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CUSTOMER POWER, STRATEGIC INVESTMENT, AND THE FAILURE OF LEADING FIRMS
Abstract
Why might firms be regarded as astutely managed at one point, yet subsequently lose their positions of industry leadership when faced with technological change? We present a model, grounded in a study of the world disk drive industry, that charts the process through which the demands of a firm's customers shape the allocation of resources in technological innovation—a model that links theories of resource dependence and resource allocation. We show that established firms led the industry in developing technologies of every sort—even radical ones—whenever the technologies addressed existing customers' needs. The same firms failed to develop simpler technologies that initially were only useful in emerging markets, because impetus coalesces behind, and resources are allocated to, programs targeting powerful customers. Projects targeted at technologies for which no customers yet exist languish for lack of impetus and resources. Because the rate of technical progress can exceed the performance demanded in a market, technologies which initially can only be used in emerging markets later can invade mainstream ones, carrying entrant firms to victory over established companies.
... We investigated the productivity effects of governmental R&D subsidies in companies in emerging industries in China. Similar to earlier studies on market power (e.g., Bellamy et al. 2014;Christensen and Bower, 1996;Peters, 2000;Chen, 2019;Wang et al. 2022), the focus was on the extent to which market power moderates the effects of government subsidies on labour productivity. ...
... As market power is an important constraint of firm performance, the extent to which market power is linked to upstream suppliers or downstream buyers remains an important question for research. The R&D of firms is influenced by various levels of market power (e.g., Bellamy et al. 2014;Christensen and Bower, 1996;Peters, 2000;Sun et al. 2021;Wang et al. 2022). These studies have been undertaken in markets with limited governmental intervention. ...
... (1) In aligning with numerous studies analysing buyer market power (e.g., Bellamy et al. 2014;Christensen and Bower, 1996;Peters, 2000), the study demonstrated that seller market power can have a negative effect on labour productivity for companies in strategic emerging industries. ...
This study explores the effects of government subsidies on company labour productivity in strategic emerging industries under conditions of market power in downstream and upstream markets. A sample of 1392 listed companies from emerging industries in China from 2006 to 2019 is used. Labour productivity will be lower in companies with high seller power. The positive effect of subsidies on labour productivity will be enhanced when firms possess higher seller power, whereas the positive effect of subsidies on labour productivity will be weakened when firms possess higher buyer power. Heterogeneity analysis shows that the role of market power is more evident for domestic enterprises compared to foreign investment companies. The mechanisms of picking winners based on government subsidies should take the effects brought by various degrees of market power into account.
... A central issue in strategic management and industry evolution studies is to understand how firms sustain their leadership, dethrone leaders, or close the market share gap between themselves and leaders (Abernathy and Clark, 1985;Christensen and Bower, 1996). Several studies since the mid-1980s have shown that radical changes in a firm's technological environment caused by the introduction of a breakthrough innovation that gradually displaces the old technology, also referred to as a technological discontinuity (Tushman and Anderson, 1986), open technological windows of opportunity (also called simply "technological windows" [Lee and Malerba, 2017;Malerba and Lee, 2021]) for challengers to catch up with the market leader (Ansari and Krop, 2012;Miao et al., 2018;Park and Lee, 2006). ...
... The technological windows of opportunity argument was initially proposed by authors in the technological change literature (e.g., Perez and Soete, 1988) and was based on the idea that technological discontinuities offer challengers "temporary" opportunities to catch up with larger rivals; from there, the idea of a "window" emerged, that is, something that opens (i.e., at the beginning of the technological discontinuity) but will close at a certain point. The concept was that during a period of technological change, challengers have an opportunity to reduce the market share gap with market leaders because the introduction of a new technology that displaces the old one is likely to (1) destroy the value of the knowledge and competences accumulated by firms through the life cycle of the old technology so that every rival, market leaders included, is a "beginner with the new technology" (Christensen and Bower, 1996;Tushman and Anderson, 1986) and (2) weaken the competitive position of those incumbents that continue to rely heavily on the old technology and fail to understand the potential of the new emerging technology (Christensen and Bower, 1996). In fact, firms winning in the old technology are more likely to fall into "competency traps" (Leonard-Barton, 1992;Levitt and March, 1988), in which a firm has difficulty in reconfiguring its resources and capabilities to adapt to the new technology and exploit the opportunities it offers. ...
... The technological windows of opportunity argument was initially proposed by authors in the technological change literature (e.g., Perez and Soete, 1988) and was based on the idea that technological discontinuities offer challengers "temporary" opportunities to catch up with larger rivals; from there, the idea of a "window" emerged, that is, something that opens (i.e., at the beginning of the technological discontinuity) but will close at a certain point. The concept was that during a period of technological change, challengers have an opportunity to reduce the market share gap with market leaders because the introduction of a new technology that displaces the old one is likely to (1) destroy the value of the knowledge and competences accumulated by firms through the life cycle of the old technology so that every rival, market leaders included, is a "beginner with the new technology" (Christensen and Bower, 1996;Tushman and Anderson, 1986) and (2) weaken the competitive position of those incumbents that continue to rely heavily on the old technology and fail to understand the potential of the new emerging technology (Christensen and Bower, 1996). In fact, firms winning in the old technology are more likely to fall into "competency traps" (Leonard-Barton, 1992;Levitt and March, 1988), in which a firm has difficulty in reconfiguring its resources and capabilities to adapt to the new technology and exploit the opportunities it offers. ...
There is empirical evidence of how challengers in an industry can take advantage of technological discontinuities that open “technological windows” of opportunity, which allow them to reduce their market share gap with market leaders, a phenomenon known as “catching-up.” However, this literature has examined leader–challenger catching-up processes within a particular industry as a whole, without considering the different product categories that can usually be identified within that industry. In fact, firms may have different market shares depending on the category under consideration, and technological discontinuities can be product category related. We extend the literature on windows of opportunity and changes in market leadership by showing that the chance a challenger has to reduce the market share gap with the market leader in a product category during a technological window depends on (a) whether the market leader in the focal product category is also the market leader in other product categories, (b) the share of a challenger's business in the focal product category relative to its overall business in the industry, and (c) the relative size of the product category with respect to the other product categories in the industry. We contend that such across-category factors influence the leaders and challengers' propensity to exploit opportunities resulting from technological discontinuities in a product category. We test a set of hypotheses using data on 31 mobile phone makers competing in India from 2003 to 2020 in the feature phone and smartphone product categories.
... A broader interest in OVF occurred some years later, when scholars identified the development of highly featured products as a response to increasing competition in technology-driven industries (Boehm et al., 2000;Christensen and Bower, 1996;Davis and Venkatesh, 2004). Later, the uncontrolled extension of projects' scope captured the attention of scholars and practitioners, as it highlighted the risk of exposing the entire NPD to failure, low-usability and unnecessary complexity (Boehm and Turner, 2005;Chen et al., 2009;Dean Hendrix and Schneider, 2002;Knight and Robinson Fayek, 2002;Ropponen and Lyytinen, 2000). ...
... Like overspecification, overdesign can be used to create a buffer to avoid later re-design of the product or service (Allen et al., 2019). In such a case, numerous features are partially designed and Beyond needs excess (BNE) Overspecification 'Defining product or service specifications beyond the actual needs of the customer or the market' (Ronen and Pass, 2008, p. 162) Over-requirement a ; Overengineering b ; Goldplating c ; Bells-and-whistles c ; Flexibilitis d ; Overshooting Bianchi et al., 2019;Boehm and Papaccio, 1988;Buschmann, 2010;Coman and Ronen, 2010;Shmueli et al., 2015 Overdesign 'Developing products or services beyond what is required by the specifications and/or the requirements of the customer or the market' (Ronen and Pass, 2008, p. 162) Overengineering b ; Gold-plating c ; Bells-and-whistles c ; Performitis; Flexibilitis d Allen et al., 2019;Buschmann, 2010;Christensen and Bower, 1996;Coman and Ronen, 2010 Beyond plans excess (BPE) Feature Creep 'Changes in features while a product [or a servicea.n.] is still in development' ( Elliott, 2007, p. 304) Feature bloat; Requirements creep Choi and Bae, 2009;Damian and Chisan, 2006;Davis and Venkatesh, 2004;Elliott, 2007;Rust et al., 2006 Featuritis 'Tendency to trade functional coverage for qualitythe more functions and the earlier they're delivered, the better' ( Buschmann, 2010, p. 10) Feature bloat Buschmann, 2010;Elliott, 2007;Hamilton et al., 2017;Rust et al., 2006 Scope Creep 'Steady increase of the system's [or project'sa.n.] scope' (Buschmann, 2009, p. 68) Mission creep; Requirements creep Buschmann, 2009;Chen et al., 2009;Choi and Bae, 2009;Gil and Tether, 2011;Knight and Robinson Fayek, 2002;Schmidt et al., 2001 Beyond resources excess (BRE) Overscoping 'Setting a [project'sa.n.] scope that requires more resources than are available' (Bjarnason et al., 2012(Bjarnason et al., , p. 1107 Scope overload Bjarnason et al., 2012;Shmueli et al., 2016 'a.n.' stands for 'author note'. a The term 'over-requirement' is mostly used in the software development realm as a synonym of overspecification, even if there is a difference between requirements and specifications. ...
... Here, always new and alluring features represent a competitive leverage to attract new customers, retain old ones or increase re-purchases (Bleda et al., 2021;Thompson et al., 2005). This results in extreme pressure on development departments to continuously include new and additional features (Bleda et al., 2021;Christensen and Bower, 1996;Coman and Ronen, 2010). ...
Developing new products and services beyond what is required by the needs of users, market demand and the resources of companies ranks among the top 10 risks leading to new product development (NPD) failures. This study defines and refers to this multifaceted phenomenon as ‘Over Featuring’ (OVF) to group different forms of excessive product development, from scope creep to overspecification and feature creep. The classification and theoretical development of the various forms of OVF is proposed, also origins and adverse outcomes, such as feature fatigue, are explored. Stage-Gate and Agile approaches are discussed in the light of the OVF phenomenon.
... The knowledge distribution in Figure 3 is very fragmented and meets Kuhn's (1970) prediction that the pre-paradigm period is Abernathy and Clark (1985) 0.03799 Thompson (1967) 0.11230 Christensen and Bower (1996) 0.08307 Sorescu et al. (2003) 0.04443 Nelson and Winter (1982) 0.11252 Bower and Christensen (1995) 0.08309 von Hippel (1986) 0.06000 Dewar and Dutton (1986) 0.11355 Damanpour (1991) 0.08311 Penrose (1959) 0.04056 Eisenhardt (1989) 0.11462 Eisenhardt (1989) 0.08315 Hair (1998) 0.04698 Dosi (1988b) 0.11546 Schumpeter (1934) 0.08317 Hill and Rothaermel (2003) 0.04023 Ettlie et al. (1984) 0.11606 Nunnally (1967) 0.08321 Tushman & Oreilly (1996) 0.04206 Porter (1980) 0.11624 March (1991) 0.08346 Henderson and Clark (1990) 0.03832 Utterback and Abernathy (1975) 0.11766 Porter (1980) 0.08346 Schumpeter (1943) Figure 3 and Table 3. Factor 1 (red) can be seen as the core group of studies in this field as it comprises the largest number of top-cited works and focuses on the central issues of disruptive innovation. Following the earliest works of Schumpeter (1934Schumpeter ( , 1943, many works (Abernathy & Utterback, 1978;Cooper & Schendel, 1976;Christensen, 1997;Dosi, 1982;Foster, 1986;Teece, 1986;Tushman & Anderson, 1986;Utterback, 1994) built on the notion of "creative destruction" and furthered Schumpeterian firm-growth theory by focusing on the emergence and impact of technological changes. ...
... Foster ( Factor 5 Dosi (1982) 0.85 Bower and Christensen (1995) 0.86 Barney (1991) 0.8 Chandy and Tellis (1998) 0.77 Eisenhardt (1989) 0.75 Tushman & Anderson (1986) 0.82 Moore (1991) 0.86 March (1991) 0.78 Nunnally (1967) 0.76 Leifer (2000) 0.75 Teece (1986) 0.82 Lynn et al. (1996) 0.85 Levinthal and March (1993) 0.77 Damanpour (1991) 0.68 Yin (1984) 0.71 Abernathy and Utterback (1978) 0.82 Veryzer (1998) 0.8 Teece et al. (1997) 0.69 Christensen and Bower (1996) 0.66 Cooper (1986) 0.67 Cooper and Schendel (1976) 0.82 Tushman and O'Reilly (1997) 0.79 Eisenhardt and Martin (2000) 0.63 Dewar and Dutton (1986) 0.65 O'Conner (1998) 0.6 Nelson and Winter (1982) 0.81 Morone (1993) 0.75 Leonardbarton (1992) 0.59 Chandy and Tellis (2000) 0.62 Hamel and Prahalad (1994) 0.51 Henderson and Clark (1990) 0.8 Anderson and Tushman (1990) 0.64 Cohen and Levinthal (1990) 0.54 Rogers (1962) 0.58 Morone (1993) 0.51 Freeman (1974) 0.8 Prahalad and Hamel (1990) 0.64 Schumpeter (1943) 0.78 Abernathy and Clark (1985) 0.58 Schumpeter (1934) 0.77 Porter (1985) 0.53 Henderson (1993) 0.76 Hamel and Prahalad (1994) 0.52 Utterback (1994) 0.75 Christensen (1997) 0.51 Christensen and Rosenbloom (1995) 0.75 Dosi (1988b) 0.73 Porter (1980) 0.7 Foster (1986) 0.69 Abernathy and Clark (1985) 0.64 Christensen (1997) 0.63 Anderson and Tushman (1990) 0.59 Cohen and Levinthal (1990) 0.57 ...
... Tushman and Anderson (1986) 0.89 Zahra and George (2002) 0.8 Fornell and Larcker (1981) 0.86 Yin (1984) 0.72 Dosi (1982) 0.88 March (1991) 0.77 Hair (1998) 0.86 Eisenhardt (1989) 0.72 Anderson and Tushman (1990) 0.87 Eisenhardt and Martin (2000) 0.77 Podsakoff et al. (2003) 0.85 Eisenhardt and Graebner (2007) 0.72 Henderson and Clark (1990) 0.84 Tushman & O'Reilly (1996) 0.76 Nunnally (1967) 0.84 Cooper (1986) 0.72 Utterback (1994) 0.81 Kogut and Zander (1992) 0.76 Aiken et al. (1991) 0.82 Leifer (2000) 0.7 Schumpeter (1943) 0.81 Levinthal and March (1993) 0.75 Chandy and Tellis (1998) 0.8 Miles and Huberman (1994) 0.69 Schumpeter (1934) 0.79 Teece et al. (1997) 0.69 Sorescu et al. (2003) 0.8 von Hippel (1986) 0.65 Teece (1986) 0.78 Cohen and Levinthal (1990) 0.68 Chandy and Tellis (2000) 0.76 McDermott and O'Connor (2002) 0.6 Christensen (1997) 0.77 Penrose (1959) 0.65 Garcia and Calantone (2002) 0.68 Rogers (1962) 0.54 Hill and Rothaermel (2003) 0.76 Nelson and Winter (1982) 0.61 McDermott and O'Connor (2002) 0.58 Garcia and Calantone (2002) 0.54 Abernathy and Clark (1985) 0.75 Benner and Tushman (2003) 0.61 Gatignon et al. (2002) 0.58 Christensen and Bower (1996) 0.73 Barney (1991) 0.57 Dewar and Dutton (1986) 0.54 Tripsas and Gavetti (2000) 0.71 Leonardbarton (1992) 0.56 Nelson and Winter (1982) 0.68 Danneels (2002) 0.56 Christensen and Raynor (2003) 0.67 Miles and Huberman (1994) 0.55 Rogers (1962) 0.6 Chesbrough (2003) 0.52 Leonardbarton (1992) 0.59 Eisenhardt and Graebner (2007) 0.52 Cohen and Levinthal (1990) 0.53 Tripsas and Gavetti (2000) 0.51 Gatignon et al. (2002) 0.51 Penrose (1959) Higgins (1990), Anderson and Tushman (1990), Clark and Fujimoto (1991), Cohen and Levinthal (1990), Williamson (1985), and Schein (1985), did not load on any of the factors. These works either share similar characteristics with too many clusters (Anderson & Tushman, 1990;Cohen & Levinthal, 1990) as indicated by the lines connecting them with other works or isolated from other groups. ...
This paper aims to gain an impression of recent developments in the field of disruptive innovation and to analyse changes in the intellectual structure of this field from 1994 to 2014 using bibliographic methods. Applying “Mode 2” transdisciplinarity knowledge production and paradigm development theory, we perform a citation and cocitation analysis with multidimensional scaling tools using the Web of Science as the data source. Through the analysis, we present major research trends as well as the evolution of paradigm development in the transdisciplinary field of disruptive innovation. We also find that the conversation between theory and practice and the pollination from divergent sources are critical to the advancement of disruptive innovation.
... As illustrated by these examples, a company's value proposition needs to change when new products are launched (Frishammar & Parida, 2019) or when its operations are put in check. Economic and health-related crises, competition from new entrants, the emergence of new technologies and new markets are factors that require traditional organizations be able to sustain themselves and sometimes to reinvent themselves (Christensen & Bower, 1996). Compared to other types of innovation, such as process, product, and market positioning, business model innovation (BMI henceforth) portrays higher failure rates. ...
... According to Christensen and Bower (1996), established companies tend to lead innovations when they meet the expectations of current customers. The present study challenges this proposition by indicating that the resources used by the organization for innovation, as well as the receptivity of customers who knew how to hire an innovative solution, from a century-old company. ...
The present paper aims to explain how dynamic capabilities contribute to business model innovation in established organizations. It draws on a qualitative research design based on a single case study of an established multinational company operating in the construction materials industry (production and sale), which developed a service solution in lightweight façades. In addition to explaining how the sub-dimensions of dynamic capabilities contributed to the success/failure of the new business model, from its idealization and structuring to its execution, the paper shows which dynamic capabilities were present at the beginning and which ones were developed during the innovation. The study uncovers four important findings: 1) dynamic capabilities should be present in top leadership for the development of business model innovation; 2) the occurrence of dynamic capabilities takes place in a non-sequential and non-linear fashion; 3) dynamic capabilities contribute to the creation of competitive advantages in relatively stable environments; and 4) existing resources are important catalysts of results for business model innovation in established organization. The paper hence highlights the role of top leadership in business model innovation, as well as identifies the contribution of dynamic capabilities in relatively stable markets, alongside the catalyzing role of available resources in established organizations.
... 1) Radical Innovation: Radical innovations are novel ideas or products that stem from creating new knowledge [63]. Despite being costly and time-consuming endeavors with uncertain outcomes, they have long been of scholarly interest because they have the power to create new markets (e.g., [64], [65]). Even though the process by which radical innovations are created is complex and accompanied by a low probability of success, doing so is often necessary for firms to survive in competitive environments (e.g., [64]). ...
... Despite being costly and time-consuming endeavors with uncertain outcomes, they have long been of scholarly interest because they have the power to create new markets (e.g., [64], [65]). Even though the process by which radical innovations are created is complex and accompanied by a low probability of success, doing so is often necessary for firms to survive in competitive environments (e.g., [64]). Among those firms that commercialize these innovations successfully, their ability to tap into heterogeneous pools of knowledge across the organization was vital to their success (e.g., [18], [66]). ...
In this article, we extend the innovation literature by examining how firms respond to crisis, specifically exogenous crises. At their early onset, crises may represent a window of opportunity for innovation, but it is not equally allocated across firms. We created a unique database of 636 biopharmaceutical firms, from 24 countries and territories, developing innovative treatments during the early outbreak of the COVID-19 crisis to study this phenomenon. We found that firms acted strategically to the shifting external environment and attempted to capitalize on the opportunity by pursuing different but complementary innovation strategies (i.e., radical versus repurposed). The successful outcome of a chosen strategy was highly dependent upon a firm's accumulated knowledge resources, which varied in degree of diversity (i.e., homogeneous versus heterogeneous). We found that firms with more focused R&D (i.e., homogeneous knowledge) developed more radical innovations, whereas firms with more diverse R&D (i.e., heterogeneous knowledge) repurposed innovations. We controlled for firm size (small versus large), firm age (startup versus mature), and country classification (developing versus emerging). We also controlled for a firm's prior knowledge and expertise in coronavirus research and found that it did not influence innovation. Our results suggest that this unique period of environmental uncertainty and crisis created a window of opportunity and a level playing field for innovation.
... Despite its focus on new or low-end markets, disruptive innovation demands considerable resource commitment, posing a significant challenge for SMEs that typically operate under resource constraints (Christensen and Bower 1996;Osiyevskyy and Dewald 2015;Rothaermel 2001). This resource paradoxneeding resources to innovate disruptively while having limited access to them-remains a critical issue, especially in volatile emerging markets characterized by rapid growth and evolving regulatory landscapes (Atuahene- Gima and Li 2004;Shi et al. 2017;Yu et al. 2024). ...
Disruptive innovation is increasingly recognized as a strategy for small and medium-sized enterprises (SMEs) to gain a competitive edge. However, SMEs often face resource constraints that create significant challenges to develop such innovation. Aiming to provide a potential solution for this problem, this study investigates how entrepreneurial bricolage can help SMEs overcome resource constraints to develop disruptive innovation in the context of emerging markets. Drawing on the resource orchestration perspective and using data from two waves of a survey involving 269 Chinese SMEs, the results indicate that entrepreneurial bricolage has a positive impact on disruptive innovation. Moreover, we find that failure-based learning behaviors can strengthen the positive role of entrepreneurial bricolage in driving an SME’s disruptive innovation, particularly when faced with high institutional voids. These findings provide compelling insights for SMEs in emerging markets seeking to gain competitive advantages through disruptive innovation.
... Benner and Tushman (2003) opined that both exploitation and exploration processes may be harmed by difficulties in realizing strategic integration across independent firms. Christensen and Bower (1996) stated that firms cannot simultaneously engage in both exploratory and exploitative endeavors. Gibson and Birkinshaw (2004), on the other hand, argued that OA can be observed from a contextual perspective and thus through the lens of alignment and adaptability. ...
... Lemley and Sampat (2012) pointed out in tracing the history of patent inventions that serendipities are rare, and a significant majority of innovations are incremental improvements that come later. Christensen and Bower (1996) pioneered the theory of disruptive innovation, classifying it into sustaining innovation and disruptive innovation based on the different value networks upon which innovation relies. Christensen further developed the basic framework of disruptive innovation theory in his book The Innovator's Dilemma. ...
Measuring disruptive innovation is a critical and still-developing topic. Although the disruption (D) Index has been widely utilized, it ignores the structural differences between i-and j-type nodes and suffers from inconsistencies, biases related to reference lists, and little comparability across different clusters. To address these possible biases, we propose the improved disruptive Index (ID Index), using a dataset of 114,202 patents from Chinese listed firms to test its validity. The results show that the ID Index (i) provides a more precise measurement of disruptiveness, resolves inconsistencies, reduces biases related to reference lists, and enhances comparability across clusters; (ii) demonstrates better convergent validity, correlating more closely with expert evaluations and more effectively identifying determinants such as knowledge search, recombination, and coordination; (iii) shows better validity in predicting stock market reactions, renewal durations, firms' short-and long-term performance. Finally, we separate the ID index to independently measure the extent of disrupting and consolidating existing knowledge, and the convergent and predictive validity are demonstrated.
... This particularly has been found to be prevalent among SMEs who attempt to innovate the firm's business model (Latifi, Nikou, & Bouwman, 2021). This is because scholars have shown that, within one organization, business owners find it arduous to simultaneously deal with their original business model-which in the case of a crisis has been disrupted for an undefined time-and with an innovative newly discovered opportunity on which the new business model rests (Christensen & Bower, 1996;Zhang et al., 2023). Many SMEs, therefore, fail in BMI. ...
This study exploits a unique sample of 536 Belgian SME business owners, collected immediately after the first COVID‐19 lockdown, and provides new insights into how , during severe crises, business owners' entrepreneurial alertness functions as a critical strategic opportunity discovery skill for SMEs. Concretely, we find that entrepreneurial alertness can determine the emergence of a business model innovation (BMI) as a strategic response to severe crises, which then stimulates business owners' intent to start a new internal corporate venture (ICV). Creating such a new separate organizational entity within the structure of the existing firm can be strategically used as a tool to pursue the successful implementation of this BMI. Robustness and sensitivity analyses show that our results hold, and, in addition, we find that if business owners are lowly skilled in being able to be alert to discover innovative new opportunities for their firm, that this lack of skills negatively influences engaging in BMI and the subsequent intent to create such a new ICV to effectively implement the BMI. We discuss this study's contributions to the literature on BMI and (strategic) corporate venturing and address this study's practical implications.
... Furthermore, resource access has been shown to limit the founding teams' flexibility and openness to new ideas (Ruef et al., 2003). Excessive resource access is also likely to make the organization ambivalent toward the environment (Bourgeois, 1981;Christensen and Bower, 1996;Henderson and Clark, 1990;Leonard-Barton, 1992;Patzelt et al., 2008); it may encourage wasting of resources over unnecessary projects (Barnett and McKendrick, 2004); and even promote ineffective management practices (Shapiro and Stiglitz, 1984). ...
Purpose
This research aims to theorize how a critical factor, resource access, can paradoxically impact the comprehensiveness of venture location decision processes and the relationship between decision comprehensiveness and new venture performance. To do so, the authors focus on nascent entrepreneurs’ venture location decision processes and introduce resource access as a double-edged sword.
Design/methodology/approach
In this conceptual article, the authors draw from the strategic decision-making and resource mobilization literature to theorize about the new venture location decision-making process and its performance implications.
Findings
By uncovering the paradox of resource access, the authors propose that high levels of resource access create a paradoxical situation in which nascent entrepreneurs are less likely to use comprehensive decision processes when their benefits are at their greatest.
Originality/value
This work contributes to entrepreneurship research on new venture location and resource mobilization in three important ways. First, the authors advance the literature on nascent entrepreneurs’ location decision-making processes by introducing “location decision comprehensiveness” as a decision process construct and juxtaposing it with resource access to uncover the entrepreneurial decision-making process. Second, the authors develop a more nuanced theorization of the location choices made by nascent entrepreneurs instead of relying on generalized conclusions drawn from well-established corporations’ location decisions. Last, the authors extend the literature on resource mobilization in entrepreneurship by shedding light on the paradoxical aspect of resource access. While previous research has emphasized the favorable effects of resource access on new venture processes and outcomes, the authors contend that it can also negatively impact entrepreneurs’ ability to make effective decisions.
... Theory. Radical innovations transform business ecosystems and reconfigure the leadership positions that determine firms' ability to create and capture value (Ansari & K rop, 2012;Christensen & Bower, 1996;King & Tucci, 2002). In the present research, it is acknowledged that incumbents have a vested interest in backing a particular technology and in shaping the outcome of a particular technological battle in their favor (Cole & Chandler, 2019) to enhance their profitability and maintain the value of their complementary assets (Pisano & Teece, 2007;Teece, 2018). ...
... Furthermore, we control for firm size, using the natural log of the number of employees (SIZE). The literature shows that firm size can have ambiguous effects on firm innovation (Veugelers, 1997;Christensen and Bower, 1996;Laursen et al., 2012;Tödtling and Kaufmann, 2001;Cooke et al., 2005;Schmutzler and Lorenz, 2018). On the one hand, large firms are able to spread innovation risks, might have easier access to finance and benefit from economies of scale. ...
Generalized trust represents an important regional resource for a firm. It increases human capital, fosters frequent interaction and information sharing, and lowers transaction costs. We provide empirical evidence on the impact of generalized trust among people on firm innovation in German regions. Our observation period ranges from 2004 to 2018. A trust measure is generated by using survey data from the German SocioEconomic Panel, firm-level data is obtained from the Mannheim Innovation Panel and regional data is retrieved from the INKAR database. We apply a 3-level multilevel model, with yearly observations nested in firms, which are nested in regions. Our results show that the relationship between trust and firm innovation has an inverted U-shape. An increase in trust is particularly beneficial for firms inside regions with very low levels of trust, and in small and medium-sized enterprises, especially those that operate in the doing-using-interacting mode of innovation (DUI) with an emphasis on employee freedom and creativity.
... Originated from the seminal work by Abernathy and Clark (1985), disruptive innovation has become one of the most influential concepts in strategic management and innovation research, leading to profound findings from academic research and business practice (e.g., Christensen & Bower, 1996;Christensen et al., 2018;O'Reilly & Binns, 2019). The growing importance of disruptive innovation as a crucial way to build sustainable competitive advantage has attracted scholars to elucidate the influencing factors and how to promote disruptive innovation. ...
How to enhance disruptive innovation to build sustainable competitive advantage has become an essential issue in strategic management research. However, few studies exist to elucidate the influencing mechanism of disruptive innovation in the context of the digital era. Using multivariate regression analysis and bootstrapping method, we examine the underlying mediating mechanism and contextual condition in the relationship between digital transformation and disruptive innovation. Our results demonstrate that the digital transformation of entrepreneurial firms has a significant positive effect on disruptive innovation. Interorganizational collaboration mediates the relationship between digital transformation and disruptive innovation. Moreover, we demonstrate that dynamic capabilities positively moderate the indirect effect of digital transformation on disruptive innovation through interorganizational collaboration. Our findings contribute to disruptive innovation research by explaining the mediating mechanism of how to utilize digital transformation to promote disruptive innovation vis interorganizational collaboration. Our results also explain how dynamic capabilities interact with interorganizational collaboration and significantly affect disruptive innovation.
... Over time, small resource allocation decisions initiated from below can push a firm to adopt an overall strategy, which in turn can lead to large allocation decisions . Other, case-study-based works have documented inefficient resource allocation processes that led to firm failure (e.g., Christensen & Bower, 2005;Danneels, 2011;Sull, 1999). ...
The strategy and finance literatures generally find that large firms' internal resource allocation decisions are inefficient, which they ascribe to behavioral biases or agency costs. Firms differ in their degrees of resource allocation inefficiency, however, in ways that the literature often does not address. Understanding these firm differences is important for designing more efficient internal resource allocation processes, and is therefore central to strategic management. We highlight several sources of internal resource allocation in efficiency that, we suggest, vary across firms in their salience, and are based on firms' prior choices of organizational partitioning, information granularity, and selection mechanisms. These sources include partitioning inertia; misaligned resource allocation systems; partitioning differences between acquiring and target firms; variance and mismatches involving degrees of granularity, and limited use of certain selection mechanisms. We thank Jackson Nickerson and Richard Rumelt for helpful comments. 2
... However, this does not mean that non-dominant firms cannot catch up with or exceed dominant firms. In many cases, entrant firms' victory over established firms is due to established firms' failure to meet the foreseeable needs of their current customers (Christensen & Bower, 1996). ...
This study investigates the impacts of industry competition and market share on the long-run performance of firms conducting seasoned equity offerings (SEOs). These two factors are related to the “market dominance” and “expense preference” hypotheses, which suggest that dominant (low-competitive and high-market-share) firms would perform well after SEOs if they can bring their market advantages into full play and poorly if managers intend to hold more funds to expend, respectively. The results show that dominant SEO firms tend to outperform their matching firms and challenging (high-competitive and low-market-share) firms, supporting the market dominance hypothesis. This finding implies that firms with advantages in the product market can increase their competence via SEOs due to their ample resources. We contribute to the literature by showing that business risk can affect the performance following financing activities, a result that can help long-run investors select more promising SEO stocks.
... It is also believed that a long-term commitment to the same technological area would make firms reluctant to divest from their current technology and pivot to new technology because of sunk costs (O'Brien and Folta, 2009), resistance to introducing new technology (Mokyr, 2000;Parente and Prescott, 2000), inconsistencies with customer requirements (Christensen and Bower, 1996), and cannibalization risks in existing product lines (Coad, 2018). Prior studies have revealed that firm age has a negative impact on the quality of inventions. ...
... "Según Bower y Christensen (1996) la innovación disruptivatecnología disruptivaprovoca una revolución en la estructura del mercado que impera en ese momento y en las empresas que dominan (Christensen y Bower, 1996). Originalmente, las tecnologías disruptivas trabajan en la periferia, pero de forma eventual suplen a las tecnologías convencionales" (Schuelke-Leech, 2018). ...
La innovación disruptiva, como una de las terminologías comerciales más influyentes en las últimas décadas, existe ampliamente en la práctica laboral impulsada por la actual pandemia y es una herramienta importante para el desarrollo empresarial, comercial y el desarrollo de nuevos mercados. En este sentido el presente artículo muestra los resultados de una investigación con respecto a ¿cómo la innovación disruptiva en las organizaciones impactó en la actual crisis sanitaria por el covid-19? Para dar respuesta a la pregunta de investigación se utiliza el metanálisis, teniendo como objetivo identificar qué declaraciones de valor generalizables sobre la innovación disruptiva de las organizaciones en tiempos de covid-19 fueron respaldadas por la mayoría de los metanálisis. Los hallazgos muestran que la pandemia del covd-19, por primera vez, ha elevado la importancia de la dimensión física de trabajo, le necesidad de modificar los procesos digitales para poder realizar trabajo a distancia, mejor y más eficiente; y ha visibilizado la necesidad de innovar en los procesos tecnológicos
... There are many noticeable studies that have examined the powerful role of Market Orientation (MO) on innovation and their impact on other firm-level outcomes (Kohli & Jaworski, 1990;Narver & Slater, 1990). The results of a number of studies have shown that MO is considered very important for the innovation and Innovation Capacity (IC) of enterprises (Christensen & Bower, 1996). This is the expected outcome of corporate growth strategies towards (Grant, 1991). ...
This study aims to examine the impact of market orientation, innovation capacity, and government support on the development of the Unburnt Building Materials (UBMs) market in the Mekong Delta, Vietnam. In this study, we analyzed the impact of government support on UBMs market development through market orientation, and incoming innovation capacity. In addition, this study analyzed the impact of market orientation and innovation capacity on the market development of manufacturers’ UBMs. Because the whole manufacturers of UBMs in the Mekong Delta are small, the number of samples of the study is the target population - the whole overall with 78 owners or senior managers of micro, medium, and small manufacturing enterprises. For data analysis, we applied the Partial Least Squares Structural Equation Modeling (PLS-SEM) to test both measurement and structural models. The results show that government support has a positive impact on the market development of UBMs through market development and innovation capacity. Furthermore, market development is also influenced by one’s market orientation and innovation capacity in terms of products, processes, and marketing. In this study, innovation capacity has the highest impact on the market development of UBMs of enterprises. This study has contributed to the knowledge related to the positive impact of government support on market orientation, on innovation capacity from the perspective of small, medium, and micro construction enterprises in Vietnam. Develop a new product market development model for small, medium, and micro enterprises by integrating external factors (government support) and internal resources of enterprises (market orientation and innovation capacity).
... Further, the short-term gains of quick return and low risk associated with exploitation will gradually induce managers to reduce the synchronous devotion to exploration (Christensen et al., 2017) as learning myopia (Levinthal & March, 1993), which will eventually result in a decline in radical innovation. Christensen and Bower (1996) also advocated that beyond a certain point, exploitation will hinder the positive effect of exploration for radical innovation performance. ...
How can a firm apply the appropriate interaction between exploration and exploitation with the goal of either radical or incremental innovation? In this study, we seek to answer this puzzling question by reframing exploitation and exploration as a duality of learning (i.e., two modes that are partial complementary for synergy as well as partial conflicting for tradeoff). Specifically, rather than assuming either a positive or negative interaction between exploration and exploitation as prior literature has done, our study highlights a novel pattern of inverted U-shaped interaction between exploration and exploitation for both radical and incremental innovations. With a Chinese sample of 508 firms, our empirical evidence supports our prediction of two patterns of inverted U-shaped interaction of exploration and exploitation. Such unique findings showcase the unique value of reframing paradox into duality from the meta-perspective of yin-yang balancing to shed new light on organizational ambidexterity and innovation management.
... Experts are more inflexible (Dane, 2010) and more resistant to incorporating new information and altering their perspectives in the face of negative news (Furr, Cavarretta, & Garg, 2012;Staats et al., 2018). Research also suggests that experts are more likely than nonexperts to recognize and value information that enhances their firm's existing competencies and disregard conflicting evidence (Christensen & Bower, 1996;Tripsas & Gavetti, 2000). Staats et al. (2018) suggest that experts tend to exhibit selfconfirmation bias, as they believe their logical processes are superior to those of others. ...
Through a longitudinal study of the product development portfolios of 457 US‐based firms in the biotechnology industry, we investigate how prolific inventors shape a firm's innovative direction following product development failure. Contrary to received wisdom, we argue and demonstrate that an increase in the number of prolific inventors is associated with a decrease in firm propensity to pursue novel product innovation following such failure. We further find that the presence of prolific inventors with greater collaborative strength and longer tenure negatively moderate the positive relationship between failure and the pursuit of novel product development. We discuss the implications of our results for research on learning from failure and strategic human capital. In case of adverse events such as product development failure, managers often rely on the firm's prolific inventors to help the firm learn from failure. Our study shows that there are limits to this approach. While prolific inventors increase firm propensity for novel product development, such propensity is significantly decreased following product failure. We further establish that the presence of prolific inventors with greater collaborative strength and long tenures is especially likely to reduce firms’ pursuit of novel products, while the presence of those with low collaborative strength and tenure tend to increase this propensity. This article is protected by copyright. All rights reserved.
... However, new technologies are quickly replaced in the race for innovation. Bower and Christensen assert that disruptive technologies are those that cause an upheaval in the existing market structure and dominant firms (Christensen & Bower, 1996). These technologies initially operate at the margins but eventually displace conventional technologies. ...
Blockchain technology (BT) has been receiving increasing attention from the academics and practitioners, in terms of its emergence, evolution, transformation, potential disruptions, technical aspects, and implications on accounting, auditing and finance practices. Through a review of the 51 papers published from 2015 to 2021 in Scopus indexed academic journals in accounting and auditing. Based on the analysis of the selected papers, this chapter charts the current knowledge on BT, examines key themes identified from the literature, and recommends opportunities for future research. The chapter finds that the innovation and ensuing disruption of BT is still in an emerging phase, particularly the scope and influence in the accounting, auditing, and finance practice and research. The findings of this chapter can be used by the key stakeholders involved in professional practice in the accounting and auditing domain. The chapter offers avenues for future research seeking to develop theory and align theory-practice.
... Although research in environmental sustainability dimension of demarketing has been recommended to progress further, economic sustainability dimension lacks adequate amount of research. It is a very important dimension for managers as a large number of start-up as well as established companies fail due to their inability to confront economic objectives (Christensen & Bower, 1996;DeSantola, 2022). ...
In the context of emerging sustainability challenges, demarketing has continued to draw the attention of academicians and practitioners globally over the past few years. It is interesting to note that demarketing is as old as marketing itself, yet its application and scope have grown from the past two decades only. Kotler and Levy, (1971) has defined demarketing as “that aspect of marketing which deals with discouraging customers in general or a certain class of customers in particular on a temporary or permanent basis”. This systematic literature review attempts to enrich the discussion on demarketing research through a systematic and comprehensive review of 64 articles published between 2000 and 2022. Using TCCM framework, we present relevant theories, research contexts, study characteristics, and methodologies used in demarketing research. Our review (1) Presents a systematic and comprehensive overview of the research in demarketing over the last two decades (2) Examines studies in demarketing within the framework of ‘triple bottom line’ approach for sustainability (3) Suggests a suitable definition of demarketing considering its exorbitant application within the sustainability context (4) Identify gaps and sets agenda for future research. Our systematic literature review found that research in demarketing has been growing considerably over the past two decades, twice as much in the last decade compared to the previous decade with spill‐over to new sectors. The literature review, through the lens of ‘triple bottom line’ approach, is able to establish that demarketing can be employed to effectively address the sustainability challenges encountered by policymakers and practitioners.
... Organizations with a high level of relational capability, that is, those that build and maintain relationships with consumers and strategic partners, will be able to obtain access to market and customer-related data and restructure their resources to better meet the market demand (Lee & Yang, 2014). However, despite the importance of maintaining relationships with customers and strategic partners, the existing mixed evidence in the literature suggests that the effectiveness of organization relationships depends on various internal and external factors (Christensen & Bower, 1996;Grewal & Tansuhaj, 2001;Joshi, 2016;Wang, Jin, Zhou, Li, & Yin, 2020). As a response to account for the possible moderators, we introduced the market dynamism as a possible moderating factor that might have an impact on the effectiveness of relational capability of the firm (Houston, 1986). ...
This study empirically examines the direct as well as indirect effect of dynamic capabilities on firm performance. Structural equation modeling has been used to analyze the survey data from 218 Indian companies to test the objective of the study. The findings show that the dynamic capability positively influences the firm performance, however, the indirect effect of the dynamic capability on performance through the firm’s VRIN resources is higher than the direct one. This suggests that the effectiveness of the dynamic capability on firm performance increases through modification and reconfiguration of VRIN resources. The study contributes to the extant literature by examining the resource-based theory with the dynamic capability view to provide evidence on the dynamic capabilities’ indirect influence on firm performance.
... Since disruptive innovation (DI) theory introduction, it has raised great debates and has become an influential concept attracting attention of scholars in various domains and contexts (Pandit et al., 2017;Williamson et al., 2020). As this interest evolved, many debates were built from different perspectives, such as concept evolution in order to expand Christensen's original definition (Martinez-Vergara and Valls-Pasola, 2021;Schmidt and Druehl, 2008;Yu and Hang, 2010), coping factors for incumbents (Ansari and Krop, 2012;Adner and Snow, 2010), determining factors for success or inhibitors of DI (Assink, 2006;Yu and Hang, 2011 ), failures of incumbents to respond to DI (Christensen and Bower, 1996) and reflections on types of innovations (Kovacs et al., 2019;Li et al., 2018;Rakic, 2020). ...
The main objective of this study is to synthesize and understand how disruptive innovation (DI) and dynamic capabilities (DC) are related to answer research question: what is the panorama of researching on relationship between DI and DC? We followed the guidance established by PRISMA protocol for a scope review, due to lacking recent literature review on relationship between DI and DC. We focus on scientific articles anchored in Web of Science (Wos) and Scopus databases and gray literature (Google scholar). Our analyzes indicate that, despite progress of literature in relation to each theory, research that links them is still incipient and little explored. Additionally, findings also point out a positive relationship between DI and DC, mediated by digital platforms sometimes; new offers of products or services and new digital channels; and moderated by spending on Research and Development (R&D) and turbulent environment. In other cases, DC acts through operational capabilities to trigger DI. It is also possible to observe that this relationship is not always positive. This article contributes by providing a literature review and systematization of models that relate DI and DC which allows us to understand trends in this research field.
... Indeed, the advantages and disadvantages of new firms versus established firms in terms of innovation, development, and growth have attracted a good deal of scholarly attention (Coad et al., 2018;Latifi et al., 2021;Antolin-Lopez et al., 2015;Wei et al., 2014;Petruzzelli et al., 2018;Criscuolo et al., 2012). The belief that older, more established firms tend to focus on better serving their existing customers through their innovation efforts, which are typically incremental, while younger firms focus on more disruptive innovation, is prevalent (Bower and Christensen, 1996;Christensen, 1997;Coad et al., 2016;Tongur and Engwall, 2014). Young firms have attracted considerable attention in the literature as they are seen to be particularly capable of translating innovation into economic growth (Audretsch et al., 2014;Coad et al., 2016;Saemundsson and Candi, 2017;Schneider and Veugelers, 2010) and innovation quality (Balasubramanian and Lee, 2008). ...
This research examines business model centrality over technology-based firms' (TBFs') life courses and thus contributes to the discourse on business models by addressing recent calls for time-sensitive and contextualized research. Based on analysis of data collected from a large sample of European TBFs, we find that younger TBFs are more likely than older TBFs to opt to bring their innovations to market using novelty-centered business models, and the same is true for efficiency-centered business models. By examining relationships between business model centrality and performance over TBFs’ life courses, we uncover important implications for TBFs of all ages suggesting caution in the pursuit of novelty-centered business models by younger TBFs, which are likely to fare better by bringing their innovations to market using efficiency-centered business models. Meanwhile, older firms are more likely to achieve success through novelty-centered business models.
... In sum, recent research has revealed that organizations are influenced by the contextual features of adversity, especially its duration and degree of impact. However, as has been established by foundational scholarship (e.g., Christensen & Bower, 1996;Finkelstein, 1997;Pfeffer & Salancik, 2003), organizations are not simply acted upon by environmental forces but produce different interpretations and then responses that allow them to manage and capitalize on environmental conditions (i.e., constraints and opportunities, etc.) that shape the relationship between adversity and organizational outcomes (i.e., performance, failure, etc.). Therefore, while acknowledging the diverse forms of adversity that shape organizations, we are interested in isolating and understanding different organizational responses. ...
Plain English Summary
There are different ways organizations make the most out of a surprising challenge to enhance performance, adjust, and pivot for new opportunities. The COVID-19 pandemic has challenged organizations in different ways—some experienced near-exponential increases in demand, whereas others saw their entire business evaporate overnight. Despite a continuum in the severity of these challenges, they require resilience. But how does resilience happen in organizations? Our study examines different responses to a challenge that, while originating from the same adverse event (COVID-19 pandemic), impacted organizations and their decision making differently. We find three patterns of responses that provide options for how organizations might approach challenges based on the impact they experience. First, some organizations fell into sudden, exponential demand—requiring simple decision-making rules to make incremental changes to support rapid scaling. Second, other organizations faced operational challenges and found ways to repurpose existing structures to maintain business operations. Finally, some organizations appraised their situation as an imminent threat to organizational survival, requiring rapid, wholesale changes to the business model in the form of pivots. Thus, the principal implication of this study is that organizations have different experiences from the same precipitating event, and they should ensure they align firm decision making, strategic initiatives, and operational activities to best promote resilience.
... Accordingly, a notable future research direction is measuring the impact of information overload in the market orientation process and examining how it affects the association among market orientation and new product performance. Fifth, being overly market oriented might also lead a firm to be obsessed with market information on customers' past experiences and expressed needs and to encounter an overload of ambiguous irrelevant market information (Christensen & Bower, 1996;Cui & Xiao, 2019;Morgan & Anokhin, 2020); thus, casting light on how to effectively prioritize and determine the value of market information acquired and disseminated within an organization merits further empirical investigations. Finally, the current study empirically investigated product launch quality as a significant deployment mechanism through which market orientation affected new product performance. ...
Grounded on the resource-based view, this study aims to examine the mediating role of product launch quality as a deployment mechanism in the association between market orientation and new product performance. Conducting an on-site survey of Iranian manufacturing industries, this study applies covariance-based structural equation modeling to test research hypotheses and verify the proposed theoretical model. The empirical findings indicate market orientation is a critical knowledge-based resource enhancing firms’ product launch quality, and right decisions concerning the product launch elevate new product performance. The results also reveal while market orientation significantly impacts new product performance, product launch quality is a crucial deployment mechanism for leveraging market orientation as it fully mediates impacts of market orientation on new product performance. The current static characterization of the resource-based view signifies strategic resources have potential value, but unleashing this potential requires incorporation of deployment mechanisms in the resource-performance link. Besides, considering this insufficient view, prior studies have revealed mixed and inconsistent results. Accordingly, through examining product launch quality as a deployment mechanism for leveraging market orientation on new product performance, not only does this study address inconsistent findings, but it noticeably contributes to the resource-based view by casting light on the mechanism through which market orientation as a strategic knowledge-based resource leads to superior new product performance.
... Consequently, examining the ambidexterity literature produced little empirical support for this approach, and the few examples largely stem from a time when OA theory was still in its early development phase (see Appendix VI). This particularly includes the study of three CV units in the disc-drive industry by Christensen and Bower (1996), who strongly influenced the debate early on by presenting successful cases of independent corporate venturing. Although the examinations that followed often confirmed the successful exploration in separate CV units, simultaneous exploitation was rarely achieved, demonstrating that the missing alignment and, therefore, the missing ambidexterity eventually hindered sustainable success. ...
In times of changing business environments, firms must constantly renew their competitive advantage by establishing dynamic capabilities. While often attempting to employ this in corporate venturing activities, they face the challenge of simultaneously exploring new and exploiting existing business opportunities. Examining possible approaches to mastering this feat of ‘organizational ambidexterity’ reveals an extensive but scattered picture. To better integrate this effort by assessing how corporate venturing is linked with organizational ambidexterity in the literature and identifying possible organizational setups, this systematic literature review builds on a sample of 172 studies. Based on different dimensions of dynamic capabilities, the analysis indicates that corporate venturing may take a solely explorative or an exploitative role, or balance both, to directly enable organizational ambidexterity, following a ‘trade-off’, respectively ‘paradox’, school of thought. As a result, this paper identifies four different setups of corporate venturing in an integrated framework, based on the ability and approach to enabling organizational ambidexterity. Here, the synthesis in the proposed framework of the studies examined allows differentiating between not directly ambidextrous separated or integrated corporate venturing and directly ambidextrous contextual or interlinked corporate venturing. As a novel contribution to the fields of strategic management, organizational change and corporate entrepreneurship, this integrated perspective suggests an often overlooked, potentially more strategic role for corporate venturing in the strategic renewal of a firm’s competitive advantage, thus building the basis for further empirical research on strategic corporate venturing approaches for organizational ambidexterity and their application in practice.
... Adequate knowledge and understanding of investment companies helps them to design effective and successful portfolios for investment. Christensen and Bower (1996) stated that "technological advances can exceed the required 4 performance in a market, technologies that can initially only be used later in emerging markets can attack major markets and move incoming companies to victory over established companies". It can be said that the design of investment proposing systems is one of these technical and effective advances in the investment market. ...
The aim of the study was to present a new business model of an investment recommender system using customer investment service feedback based on fuzzy neural inference solutions and customized investment services. The model designed to support the system's process in investment companies. The type of research was qualitative and used exploratory study and extensive library research. The model divided into two main parts using customer investment service feedback: data analysis and decision making. In this model, seven group factors proposed to implement the model of the proposed system of investment jobs through the potential investors. Machine learning use in this process and next ANFIS, which is an implementation of the neural art community uses the establishment of fuzzy logic judgment directly forward. The system acts like a system consultant who studies the investor's past behavior and recommends relevant and accurate recommendations to the user for the most appropriate investment.
... These participated in, and aligned with, the 'orchestras' in order to strengthen their relationships with hub companies and prosperous networks (Nambisan & Baron, 2013), to tap into various knowledge sources or to monitor innovative moves of competitors. Participating in ecosystems with dominant central players could open up opportunities for direct and indirect network effects (Jacobides et al., 2018;Parker & Van Alstyne, 2005) but might also create resource dependencies that limit the freedom to explore alternative pathways for innovation (Christensen & Bower, 1996;Pol & Visscher, 2010). However, not all ecosystems had a centralized structure with leader/follower dynamics. ...
There is a growing interest in innovation ecosystems. Embedding innovation processes in ecosystems comes with several opportunities and managerial challenges. This paper's aim is to increase our understanding of the strategies that industrial firm managers use to deal with innovation ecosystems. How do they align partners and activities while securing and developing their role in the ecosystem? Drawing on 98 interviews with CEOs, CTOs and innovation managers in Germany and the Netherlands, we identify two layers in innovation ecosystems: an explorative layer, which is open and aimed at identifying opportunities for innovation, and an exploitative layer, which is semi‐closed and aimed at enacting these opportunities to create new value propositions for customers. We analyse how companies act upon these two layers productively, particularly in relation to alignment and strategic positioning; how they create synergies between the different layers; and how they cope with the existing tensions. Furthermore, we discuss differences in strategic choices regarding ecosystem strategies, and propose a maturity model for the development of innovation ecosystem strategies.
... Initial studies of disruptive innovations concentrated on discontinuous technological innovations (Christensen and Bower 1996;Christensen 1997). However, the economic value of any innovation can only come to fruition through commercialization via a business model (Chesbrough 2010). ...
The present study investigates how family firms respond to disruptive industry changes. We aim to investigate which factors prevent or support family firms` adoption of disruptive innovations in their industry and which mechanisms lead to more or less successful coping with disruptive change. Our analysis is based on 24 qualitative interviews with top executives and on secondary data from an industry in which disruptive innovations dramatically changed the way business was generated. The industry in question is the mail order industry, which, in its early days, disrupted the retail business. When the Internet and, with it, ecommerce started to disrupt the industry in the late 1990s, the industry was characterized by a high proportion of family firms and a low level of innovativeness. While incumbent firms had been very successful for decades, most of them were confronted with serious turbulence when new entrants started changing the face of the industry. Our findings show that different factors impact reactions to disruptive industry change in two different phases, namely, opportunity recognition and opportunity implementation. While some of the influencing factors are determined by industry factors, family influence may function for better or worse for incumbent firms. Specifically, we find that in firms with a family disruptor, a family member in a powerful position who drives the adoption of the new technology, hindrances can be overcome and firms tend to show more successful strategies when reacting to the disruptive industry change.
... Conventional ideologies about company size and financial resources being the deciding factor for international expansion is heavily disregarded by studies on the growing success of start-ups in global markets [8], [15]. In the context of technology-oriented ventures, start-ups offer positive impacts on the rejuvenation of disruptive technology industries [16]. ...
This article aims to determine factors crucial for the performance of new ventures by performing a meta-analysis. It evaluates the performance of machine learning and statistical models by selecting 19 studies through preferred reporting items for systematic reviews and meta-analyses (PRISMA). The results obtained were graphically represented using forest plots. A subjective analysis of the studies revealed “business plan,” “market scope,” “team size,” “service timing,” “market growth,” and “age of the entrepreneur” as crucial factors for deciding the performance of the new ventures. In machine learning model-based studies, the combined model was found to be statistically significant. The variables, namely, “seed funding,” “funding rounds,” “location,” “social media presence,” “team size,” “number of founding members,” and “defunct date” affect the predictive capability of these models. The implications of this article can be applied by start-ups to reduce uncertainty and enhance performance.
Purpose
Knowledge on how firms adapt to exogenous shocks remains scant. This study examines whether internationally connected firms (i.e. firms that rely on exporting, global value chains and foreign ownership) are less likely to adjust their production in response to a major exogenous shock. Moreover, this study investigates if governmental policy interventions affect more internationally connected firms than domestically focused counterparts.
Design/methodology/approach
This study uses data on more than 13,000 firms from 41 countries worldwide from the World Bank’s Enterprise Surveys, taking advantage of the recent COVID-19 pandemic as a quasi-experimental setting for research.
Findings
The results show that export-intensive and foreign-owned firms are less likely to adjust their production in response to the pandemic. Moreover, national governmental policies (in the form of confinement stringency and economic stimuli) seem to affect equally all firms in terms of their ability to adapt to the pandemic. Finally, the economic magnitude of these national policies dwarfs those of firms’ international strategies, confirming the paramount role played by governments worldwide in response to major exogenous shocks.
Originality/value
This study examines empirically whether internationally connected firms are more or less affected by a major global crisis (in this case the COVID-19 pandemic) and whether national policies in response to the crisis favor domestic firms.
Advancement in technology has brought intense but healthy competition among professional bodies in Nigeria, especially in the field of accounting. This has systematically transformed the accounting process from a traditional analog to a digital system. It is on this note that this study examined how disruptive technology affects the efficacy of accounting practice in Nigeria. This study employed a survey research method with the use of a structured questionnaire distributed among professional bodies in Ekiti, Osun, and Ondo States, South Western Nigeria. Regression analysis of Ordinary Least Squares coupled with correlation analysis were employed. The results revealed that artificial intelligence, blockchain, big data, and the internet of things had a significant positive effect on the controlled variable in Nigeria. The results also revealed that cloud computing had insignificant negative effect on the dependent variable. With the F Statistics (7.113) = 109.747, P = 0.000 < 0.05), the results showed a significantly strong relationship between the controlling and controlled variables. www.scholink.org/ojs/index.php/ibes International Business & Economics Studies Vol. 5, No.3, 2023 2 Published by SCHOLINK INC. It is, thus, recommended the pivotal need for accounting practitioners to enhance their knowledge of disruptive technologies through training and retraining, and continuous attendance of related workshops organized by the respective professional bodies in Nigeria.
Studies confirm that, successful products must be based on understanding users through direct communication with users during product development process. Users may have less to offer during product development than expected, due to limited abilities to describe what they expect from the product (Christensen and Bower 1996). There must be different ways to involve users, depending on which users and at which phase of the development process. Approaches and characteristics of users are still an issue of debate. Hippel's work concerning lead users plays an important role in this area of study, since then, there was a growth in user terminology, such as prosumers, and core users. this paper explores what I term the " DESUMERS ". The term is a portmanteau of the words (Designer and consumer) to describe users that would be enabled by the product designers to participate in creating innovative ideas or what is known as Ideators within the product development process based on the "Design By Approach" (M. A. Kauliu.1998). An increased number of companies call for innovative ideas, as in the case of Ikea. These companies aim to detect innovative ideas that could increase its position in the market. Such calls can last for short or long times and a substantial number of Ideators would respond, this naturally would lead to enormous numbers of ideas that consume lots of effort and time in order to revies, and because it's an open call creative and uncreative ideas would appear. This paper suggests involving Desumers as Ideators in the ideation phase, of design process based on certain characteristics they own. The novelty of this approach would enrich the sub takes gained for the designer while help Desumers get benefits (financially and socially). Research problem: The "Design by" approach used among designers should gain better outcomes in a shorter time and less effort, this may not be achieved unless the targeted users have certain creative characters, this would be achieved by building standards in the form of characters of those creative users coined, Desumers. The research seeks achieving this through answering the following questions:-Who are the suggested users coined" Desumers"?-What are the characteristics of Desumers'?-Could Desumers help designers gain better ideation when involved? Research aim: Introducing "Desumers" who can participate successfully in design process based on Design by Users' Approach & defining their characteristics, as a new term that refers to users with higher level of creativity than lead users
With the development of the Internet, traditional platforms have been challenged by competition from participants on the platform. However, it is unclear how these two types of population, which are in competition but also mutually dependent, can co-exist in the new platform ecosystem. This paper sheds light on that key phenomenon by extending the population density logistic model of the e-commerce platform ecosystem between participants and platforms based on the symbiosis theory. By solving the logistic equation, we acquire the evolutionary trajectory and final size of populations under different symbiotic patterns. The results reveal that the cooperative and competitive effect determines the equilibrium outcome of the symbiosis evolution of e-commerce platform ecosystem. In the asymmetric symbiosis mode, only one population is influenced by positive synergy that increases population density and promote evolution. The contribution coefficient of subordinate to the dominant is greater than the feedback coefficient from the dominant; the trends of output value are inconsistent. The symmetric symbiosis mode is the optimal model for participants and platforms. The effect “ 1 + 1 > 2 ” can only be achieved under the symmetric symbiosis mode, and the growth of the participants and the platforms is more stable and sufficient than that in other modes. The findings will provide additional perspectives to promote the sustainable development of e-commerce platform ecosystem considering the cooperative and competitive effect.
The real estate agency industry has seen the emergence and growth of disruptive technology and innovation to the extent that real estate agents view search portals such as Zillow and Purplebricks as serious competition. In response to these threats, a major real estate agency in Singapore, OrangeTee, launched a property agent review and rating program called Property Agent Review (PAR) to provide better information on their agents for prospective clients. The PAR program provides a natural experiment to test the effect of informative reviews and ratings on agent performance in terms of commissions and transactions. This is done via a difference-in-difference approach, carefully controlling for observed agent characteristics and market conditions. This paper also analyses the informativeness of reviews.
Research defines coopetition as a mix of cooperation and competition among firms oriented towards producing innovation, and generating net value added or economic benefit. The importance of studying the determinants of firms’ innovative behaviour, based on those coopetition relationships, has warranted increasing attention from scholars. However, the role played by micro-, small-, and medium-sized enterprises in this process have been neglected, even as research on economic
geography, clusters, entrepreneurship, and innovation, has become pre-eminent. This represents an opportunity for scholars, policymakers, entrepreneurs, and practitioners to discuss the importance of micro-, small-, and medium-sized enterprises in determining the innovative behaviour of government, industry, higher education institutions (HEIs), and citizens in environments that mix competition and cooperation.
Despite the importance of the institutional and network approaches explored in the literature, much remains unknown regarding the role played by the referred different types of enterprises in determining innovative and economic performance. Another gap found in the literature is concerning entrepreneurial and open innovative ecosystems. There is increasing literature suggesting reasons behind ecosystems emergence, but it fails to examine, in detail, the exact mechanisms behind it, namely, the role played by endogenous production factors (for example, human
capital, social or relational capital, organizational capital, and knowledge), using an organizational economics approach. This gap may be addressed by linking, for example, coopetition, innovative behaviour, clusters, or industrial districts. If agglomeration improves the quality of the match between government, firms, HEIs, and citizens, then clusters will ensure enduring productivity and sustainable competitive advantages.
The collection of 13 contributions is quite impressive, in the sense that congregates in the same volume several benchmarks of international practices of open innovation, revealing the importance of micro-, small-, and medium-sized firms for reinforcing the evolutionary innovation pathway undercut with established firms, public institutions, and civil society.
Research avenues are provided to scholars, policymakers and practitioners that are interested in moving forward with the open innovation paradigm, recovering the importance of the open debate devoted to the innovative nature of new entrepreneurial units, which are responsible for creating qualified work, innovations, and new specializations.
We show that over the past half‐century, innovative disruptions were central to understanding corporate defaults. In a given year, industries experiencing abnormally high VC or IPO activity subsequently see higher default rates, higher segment exits by conglomerates, and higher yields on bonds issued by the firms in these industries. Overall, we find that disruption is a broad phenomenon, negatively affecting incumbent firms across the spectrum of age, valuation, and levers, with the exception of very large and low‐leverage firms, in line with our central hypothesis. This article is protected by copyright. All rights reserved
Green marketing based on environmentally sound practices, with the aim of generating more sustainable products and services, strengthens the image of companies, differentiating them from other brands in the market. In this context, music events have bet on this proposal to promote themselves. Based on this paradox, the Rock in Rio event, considered the largest music festival in the world, recognized by ISO 20121 certification—sustainable events, promotes and supports social and environmental awareness campaigns. The objective of this research is to present the relevance of green marketing at the tourist event Rock in Rio. The results show a strong relationship between the information available on social networks (i.e., digital environment) about green marketing and the behavior change of organizers of the Rock in Rio event (in a business logic) regarding the adequacy of the event company to the environmental, economic and social sustainability certification policies. From an interdisciplinary perspective, the present manuscript presents inputs in the field of tourism, marketing, events (i.e., sustainable green events) in the context of the largest rock festival in the world. Although the event is consolidated in the calendar of country events, there is a lack of scientific research with more data about the event, which brings more originality and value to this research.KeywordsSegmentationGreen marketingFestival tourismTrends
Platform model is one of the most prominent phenomena in modern business with the development of the Internet and the continuous expansion of the scale of industry 4.0 related industries. Two-sided platforms show features whereby two groups of agents interact with each other, in order to promote resource exchange and value creation. This review presents an integrated framework for understanding key factors of platform ecosystems, analyzing its member structure and technology architecture, exploring the dynamic mechanism and competition mechanism. Platform ecosystems refer to the core platform and its cooperative network of stakeholders, mainly consist of providers, sponsors, complementors and end users. The dynamic mechanism and competition mechanism are mainly in the realization of network effects and “winner-take-all”. These bring some management challenges, the preventive strategies are embodied in platform pricing, positioning, binding, in realization of ecosystem expansion and multi-win situation, to face the “egg-and chicken” syndrome and “get both sides of the market onboard”. Using this foundation, this research finally proposes five directions for future research in these settings, including the influence of platform technology architecture on complement or innovation, profit model of platform companies, environmental factors in platform competition, new challenge of platform envelopment and dynamic research methods, hoping to offer substantial new insights in the context of platforms and ecosystems.
Environmental regulations force car manufacturers to renew the powertrain technology portfolio offered to the customer to comply with greenhouse gas (GHG) emission targets. In turn, automotive companies face the task of identifying the “right” powertrain technology portfolio consisting of, for example, internal combustion engines and electric vehicles, because the selection of a particular powertrain technology portfolio affects different company targets simultaneously. What makes this decision even more challenging is that future market shares of the different technologies are uncertain. Our research presents a new decision‐support approach for assembling optimal powertrain technology portfolios while making decision‐makers aware of the trade‐offs between the achievable profit, the achievable market share, the market share risk, and the GHG emissions generated by the selected vehicle fleet. The proposed approach combines “a posteriori” decision‐making with multi‐objective optimization. In an application case, we feed the outlooks of selected market studies into the proposed decision‐support system. The result is a visualization and analysis of the current real‐world decision‐making problem faced by many automotive companies. Our findings indicate that for the proposed GHG restriction at work in 2030 in the European Union, no optimal powertrain technology portfolio with less than 35% of vehicles equipped with an electric motor exists.
Increasing the adoption of Information Technology (IT) is one potential means for strengthening national economies through enhancing productivity; there is a need for theoretical models to assist the development of national strategies to achieve this end. Theories for adoption models at the entity and the firm level used in Information Systems (IS) literature are discussed in this chapter. A detailed study of the major theories was undertaken along with reviews that compare more than one theory. Independent and dependent variables and the empirical literature are considered in this analysis. Full Text Preview Introduction Innovation is a significant business challenge (Hamel 2002), it is seen as increasingly essential for growth and viability (Tidd 2001) yet is a challenge for companies to know what is necessary for successful innovation (Christensen 2003). An innovation adoption is ‘the generation, development, and adaptation of novel ideas on the part of the firm’ (Damanpour 1991; Higgins 1995), either as an anticipatory act to control the environment, or as a response to the environment. It can completely change the nature of an organization (Damanpour 1996) and from an IS perspective can involve new practice or operational idea (Annukka 2008; Lind & Zmud 1991). IT can affect firm productivity (Caldeira & Ward 2003; Oliveira & Martins 2011) and new technologies are developing constantly (Wang et al. 2011; Shiels, 2003; Alam & Noor, 2009). This chapter explores theories of industrial innovation and the diffusion of innovation literature: • Theories of Industrial Innovation: This includes innovations, fresh thoughts and artefacts, plans, behaviour, or impacts of artefacts that are fresh for the industry or the public (Abernathy & Clark 1985; Christensen 1992a, 1992b). • The Diffusion of Innovation Literature: This area of research is focused on applied diffusion of innovation theory (Rogers 1990) including the reasons and progressions that can reveal the results of adoption (Fichman 1992; Lyytinen & Damsgaard 2001; Prescott & Conger 1995). Categorization of the point of innovation can be done into two classes. Firstly, service alterations in the method of manufacturing and distributing products while secondly as new things (products and services) themselves (Johne 1999). Systematization, dealings, administration technique and business models can be types of innovation (Slappendel 1996; Paap & Katz 2004). These different types of innovation relate primarily to process innovation. Innovation can be distinguished by aggregation level. Innovation can take place at many different levels such as an individual level (improvement), at functional level (process improvement or adaptation), at company level as an entire value chain (product and service innovation, new business models), and at industry level (technology breakthroughs) as systems of innovation (Edquist 1997). The adoption and implementation of new innovations is explored in the study of the diffusion of innovations (Rogers 2003) which draws on sociology and psychology (AlQaisi 2009). Challenges are associated with the implementation of new technologies as reflected in IT/IS innovation adoption studies (Jeyaraj et al. 2006; Korpelainen 2011). Continue Reading
Distance education has been the topic of a substantial amount of research. However, prior studies have shown mixed results when trying to determine if a difference exists in student satisfaction between students in distance courses versus traditional courses. Prior empirical studies have been too narrow in scope, and a more comprehensive model is needed to better explain the factors influencing student satisfaction. Therefore, the current study includes student demographic factors, comprehensive measures of student motivation, and course format, as well as specific course features included, to fully explain student satisfaction. Structural equation modeling is used to test the model. Results indicate a positive association between demographics and motivation, between motivation and course format, between one demographic factor and course format, between course format and preferred features, between course format and satisfaction, and between course features and satisfaction.
We test theories of product differentiation and firm capabilities using data from the U.S. automobile industry. We find managers introduce new models close to their existing ones but far from rival models. We also find entrants and foreign manufacturers locate models closer to rival models. These results are consistent with both economic models of product differentiation and theories of firm capabilities Copyright © 2000 John Wiley & Sons, Ltd.
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