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Ratio Working Paper No. 203: Symmetric Assumptions in the Theory of Disruptive Innovation

PublicationWorking paper
Christian Sandström, Disruptiva innovationer, Företagandets villkor, Henrik Berglund, Mats Magnusson

Abstract

The litterature on disruptive innovation has convincingly explained why established firms encounter problems under conditions of discontinuous technological change. Incumbents fail to invest in new technologies that are not demanded by their existing customers. This argument is grounded in resource dependency theory and the associated assumption that existing customers control a firm’s resource allocation processes. The theory of disruptive innovation has described a problem, but there is still a need for managerial solutions. We argue that a key reason why such solutions are lacking can be found in the asymmetric assumptions underpinning the theory. Specifically, we identify two forms of asymmetry. First, the focal (incumbent) firm is treated as a collection of heterogeneous actors with different incentives and competencies, whereas firms in the surrounding environment are treated as if they contained no such heterogeneity. Second, the theory of disruptive innovation describes incumbents as controlled by the r environment, but fails to recognize that firms can also influence their environments. In this paper we argue that these asymmetries have hampered further development of the theory, and that a more symmetric theory – i.e. one that treats all similar entities in the same way – opens up for a range of interesting managerial solutions.

Related content: Symmetric assumptions in the theory of disruptive innovation

Sandström, C., Berglund, H. & Magnusson, M. (2012). Symmetric Assumptions in the Theory of Disruptive Innovation – Theoretical and Managerial Implications. Ratio Working Paper No. 203.

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Ratio Working Paper No. 203: Symmetric Assumptions in the Theory of Disruptive Innovation
Working paperPublication
Sandström, C., Berglund, H. & Magnusson, M.
Publication year

2012

Abstract

The litterature on disruptive innovation has convincingly explained why established firms encounter problems under conditions of discontinuous technological change. Incumbents fail to invest in new technologies that are not demanded by their existing customers. This argument is grounded in resource dependency theory and the associated assumption that existing customers control a firm’s resource allocation processes. The theory of disruptive innovation has described a problem, but there is still a need for managerial solutions. We argue that a key reason why such solutions are lacking can be found in the asymmetric assumptions underpinning the theory. Specifically, we identify two forms of asymmetry. First, the focal (incumbent) firm is treated as a collection of heterogeneous actors with different incentives and competencies, whereas firms in the surrounding environment are treated as if they contained no such heterogeneity. Second, the theory of disruptive innovation describes incumbents as controlled by the r environment, but fails to recognize that firms can also influence their environments. In this paper we argue that these asymmetries have hampered further development of the theory, and that a more symmetric theory – i.e. one that treats all similar entities in the same way – opens up for a range of interesting managerial solutions.

Related content: Symmetric assumptions in the theory of disruptive innovation

Symmetric assumptions in the theory of disruptive innovation
Article (with peer review)Publication
Sandström, C., Berglund, H. & Magnusson, M.
Publication year

2014

Abstract

The literature on disruptive innovation has convincingly explained why many established firms encounter problems under conditions of discontinuous change. Incumbents fail to invest in new technologies that are not demanded by their existing customers. This argument is grounded in resource dependency theory and the associated assumption that existing customers control a firm’s internal resource allocation processes. While the problem of disruptive innovation has been convincingly explained, there is still a need for managerial solutions. We argue that a key reason why such solutions are lacking can be found in the asymmetric assumptions made in the original theory of disruptive innovation. Specifically, we identify two related forms of asymmetry. First, the focal (incumbent) firm is treated as a collection of heterogeneous actors with different preferences, incentives and competencies, whereas firms in the surrounding environment are treated as if they contained no such heterogeneity. Second, the theory of disruptive innovation describes incumbents as controlled by their environment, but has failed to recognize that the environment can also be influenced. In this paper we argue that a more symmetric theory of disruptive innovation – i.e. one that treats all similar entities in the same way – opens up for a range of interesting managerial solutions.

Related content: Working Paper No. 203

Symmetric assumptions in the theory of disruptive innovation
Artikel (med peer review)Publication
Sandström, C., Berglund, H. & Magnusson, M.
Publication year

2014

Abstract

The literature on disruptive innovation has convincingly explained why many established firms encounter problems under conditions of discontinuous change. Incumbents fail to invest in new technologies that are not demanded by their existing customers. This argument is grounded in resource dependency theory and the associated assumption that existing customers control a firm’s internal resource allocation processes. While the problem of disruptive innovation has been convincingly explained, there is still a need for managerial solutions. We argue that a key reason why such solutions are lacking can be found in the asymmetric assumptions made in the original theory of disruptive innovation. Specifically, we identify two related forms of asymmetry. First, the focal (incumbent) firm is treated as a collection of heterogeneous actors with different preferences, incentives and competencies, whereas firms in the surrounding environment are treated as if they contained no such heterogeneity. Second, the theory of disruptive innovation describes incumbents as controlled by their environment, but has failed to recognize that the environment can also be influenced. In this paper we argue that a more symmetric theory of disruptive innovation – i.e. one that treats all similar entities in the same way – opens up for a range of interesting managerial solutions.

Related content: Working Paper No. 203

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