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

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.

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