Research Report: Disruptive Technologies--Explaining Entry in Next Generation Information Technology Markets.

Author List: Nault, Barrie R.; Vandenbosch, Mark B.;
Information Systems Research, 2000, Volume 11, Issue 3, Page 304.
The most difficult challenge facing a market leader is maintaining its leading position. This is especially true in information technology and telecommunications industries, where multiple product generations and rapid technological evolution continually test the ability of the incumbent to stay ahead of potential entrants. In these industries, an incumbent often protects its position by launching prematurely to retain its leadership. Entry, however, happens relatively frequently. We identify conditions under which an entrant will launch a next generation product thereby preventing the incumbent from employing a protection strategy. We define a capabilities advantage as the ability to develop and launch a next generation product at a lower cost than a competitor, and a product with a greater market response is one with greater profit flows. Using these definitions, we find that an incumbent with a capabilities advantage in one next generation product can be overtaken by an entrant with a capabilities advantage in another next generation product only if the entrant's capabilities advantage is in a disruptive technology that yields a product with a greater market response. This can occur even though both next generation products are available to both firms. We also show that the competition may require the launching firm to lose money at the margin on the next generation product.
Keywords: Competitive Strategy; Defensive Strategy; Disruptive Technology; Game Theory; Product Research
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#242 0.306 market competition competitive network markets firms products competing competitor differentiation advantage competitors presence dominant structure share using incumbent make important
#98 0.179 platform platforms dynamics ecosystem greater generation open ecosystems evolution two-sided technologies investigate generations migration services implications interplay disruptive control markets
#89 0.137 product products quality used characteristics examines role provide goods customization provides offer core sell key potential stronger insights design initial
#59 0.086 capabilities capability firm firms performance resources business information technology firm's resource-based competitive it-enabled view study value infrastructure results organizational model
#219 0.068 response responses different survey questions results research activities respond benefits certain leads two-stage interactions study address respondents question directly categories
#123 0.064 information strategy strategic technology management systems competitive executives role cio chief senior executive cios sis support organization officer position ceos
#252 0.056 management practices technology information organizations organizational steering role fashion effective survey companies firms set planning focus committees executives managing committee
#125 0.050 framework model used conceptual proposed given particular general concept frameworks literature developed develop providing paper developing guidelines concepts appropriate set