Abstract
New disruptive technologies invalidate the traditional competition dimension in continuous innovation and reconstruct the competitive landscape. These technologies leave a management gap in the adoption of new technologies by competing companies. Accordingly, this research establishes a duopoly game model based on horizontal and vertical differentiations for technology competition problems with asymmetric features. Competition between firms and technologies are investigated simultaneously. We find that a profit increase from new technologies is typically eliminated by the increased technology competition. Thus, firms with competitive advantages in the old market might be late in adopting new technologies, and the competition will further delay the adoption process. We then introduce a preemption strategy for adopting disruptive technologies, and test it in both current established competition and threat competition from the entrants. Results show that leading companies might hesitate in deterring new entrants for fear of losing the leadership in the current competition. Finally, we provide a time strategy that can help the market leader maintain a leadership position with minimal losses. Our research has contributed to the studies of both the interpretation of the “innovator’s dilemma” and the direction of technology adoption research under multi-dimensional technologies and multiple competitors.
Highlights
Technological changes are critically important to firms because they can render the intellectual capital of incumbents obsolete and create exploding demand in the market [22]
For the firms’ competition, specially, we differentiate two types of competitors, namely, the incumbent competitor(s) in the old market and the entrant competitor(s) entering the market with only the new technology. With this conjoint framework we find that there are two key factors that affect the delay in adoption of disruptive technologies for market leaders: the first one is that the technological competition will reduce market leaders’ alertness to the competitors’ entry; and the other one is that the increased firm competition eliminates the profits facilitated by the new disruptive technology
We find that when considering both incumbent competitors and the threat of entrants, market leaders will encounter a kind of decision-making dilemma when adopting disruptive technologies, that is to defend the underlying threat would lose to the incumbent competitor
Summary
Technological changes are critically important to firms because they can render the intellectual capital of incumbents obsolete and create exploding demand in the market [22]. The adoption of the new disruptive technology has quickly become a hot topic in the business world in the 21st century since the emergence of disruptive innovations [60]. That we have all disruptive technologies suddenly converging – IoT, robotics, self-driving cars, AI, 3D printers, VR and blockchains. Only 30% companies might survive in the disruptive technologies transformation as shown by the Boston Consulting Group’s latest report [12]. Over the past 20 years, we have known much about how to identify the shifts of disruption and the dangers they pose to existing businesses [50]. The timing of disruptive technological change remain unsolved
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