Christensen’s Disruptive Innovation Theory: Origin and Development

Abstract

Disruptive innovation is regarded as the most influential innovation theory in business theory in the early 21st century. Clayton Christensen, the founder of the theory, has attracted extensive attention both in theory and practice since the theory was founded more than 20 years ago. This concept was elaborated and developed in Christensen’s 1997 book, The Innovator’s Dilemma, and in subsequent articles and monographs. Specifically, although disruptive innovation involves a lot of content, its core content needs to meet four basic criteria: (1) locking customers in a new way; (2) usually lowering gross profit; (3) usually not following the traditional trajectory of improving the performance valued by mainstream consumers; (4) introducing new trajectory of performance and improving performance along parameters different from the traditional ones. In addition, the disruptive innovation theory has been also described as the game between two types of enterprises with asymmetric capacity resources. Usually it describes the game between new entrants and incumbents. The weak side must rely on innovation to subvert their strong competitors. The crux of the problem is what the strategies are taken by the weak side. Christensen argues that new entrants must choose a customer base that differs from incumbents and they need new technologies to produce better qualified and lower priced products. If low-end customers are selected, it is the low-end customer disruptive innovation strategy; if potential consumers are selected, it is the new market disruptive innovation strategy, and a disruptive innovation strategy is an effective way to defeat strong competitors. This paper reviews the theory of disruptive innovation, classifies and analyzes the research and practice of disruptive innovation theory in the past more than two decades by means of literature review, and objectively comments on the misunderstanding, modification and development of disruptive innovation. In addition to The Innovator’s Dilemma, Christensen’s other books and papers are also reviewed. The main contributions of this paper can be divided into three aspects: (1) It systematically reviews and analyzes the literature of disruptive innovation in the past more than 20 years, which is of great significance to the theoretical researchers and practitioners of disruptive innovation, particularly in China. (2) It proposes the MSE innovation model and the future direction of disruptive innovation in the digital economy. As for the MSE innovation model, since 2014, Christensen has continually proposed three different theoretical explanations based on disruptive innovation, which are market creating innovation, sustaining innovation and efficiency innovation. (3) It elaborates the problems and prospects of disruptive innovation theory in the context of digital economy. The authors identify four potential directions for disruptive innovation in the digital economy. First, we propose that as digital transformation becoming more important in both developed and emerging economies, the future development of disruptive innovation will be linked to the integration of digital technologies and promote the development of the digital economy. Second, in the digital economy, entrepreneurs do not have enough time to learn new knowledge. In this unstable environment, the ability to make relevant immediate decisions becomes a competitive force, providing new entrants with the opportunity to compete in the market. Third, since both disruptive and breakthrough innovations can be explained by asymmetric theories/models and are developed based on the discontinuous technologies, as a result, they are all facing competition from mainstream markets. In addition, the theory and practice of disruptive innovation are dynamic processes. Fourth, while we cannot deny the value of disruptive innovation, we cannot ignore that it may not have a positive impact on society when it is implemented. Therefore, researchers should increasingly focus on the “positive side” of technology, including disruptive technology, because it is highly correlated with people’s desire for a better society. The future development of this theory can expand its application scope and strengthen its positive role in social economy. Finally, the authors recognize that gaps between the disruptive innovation theory and practice need to be filled by researchers in the future.