Demystifying the Dynamic of Disruptive Innovations in Markets with Complex Adoption Networks: From Encroachment to Disruption

Abstract

Since it was coined by Christensen [The Innovator's Dilemma: When New Technology Cause Great Firms to Fail. Harward Business, Boston, MA], disruptive innovation (DI) has been discussed by many scholars. Although it is not a crude concept anymore, many contrary criticisms and notions around this topic may necessitate further studies about the dynamics of DI diffusion. Furthermore, since the creation of DI is the matter of diffusion rather than the emergence of innovation, this research tends to concentrate on the process of innovation diffusion within a complex network of adopters such as in the medical markets. To aid in understanding the dynamics of DI diffusion from market encroachment phase to post-disruption era, this paper conducts a longitudinal case study of Iranian medical devices markets between 2000 and 2010. Medical markets are the subject of more investigation due to the complexity of adopters' network. This complexity arises since customers and consumers are not the same in this market and the role of key decision-makers are interchangeable in different segments to adopt new medical innovations. Therefore, 30 in-depth elite interviews have been conducted with the key decision-makers to launch new innovations in the four main incumbents of Iranian medical devices market during the mentioned time span. These include Cordis, Abbott Laboratories, Medtronic, and Boston Scientific. The findings suggest that DI diffusion acceleration would not guarantee an efficient market disruption. They also state the importance of information management during and after the encroachment phase to increase the knowledge of new innovation throughout the mainstream market. Finally, attack of the followers during the encroachment phase and their reinforcing effects on the position of the market leader is discussed. The main contribution of this paper is its attempt in demystifying the dynamics of DI diffusion in markets with a complex network of adopters such as the medical devices markets. In fact this paper would elucidate the main mechanisms which contribute to a potential DI to pass the encroachment phase and disrupt the mainstream market substantially. This paper is inclined to persuade further studies on DI diffusion through complex networks of adopters and spur debates by other scholars.