Effective reactions against disruptive innovations – the case of Japan's electronics industry

Abstract

All companies try hard to expand their business and to attain the number one position in their respective industries. While companies are chasing the market leader, it is not so difficult to decide which strategies to follow because the target is clear. However, once a company has become the leader, it is difficult for the management to come to a consensus on business strategy because no one knows the right direction. So leading companies sometimes make the wrong decision, especially with regards to price competition and new technologies which are less capable than current ones; these are so-called disruptive innovations. Clayton Christensen suggests several responses against disruptive innovations such as to spin off from the current company or to execute merger and acquisition activities. However, it is doubtful whether these countermeasures are culturally suitable for Japanese companies. Therefore, this paper proposes effective countermeasures against disruptive innovations in the Japanese electronics industry.