From creative destruction to creative appropriation: A comprehensive framework

Abstract

This paper introduces a conceptual modification of Schumpeter's concept of creative destruction. Identifying a Kuhnian anomaly in a case of creative destruction in the ‘new economy’, we analyze a case study of the Chinese e-hailing firm DiDi Chuxing to show that this firm used a strategy we term ‘creative appropriation’, whereby a new firm utilizes incumbent firms’ complementary assets but without cooperating with the incumbent, to disrupt a market. This exploitation of complementary assets is based on recombining prevailing technological infrastructure(s) as well as flexible business models that facilitate open innovation. Employing documentary analysis, participant-observation, face-to-face interviews with informants, and a quantitative survey, the study finds that DiDi deployed its e-hailing app to disrupt the taxi market in Xi'an, China (as it did elsewhere in China) as a means of creative destruction, appropriating human-resource-based complementary assets (social and personal reputations, tacit knowledge, and connections) of taxi companies in Xi'an, first to dominate e-hailing in the taxi industry and then to destroy that industry by shifting its focus to private cars.