Symmetric Assumptions in the Theory of Disruptive Innovation - Theoretical and Managerial Implications

Journal article, 2014

The literature on disruptive innovation has convincingly explained why many established firms encounter problems under conditions of discontinuous change; incumbents fail to invest in new technologies that are not demanded by their existing customers. This argument is grounded in resource dependency theory and the associated assumption that existing customers control a firm’s internal resource allocation processes. While convincingly explaining the problem of disruptive innovation, there is still much to do in terms of developing managerial solutions. We argue that a key reason why such solutions are lacking can be found in the asymmetric theoretical assumptions underpinning the original theory of disruptive innovation; assumptions which constrain on the scope of potential solutions. Specifically, we identify two related forms of asymmetry in the theory of disruptive innovation. First, the focal (incumbent) firm is treated as a collection of heterogeneous actors with different preferences, incentives and competencies, whereas firms in the surrounding environment are treated as if they contained no such heterogeneity. Second, the focal (incumbent) firm is treated as if controlled by the firms in its environment, whereas the focal firm itself is incapable of exerting any such control. In this paper we argue that a more symmetric theory of disruptive innovation - i.e. one that treats all similar entities in the same way - opens up for a range of interesting and fruitful managerial solutions.