How Investors Constrain Digital Innovation

HBR Digital, August 21, 2018

4 Pages Posted: 14 Sep 2018

See all articles by Anandhi Bharadwaj

Anandhi Bharadwaj

Emory University - Goizueta Business School

Deepa Mani

Indian School of Business (ISB), Hyderabad

Anand Nandkumar

Indian School of Business (ISB), Hyderabad

Date Written: August 21, 2018

Abstract

Businesses understand the power of digital innovations to reshape industries and markets. Yet, time and again, they have struggled to innovate with new and disruptive technologies. Research by Clayton Christensen and others demonstrate that an incumbent’s failure has little to do with the newness or complexity of the technology. Rather, it is often their acute focus on the needs of the most important customers that places stringent limits on changes that they can and cannot pursue. Our research implicates another important stakeholder, the firm’s investors, who may keep businesses tethered to existing technologies. In theory, investor incentives align with what is good for the firm. In practice, we find important differences.

Keywords: Digital Innovation, Financial Markets, Role of Investors

Suggested Citation

Bharadwaj, Anandhi and Mani, Deepa and Nandkumar, Anand, How Investors Constrain Digital Innovation (August 21, 2018). HBR Digital, August 21, 2018, Available at SSRN: https://ssrn.com/abstract=3241479

Anandhi Bharadwaj (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Deepa Mani

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

Anand Nandkumar

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

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