(Disruptive) innovations and rival firm outcomes

39 Pages Posted: 4 Mar 2020 Last revised: 24 May 2021

Date Written: May 21, 2021

Abstract

We show empirically that disruptive innovations significantly reduce rival firm growth and value in concentrated industries, consistent with the creative destruction hypothesis. Because these innovations make existing technologies obsolete, corporate investments and the amount of external financing to fund these investments also decrease. Disruptive innovations curb market power, thereby CEO compensation and CEO power also decline in affected firms. Overall, we show that disruptive innovation is a fierce force that intensifies competition, disciplines managers of rival firms, and strengthens business dynamism in the USA.

Suggested Citation

Reza, Syed Walid, (Disruptive) innovations and rival firm outcomes (May 21, 2021). Available at SSRN: https://ssrn.com/abstract=3533602 or http://dx.doi.org/10.2139/ssrn.3533602

Syed Walid Reza (Contact Author)

SUNY at Binghamton ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States

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