Organizational Responses to Discontinuous Innovation: A Case Study Approach

Abstract

Research that examines entrant-incumbent dynamics often points to the organisational limitations that constrain incumbents from successfully pursuing new technologies or fending off new entrants. Some incumbents are nevertheless able to successfully implement organisational structures and develop routines that overcome these institutional constraints. We provide a case-study analysis of how three firms — Motorola, IBM and Kodak — responded to "discontinuous" innovations and the associated structural and organisational limitations that typical to incumbent organisations. Each firm was able to capture gains from new technologies and develop profitable products in emerging markets, although their abilities to sustain these gains varied due to subsequent organisational changes. Drawing from these case studies, we synthesise how firms can institute organisation strategies to continue to capture gains from disruptive innovations. A schema suggests that particular organisation strategies are comparatively optimal for corresponding points along an innovation lifecycle.

Keywords: Architectural/Radical Innovation, Entrant-Incumbant Competition, Managemenet of Technology

JEL Classification: L20, O32