Industry structure and disruptive innovations: the satellite industry

Abstract

In this paper we investigate whether technologies recently introduced on the market can be a threat for existing firms. We use the theory of disruptive innovation and we propose the concept of potential disruptive innovation to assess this threat. Our empirical framework is the satellite industry. We show that the new types of satellites arriving in the industry are potential disruptive innovations. These new technologies represent a low potential threat for existing producers because new types of satellites are an imperfect substitute for existing satellites. In this study, we show that several types of potential disruptive innovations may exist at the same time. By detailing the characteristics of three types of potential disruptive innovations, we attempt to reduce the confusion about what disruptive innovation actually is. This paper also provides some insights for managers to help them assess the threat of new technologies that are potential disruptive innovations.