Disruptive Innovation as a Network Dilemma: A Conceptual Model

Abstract

Adoption of innovative products, formats and technologies has long been studied in the management and marketing literature. Organizations that adopt new products and processes in order to stay competitive need to determine which technologies will be the winners rather than passing fads. Extant literature has characterized the innovator’s dilemma for adopting new products from several points of view, from decision makers’ response to niche customers perspective (Christensen, 1997) to a focus on organizational capabilities (Henderson, 2006), while also characterizing the incumbent’s strategic response to disruptive innovation (Christensen et al., 2015). Our paper develops a new conceptual model of innovation adoption in markets with network effects. In particular, we focus on the problem that many current companies face: which (if any) new network will be the winner and how to respond? Our model captures surprising aspects of the disruptive innovation dilemma in networks.