Summary of the following articles:
• Tripsas, Mary (1997) Unraveling the process of creative destruction: complementary assets and incumbent survival in the typesetter industry, Strategic Management Journal, 18, 119-142.
Hillebrand, Bas, Ron G.M. Kemp, and Edwin J. Nijssen (2011) Customer o...
Marketing & Innovation: articles summarized................................................................................................. 1
Unraveling the Process of Creative Destruction: Complementary Assets and Incumbent .................................. 2
Customer orientation and future market focus in NSD....................................................................................... 5
Marketing’s Limited Role in New Product Development in One computer Systems Firm................................... 7
Success Factors of Product Innovation: An Updated Meta-Analysis................................................................... 8
Dark Side or Bright Light: Destructive and Constructive Deviant Content in Consumer Ideation Contests ........ 9
Consumer research in the early stages of new product development: a critical review of methods and
techniques ........................................................................................................................................................ 11
How Puritan-Bennett Used the House of Quality ............................................................................................. 13
Why co-creation experience matters? Creative experience and its impact on the quantity and quality of
creative contributions. ...................................................................................................................................... 15
Performance Assessment of the Lead User Idea-Generation Process for New Product ................................... 16
Service Blueprinting: A Practical Technique for Service Innovation .................................................................. 17
Pioneer Advantage: Marketing Logic or Marketing Legend? ........................................................................... 19
Escalation of Commitment During New Product Development ........................................................................ 20
Launch Strategy, Launch Tactics, and Demand Outcomes ............................................................................... 22
Sources and Financial Consequences of Radical Innovations: Insights from Pharmaceuticals ......................... 25
Intermediating technologies and multi-group adoption: A comparison of consumer and ............................... 26
Product Innovation Processes in Small Firms: Combining Entrepreneurial Effectuation and ........................... 28
Retaliatory Behavior to New Product Entry ...................................................................................................... 30
A customer perspective on product eliminations: how the removal of products affects .................................. 33
A customer perspective on product eliminations: how the removal of products affects .................................. 35
, Unraveling the Process of Creative Destruction: Complementary Assets and Incumbent
Survival in the Typesetter Industry
Tripsas
The paper argues that the ultimate commercial performance of incumbents vs. entrants is
driven by the balance and interaction of three factors: investment, technical capabilities, and
appropriability through specialized complementary assets. Why do incumbent firms
sometimes fail drastically in the face of radical technological change, yet other times survive
and prosper? This paper explores this question.
This paper sheds light on two perspectives by breaking out three crucial factors that, together,
influence the ultimate commercial performance of incumbents and new entrants: (1)
investment in developing the new technology; (2) technical capabilities; and (3) the ability to
appropriate the benefits of technological innovation through specialized complementary
assets. The balance and interaction among these three factors determine whether
incumbents or new entrants are more successful in the face of competence-destroying
technological change. The paper examines each of these three factors and the interaction
among them. It finds, first, that lack of investment was not responsible for incumbent failure,
incumbents invested significant amounts in the development of each new generation of
technology. However, while incumbents invested in developing new, competence-destroying
technology, the technical performance of the products they developed in each new
generations of technology proved to be significantly inferior to the performance of new
entrant products.
Arrow suggests that when innovation is radical, in the sense that it replaces rather than
competes with the old technology, then incumbent monopolists have less incentive to invest
in the new technology than new entrants. In contrast, when innovation is incremental, then
incumbents have greater incentives than new entrants to invest. An alternative explanation
for incumbent failure to invest in new technology is the argument that established firms fail
to invest in developing radically new technology as a result of firms’ resource allocation
mechanisms. Since resource allocation in established firms is guided by the needs of existing
customers, when radically new technologies are ‘disrupting’ in that they target emerging
markets instead of addressing the needs of existing customers, then established firms quite
rationally focus their research efforts away from the new technology. Last, if new technology
is ‘sustaining’ in that it meets the needs of the existing customer base, then incumbent firms
should rationally invest in the technology.
Technological progress in an industry is generally characterized as passing through long
periods of incremental innovation punctuated by periods of radical change. A technology
develops incrementally along a given ‘technological trajectory’ within a given ‘technological
paradigm’ until it is replaced with a new paradigm – a radical innovation.
Dynamic capability is the capacity of a firm to renew, augment, and adapt its core
competencies over time.
Teece distinguished between generic, specialized, and cospecialized complementary assets.
Whereas generic assets have multiple applications and can be easily contract for, specialized
,and cospecialized assets are useful only in the context of a given innovation. If a firm has
proprietary access to the specialized complementary assets necessary for the commercial
exploitation of an innovation, then that firm has a distinct advantage. Under a regime of weak
IP protection when an innovation can easily spill over to competing firms, complementary
assets become particularly important if a firm is to appropriate the benefits of its innovation.
Value network is the system of producers and markets serving the ultimate user of the
products or services to which a given innovation contributes. They argue that when
technological innovation causes a shift in the value network, then established firms are at a
disadvantage. In contrast, even when new technology is competence-destroying, if the value
network does not change, then established firms are less likely to suffer at the hands of new
entrants.
This paper argues that the expected outcome in terms of ultimate commercial performance
depends upon the balance and interaction among them. If incumbents choose not to invest
in the new technology, then new entrants that make the investment will dominate the market
for the new technology. If incumbents do invest, but their technological performance is
inferior to that of new entrants, then, assuming a regime of weak IP protection, their
commercial performance will depend upon whether the technological shift also devalued the
relevant specialized complementary assets necessary to appropriate the benefits of
innovation. If incumbents possess these assets, and due to their specialized nature, they
cannot be acquired by new entrants, then incumbents are likely to dominate the market even
if their products are technologically inferior. If, however, the technological shift also
decreased the value of these complementary assets, then the incumbents have no buffer from
competition and new entrants should dominate. Finally, if incumbents invest in the
competence-destroying technology and their technological performance is on par or superior
to that of new entrants, the commercial result is still dependent upon who possesses the
necessary specialized complementary assets.
Conclusions
This study contributes to our understanding of creative destruction in two ways. First, it adds
to the limited number of detailed longitudinal industry studies that have attempted to
understand the role of multiple waves of technological change in shaping the competitive
landscape.
Incumbents did not, however, necessarily suffer commercial consequences as a result of their
inferior technological positions. When incumbent firms possessed specialized complementary
assets that retained their value despite the technological shift, these assets were found to
buffer incumbents from the effects of competence destruction. Incumbents only suffered in
the market when both competence was destroyed and the value of specialized
complementary assets was diminished.
In addition to providing support for prior findings, this study takes prior work one step further
by explicitly examining how the balance and interaction among investment, technical
performance, and complementary assets drives commercial performance. By explicitly
distinguishing among the three, this work helps to pinpoint which factors drive ultimate
commercial performance. Additional work on improved ways to measure the effect of shifts
, in technology would still be welcome. In particular, improved measures of competence and
competence destruction are needed. Perhaps the most serious limitation of this paper is its
treatment of incumbents as a class of firms without distinguishing between individual firms
within that class.
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