MAN MMA026-2023-2-V
All mandatory papers for the exam
,Tripsas (1997): Unraveling the process of creative
destruction: complementary assets and incumbent
survival in the typesetter industry.
Introduction
This paper explores the question: Why do incumbents’ firms sometimes fail drastically in the
face of radical technological change, yet other times survive and prosper? To answer this
question, Tripsas analyzed the technological and competitive history of the global typesetter
industry for a period of over 100 years. During that time, the industry has undergone 3
waves of ‘creative destruction’ where competence destroying, and architectural technological
change transformed the industry. By exploring the dynamics of these shifts in depth, this
paper helps unravel this process of creative destruction.
In literature there are two contrasting perspectives on the process of creative destruction:
1. It is an ongoing cycle of relatively fluid industries where new entrants innovate with
technologically superior products and displace incumbent firms (Schumpeter, 1934).
2. Established firms have advantages over new entrants, because they possess critical
specialized complementary assets (Schumpeter, 1950).
This paper uses both 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; 3. The ability to
appropriate the benefits of technological innovation through specialized complementary
assets.
Synthesis
The expected outcome in terms of ultimate commercial performance depends upon the
balance and interaction among these three factors. For example, when incumbents choose
not to invest in new technology, the new entrants that do make that investment will dominate
the market for new technology. Or, when neither incumbents nor new entrants already
possess specialized complementary assets, then it’s unclear which firms will dominate.
The typesetter industry
Typesetting is the process of arranging text as input to the printing process. Typesetter
machines perform three functions: text input, text formatting, and text output. Customers for
typesetter machines include newspapers, commercial printers et cetera.
Technological change in the typesetter industry
Three generations of radical technological change in the typesetter industry can be
distinguished: analog phototypesetting (1949), digital CRT phototypesetting (1965), and
laser image setting (1976). All three new generations of technology should have created an
incentive for incumbents to invest.
,● The effect of each generation on investment incentives was incremental in the economic
sense. The old generation of technology continued to compete with the new generation.
Entrants were therefore not able to monopoly price.
● The effect of each generation on technological competence All three generations were
competence-destructing, making the technological skills and routines of incumbents
obsolete. The counts for both changes in development team skill base and architectural
changes.
● The effect of each generation on specialized complementary assets Three salient
complementary assets in the typesetter industry were distinguished: specialized
manufacturing capability, a sales and service network, and a front library. Only a good font
library was resistant to the three technological changes and provided the company a
competitive advantage. Specialized manufacturing capability was focuses on a generation
and therefore gave no advantage in the long-run, the sales and service network was less
important as clients began to buy typesetter machines for their offices.
Creative Destruction in the typesetter industry
● Investment behaviour or new entrants and incumbents Almost every firm that established
presence in a typesetter generation invested in developing a machine for the following
generations. Incumbents invested earlier than new entrants.
● Technical performance of incumbents vs. new entrants Incumbents based their
development of new generations’ machines on their established, efficient routines in the
architecture of the prior generation, but were significantly slower than those of new entrants.
There’s limited evidence that incumbents did not catch up technologically with new entrants.
● Appropriability and specialized complementary assets When an incumbent’s technological
competence is destroyed, but the incumbent still controls valuable specialized
complementary assets, it should be able to protect its competitive position. Similarly, new
entrants that possess specialized complementary assets should have an advantage over
those that do not.
The role of specialized complementary assets
When new technology was competencedestroying, but the value of incumbent specialized
complementary assets was preserved (the CRT and laser generations), then incumbents
maintained a strong market presence.
Conclusion
Tripsas examines the technological and competitive history of the typesetter industry from
1886 to 1990. The typesetter industry has undergone three waves of creative destruction,
where competence destroying technological change has shaken the industry. She finds that
the incumbents firms’ innovations, despite timely investments, are handicapped by their
previous business and that new firms in the market introduce innovations which are superior
,to those of established firms. But, they did not necessarily suffer commercial consequences
as a result of their inferior technological positions. The article highlights the importance of
considering multiple perspectives when examining the competitive implications of
technological change.
,Hillebrand, Kemp & Nijssen (2011): Customer
orientation and future market focus in NSD
Summary
Being close to existing customers (customer orientation) has a positive effect on firm
innovation and competitive advantage. From being close to customers, firms can easily
understand them and acquire feedback. This paper argues that a focus on customer
orientation results in a decrease of radical innovations developed by the firm
(innovativeness) because they miss new trends and technologies. Next to customer
orientation, they should keep an eye on future customers (future market focus) and market
developments to deal with this issue. Central in this study is the mediator ‘inertia’, that is how
willing the firm is to cannibalize sales routines and investments.
Key concepts
● Firm innovativeness: The degree to which a firm develops and introduces innovative new
products and services on a regular basis.
● Inertia: Lack of willingness to cannibalize sales, routines and prior investments (reluctance
to change).
● Customer orientation: The degree to which a firm believes it should try to understand and
satisfy current customers’ needs and wants.
● Future market focus: A firm’s predisposition of openness to new market trends and
business models.
Aim
This paper investigates the effects of customer orientation and future market focus, through
inertia, on firm innovativeness. The context is B2B small and medium sized enterprises
involved in new service development.
Relevance
● Contributes to the existing debate around the trade-off between being ‘market-led’ and
‘driving the market’.
● This study focuses on the service innovation literature, where most research discusses
product innovation. The service sector also tends to use co-creation techniques more often
in the development of new services, making this research especially relevant.
● Addition to the literature of customer and market orientation of SMEs. SMEs are more
biased towards current customers than other types of companies.
Results
The baseline model is supported (from previous literature) except for willingness to
cannibalize sales on firm innovativeness, this could be because new service development is
not concerned with the replacement of existing services and thus sales. The baseline model
indicates that firm innovativeness is the result of both R&D capital and a firm’s ability to
overcome inertia.
,Customer-orientation: The negative effect of customer orientation on willingness to
cannibalize sales and investments is supported but not on routines (H1b not supported).
This means that customer-oriented companies are less willing to cannibalize sales and prior
investments, decreasing their innovativeness. A possible explanation for H1b is that firms
with a high customer orientation may be less reluctant to change their routines when a
change in routines does not directly affect the current customer’s way of working or
interacting with the firm.
Future market focus: All hypotheses are supported, this confirms that future market focus
helps a service SME to overcome the inertia to innovate. It allows the firm to remain focused
on both the market and other new business opportunities.
Implications
Customer orientation benefits incremental service improvements whereas radical new
services are stimulated through future market focus. As both radical and incremental new
services are needed for a firm to perform well in the long term, this article suggest that firms
need a mix of a focus on current customers as well as future ones. Top management has an
important role in focusing employee attention on future market developments and
discovering and responding to latent customer needs. This calls for the use of qualitative
market research techniques next to regularly used large surveys.
,Hubert, Marco, Markus Blut, Christian Brock, Ruby
W. Zhang, Vincent Koch, and René Riedl (2019)
The influence of acceptance and adoption drivers
on smart home usage, European Journal of
Marketing, 53(6), 1073-1098.
https://doi.org/10.1108/EJM-12-2016-0794
Abstract
Purpose – This study aims to develop a comprehensive adoption model that combines
constructs from various theories and tests these theories against each other. The study
combines a technology acceptance model, innovation diffusion theory and risk theory. It
develops this model in a smart home applications context.
Design/methodology/approach – The study is based on an online survey consisting of 409
participants, and the data are analyzed using structural equation modeling.
Findings – Each theory provides unique insights into technology acceptance and numerous
constructs are interrelated. Predictors from innovation diffusion and risk theory often display
indirect effects through technology acceptance variables. The study identifies risk perception
as a major inhibitor of use intention, mediated through perceived usefulness. Results reveal
that the most important determinants of use intention are compatibility and usefulness of the
application.
Research limitations/implications – Studies which do not examine different theories together
may not be able to detect the indirect effects of some predictors and could falsely conclude
that these predictors do no matter. The findings emphasize the crucial role of compatibility,
perceived usefulness and various risk facets associated with smart homes.
Introduction
The paper explores the acceptance and adoption process of smart home technologies by
integrating three major theories: Technology Acceptance Model (TAM), Innovation Diffusion
Theory (IDT), and Perceived Risk Theory (PRT). The authors highlight the historical
significance of studying technology adoption and the challenges faced by consumers in
understanding the value propositions of connected devices.
They argue for a comprehensive adoption model, combining TAM's focus on perceived
usefulness and ease of use with IDT's consideration of factors like observability and
trialability, and PRT's role in addressing perceived risk. The justification for integrating these
, theories lies in their complementary nature, offering a more nuanced perspective on
technology acceptance.
The selection of TAM and IDT is justified by their widespread use and their potential to
explain technology adoption well. Additionally, the authors stress the changing context of
information technology and the need to address risk perceptions, making the combination of
these theories particularly relevant.
The study focuses on smart home technologies, emphasizing their complexity and the
potential impact of user perceptions, especially regarding risk. The paper aims to contribute
to the literature by providing a more holistic understanding of the factors influencing
technology acceptance.
In summary, the authors aim to develop a comprehensive adoption model that considers
positive factors (usefulness, compatibility) and negative factors (perceived security risk). The
subsequent sections of the paper will delve into research hypotheses, the conceptual model,
empirical results based on a survey, and implications for theory and practice.
Theoretical background
TAM
The Technology Acceptance Model (TAM), introduced by Davis in 1989, is a widely used
framework for predicting and explaining users' acceptance of technology. Rooted in the
beliefs of Perceived Usefulness (PU) and Perceived Ease of Use (PEOU), TAM focuses on
users' perceptions of how technology enhances performance and the ease of its use.
Derived from the theory of reasoned action, TAM has become a foundational model in
information systems research, applied across various contexts. Meta-analyses confirm its
reliability in predicting technology acceptance, making it a prevalent tool for assessing user
perceptions of technology innovation and acceptance likelihood.
IDT
Innovation Diffusion Theory (IDT) focuses exclusively on technology-related determinants,
unlike demographic and psychographic factors. It elucidates the entire innovation diffusion
process, from development to shaping user attitudes and final adoption or rejection
decisions. According to Rogers, the procedural sequence of innovation diffusion involves
communication through social channels, and the rate of diffusion is contingent on the rate of
adoption within a social system.
Rogers identifies five crucial attributes influencing the rate of adoption: relative advantage,
complexity, compatibility (CO), trialability (TRI), and observability. Observability, as discussed
by Moore and Benbasat, encompasses visibility and perceived result demonstrability. This
dimension has been substantiated by empirical evidence from various authors, including
Holak and Lehmann and Shih, indicating its impact on the diffusion process.
Perceived risk theory
Individuals often perceive significant risks during decision-making, as noted by Holak and
Lehmann (1990). In information system research and consumer behavior, Perceived Risk
(PR) emerges as a key factor influencing the adoption of technical innovations. PR, defined
