Research On Mechanism And Path Of Disruptive Innovation In Latecomer Firms

How latecomer firms can achieve leapfrog development successfully and replace the incumbents into a new industry leader was an important proposition of strategic management, but failed to be properly addressed for long time. This paper tries to conduct a systematic study on above problem by using the latest results of disruptive innovation theory.Disruptive innovation is a discontinuous technology innovation or a business model innovation, which was initially allowed to enter the non-mainstream market by introducing new value to new customers or to the low-end customers. With performance improvement, it will gradually spread to the mainstream market, occupy greater market share, and eventually become the new dominant technology. Disruptive innovation changed the old rules of the competition, undermined the incumbent's competitive advantage and established a new structure of customer value in an industry. So, it supplied latecomer firms an effective strategic tool for catching up. Research on disruptive innovation has now become hotspot in strategic management, technology economics and other fields, but the overall theoretical framework is not ripe yet, especially lack of research on innovation mechanism and developing path in latecomers, which is unfavorable to guide our business practice. After a roundly literature reviews, the main issues studied in this paper were defined as two questions as: (1) why latecomer firms need to carry out disruptive innovation? (2) How latecomer firms carry out disruptive innovation? From the point of technical evolution and industrial change, using the analysis approach of quantitative and qualitative, this paper combines theory analysis with empirical studies to study above questions. The full text is divided into eight chapters, as follows:Chapter 1: Introduction, it mainly introduces the background, purpose, meaning, research methods, main content and innovation point of this research, building an overall framework of this paper.Chapter 2: Literature reviews, it defined the concept of disruptive innovation and other easily confused concepts, proposed identification methods and indicators to distinguish disruptive innovation from other types of innovations, and analyze the factors affect firms developing disruptive innovation. On this basis, the chapter proposed some path choices for latecomers, and evaluated the shortage of current study. Chapter 3: Formation and evolution mechanism of disruptive innovation, using game theory, technology diffusion theory, case studies this chapter study the evolution dynamic, process and path of disruptive innovation. Beginning with a case study of mechanical excavator industry, this chapter display the intrinsically linkage among disruptive innovation, evolution of market structure and the failure of the incumbent, summed up the characteristics and results of disruptive innovation; Then customer value system was introduced to inspect the power sources of the evolution of disruptive innovation; Afterward, the evolution process of disruptive innovation was described, and interactions of three processes of the customers value system changing, technology development and market structure changing was analyzed. The various stages of evolution were also deeply analyzed. Finally, using improved Fisher-Pry model, diffusion process of disruptive innovation was quantitative studied, and further the heterogeneity of market conditions was taken into consideration to explore the change of a balanced market.Chapter 4: Innovation choices and corrupt reason of incumbent's, this chapter researched the process of innovation and investment decision-making behaviors of incumbents. Firstly, this chapter took a summary of core competent rigidity theory to find out some general reasons explaining incumbents'Failure. Then by scanning innovation process we find that fixed process is a key role leading rigidity. Then, a two-stage input game model was established to analyze the reason of incumbents gave up investment on disruptive innovation when existing competition. Finally the United States steelmaking industry case illustrates the result of inadequate investment on disruptive innovation and some feasible solutions were suggested.Chapter 5: Innovation choice and leapfrog development of latecomer firms, this chapter first compare the effects of sustaining innovation and disruptive innovation on latecomers'leapfrog development, and bring out the hypothesis that disruptive innovation will bring latecomers greater opportunity for leapfrog. Then, the paper mentioned above assumptions. Finally, by empirical approach, we tested the linkage of different strategic models and innovative performance in latecomer firms.Chapter 6: Research on path of disruptive innovation developed in latecomer firms. This chapter considered innovative factors has no direct effect on latecomers'performance, but influence enterprises'innovation capacity and then impact final output. On the basis of review of literature, combining innovative characteristics of latecomers, this chapter established a motive-capacity-performance concept model, and proposed the theoretical hypothesis of latecomer firms develop disruptive innovation and study design.Chapter 7: Empirical study on developing path of disruptive innovation in latecomers, this chapter firstly screen questionnaires and took a descript statistics of effective samples. Then with homogeneity test we ensured the validity samples merge. The results of Cronbach coefficient tests, exploratory factor analysis and confirmatory factor analysis also ensured questionnaires'reliability and validity. Finally, using the structural equation modeling method, the conceptual model was tested and explaned.Chapter 8: Conclusion, the chapter concluded the main contents and puts forward the direction for further studies. Through the mechanism research of disruptive innovation the paper found an interesting inherent logic of industry development: affected by consumers value systems development and new technology impetus, disruptive innovation will determines development trend of an industry and become the new industry standard by replacing the existing technology. Firm early adopting innovation will take a favorable strategic position. The characteristics of disruptive innovation and the innovative investment decision-making processes of incumbent's determine incumbent firms often will not become innovative users. At this time, if latecomers can seize the opportunity brought by disruptive innovation, they will fulfill leapfrog development. Disruptive innovation opens a window of opportunity for latecomers to achieve rapid growth in different technology trajectory. Empirical data also confirm this conclusion. It point out China's firms to a new path of development.In recent years, catching up with advanced international level has become solicitous aim of Chinese government and enterprises. How can China's firms change the developing model from technology follower relying on cheap labor cost to industry leader guiding future trend? This study shows that relying solely on technology imports, will be bundled with the maintenance innovation trajectory, making China's firms never exceed the leading companies abroad who grasp the core technology know-how. Furthermore, the blind pursuit of high-technology and expecting to surpass foreign firms by additional products features is not conforming to China's national development strategy. Disruptive innovation theory tell us, for products and services diminishing marginal utility and the growing homogenization, the marginal product profits will be fewer with more "excessive" innovation.Therefore, disruptive innovation is the fundamental way for us to fulfill the strategic restructuring and leapfrog development. Chinese firms'advantages in the future depend on our huge potential non-consumer market. By introducing disruptive innovative, reasonable cutting "excessive" function satisfy customer actual demand and supply consumers their requisite products and services with the lowest cost to release latent purchasing power, Chinese enterprises will take a long-term prosperity.The conclusions of this paper can be more favorable to firms to understand the relationship of innovation and growth from a deeper perspective, and examine it on a broader background in which industry evolve. Compared with the predecessors'study of disruptive innovation theory and latecomer firm growth, the contribution and innovation of this paper mainly show in three aspects:(1) This paper summary and integrate disruptive innovation theory into a complete conceptual framework. Based on it, the mechanism of disruptive was expanding Studied by game theory, statistical analysis and structural equation modeling methods which enrich theoretical contents and research methods. The current study on disruptive innovation spreading in technology management, corporate strategy, industrial development and other fields, has not formed a unified framework and it lead inconvenience in further study. First of all, the paper took a detailed literature review. On the basis of predecessors'work, we redefined the concept of disruptive innovation and distinguish it other similar concepts. Then we identify the factors impact innovation performance. On this basis, the dynamic, evolving process and path of disruptive innovation was deeply researched. This paper use many research methods such as game theory, mathematical statistics, field investigations, structural equation modeling et al expand research content and enrich the theoretical tools.(2) From the two levels of industry's evolution and enterprise's option this paper firstly interprets the mechanism of disruptive innovation to latecomer firms'leapfrog development, point out a new strategic path to achieve growth, proposed and verified strategic initiatives for latecomers to develop disruptive innovation, which expand the application of theory. Earlier, latecomers development strategy has not been systematic studied and not been widely recognized. Many studies attributed latecomers'success to some fortuitous factors or individual characteristics. While this paper confirmed that latecomer firms'development and success has its natural inherent logic. Disruptive innovation can bring latecomers continuous growth with smaller costs, and ultimately defeat the powerful incumbent firms. This made for the latecomers a possible new road. Empirical results showed that the firms adopt disruptive innovation have generally higher performance than ones used sustaining innovative. (3) This paper reveals the internal mechanism developing disruptive innovation in latecomer firms. The model of "Factors - capacity-performance" framework helps us identify the key path to success of innovation. Survey and structural equations modeling certify that the technology opportunity capability, knowledge creating capability and resources integrate capability significantly affected disruptive innovation performance and the three types of capabilities influenced by entrepreneurial spirit , supervisor's support, organizational knowledge sharing, system of incentives and social capital. By survey, we research more than 200 latecomers, and found there existing seven critical paths through which can enhance firms'performance obviously. The discovery can be used to guide latecomer growth and manage their R & D work, to, as well as provide a reference for follow-up study.