Study Of New Entrants' Ability And Strategy Of Disruptive Innovation Based On Path Dependence Theory

Innovation is the inexhaustible force for development, which is also an important method for countries and companies to keep a persistent competitiveness. It is an urgent issue both theoretically and practically for new entrants to make a bigger and stronger business, even surpass the incumbents. With economically globalized trend, it is not so easy for companies to survive in fierce competition. Especially in China, over ninety percent companies are smalled companies. They come across not only domestic companies but also those multinational corporations with rich resources and global vision. It is a huge challenge for Chinese companies to stand out in such an competitive environment. So, this research is based on new entrants'view, which means it is a guideline for Chinese companies.With the rapid innovation in technology and business model, product life cycle become more and more shorten and competition more and more fierce. Any organization will leave a mark on itself after a history, which portrays the path dependence phenomenon. In the field of disruptive innovation, many differences between new entrants and incumbents can attribute to path dependence.On the basis of disruptive innovation theory, this paper also introduced path dependence theory, on one hand , helping understand the disadvantages of incumbents, on the other hand, interpreting that why new entrants have less barriers for innovation, offering new ways for new entrants'disruptive innovation.Moreover, this paper builds an economics model concluding a new entrant and an incumbent, by calculating the output and profit results for each parties under different strategic results. This model proved the necessity for new entrant to realize disruptive innovation from an economics view. Besides this, this paper also constructed an evaluation model on disruptive innovative ability, extending the RPV system. The RPV model gave a more scientific evaluation for companies'disruptive innovation ability. On this basis, this paper offered an fuzzy evaluation model to directly compare each aspects of disruptive innovation abilities between different companies.This paper also applying the multi-case study, select the auto industry and four typical auto companies, including Toyota, BYD Auto, Chery Automobile Company and Geely, applied the evaluation model of disruptive innovative ability, comparing each company's strengths and weaknesses.