Study Of New Entrants’ Business Model Innovation Based On Disruptive Innovation Theory

It remains a critical problem for new entrants to find the right way toachieve development and surpass the incumbents by taking oninnovations. Successful innovation of business model can allowenterprises to keep several years’ competition advantage, or even endowsthem with industry dominance. Based on the theory of disruptiveinnovation, the paper conducts deep and systematic research on newentrants’ business model innovation, delivering results quite meaningfulboth in theory and in practice.Through reorganizing the structure of business model, the paperdemonstrates the essence, basic types, actualizing way and revolutionmechanism of business model innovation, and build a relatively completetheory framework. The paper analyzes the merits and demerits in theprocess of carrying out business model disruptive innovation for newentrants, and puts forward a business model innovation framework whichargues that innovation activity should contain six steps, includingrecognizing opportunity, design and plan, beforehand evaluation,selection and implementation, afterward evaluation, development andimprovement. Considering that business model innovation is a dynamic process, the paper also uses game theory to analyze the competitiontactics assumed by new entrants and incumbents. Multiple cases areselected, not only successful stories like Cherry, Zipcar, ING Direct andCtrips are analyzed, failure reasons of PPG are also discussed, and basedon these cases, the paper concludes several common factors sharedamong business models which successfully help enterprises realizedisruptive innovation.