Working Paper: NBER ID: w19764
Authors: Matt Marx; Joshua S. Gans; David H. Hsu
Abstract: When startup innovation involves a potentially disruptive technology - initially lagging in the predominant performance metric, but with a potentially favorable trajectory of improvement - incumbents may be wary of engaging in cooperative commercialization with the startup. While the prevailing theory of disruptive innovation suggests that this will lead to (exclusively) competitive commercialization and the eventual replacement of incumbents, we consider a dynamic strategy involving product market entry before switching to a cooperative commercialization strategy. Empirical evidence from the automated speech recognition industry from 1952-2010 confirms the main prediction of the model.
Keywords: Disruptive Technologies; Commercialization Strategies; Speech Recognition; Entrepreneurship
JEL Codes: O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| disruptive technologies (O33) | initial competition (L13) |
| initial competition (L13) | cooperative strategy (C71) |
| disruptive technologies (O33) | commercialization strategy (L17) |
| initial competitive strategy (L13) | establish technology's value (O30) |
| initially poor performance (D29) | reluctance to engage in cooperation (D74) |
| characteristics of disruptive technology (O33) | dynamics of commercialization strategies (L14) |
| disruptive technologies (O33) | integration into the market (F15) |