Disruptive Technology Doesn’t Always Upend Market Leaders

A new paper, “Dynamic Commercialization Strategies for Disruptive Technologies,” finds that disruptive technologies do not always displace established market leaders.

Knowledge@Wharton: “Indeed, the authors discovered that start-ups introducing disruptive technologies with long-term potential are more likely to end up licensing to incumbents or agreeing to be acquired rather than turning into rivals. While these start-ups would initially compete with established firms, the motivation is to prove the worth of their innovation to a skeptical industry that has not seen it before.”

“But once the technology is proven, among other factors, start-ups tend to form alliances or merge with market leaders — pursuing what is called a cooperative commercialization strategy — thus preserving the status quo.”

“The authors chose the automatic speech recognition industry as their test bed because it is a market where neither a cooperative nor competitive strategy dominates. Also, start-ups that choose to enter the ASR market alone will find it relatively feasible because the costs and complexity to do so are not as daunting as those for other industries, such as automotive or biotech.”