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Disruptive innovation: Incumbent’s response to innovation threat

Author

Listed:
  • Marcin Penconek

    (University of Warsaw, Faculty of Psychology)

  • Stefano Pagliarani

    (University of Warsaw, Faculty of Economic Sciences)

Abstract

The theory of disruptive innovation has gained significant interest from the academic and business communities, investigating the reasons for inadequate or delayed responses of incumbents to innovation which challenges their established markets. Inadequate responses were explained by the concept of innovator’s dilemma, which postulates how incumbents tend to satisfy their consumers on the established markets, while overlooking opportunities with other consumers. However, the optimal incumbents’ response to disruptive innovation in the normative sense has not been researched. We investigate the choice of the payoff-maximizing strategy in response to the observed market disruption as a choice between different management approaches. Our study shows the importance of the speed of innovation adoption for the choice of the optimal response to innovation. We also show that the response can be delayed in some cases, reflecting the exploitation-exploration dilemma. This new insight complements the reasons of delayed response to disruptive innovation threats.

Suggested Citation

  • Marcin Penconek & Stefano Pagliarani, 2025. "Disruptive innovation: Incumbent’s response to innovation threat," Working Papers 2025-04, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2025-04
    as

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    File URL: https://www.wne.uw.edu.pl/download_file/5266/0
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    References listed on IDEAS

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    More about this item

    Keywords

    Innovation; Incumbent; Management strategy;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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