IDEAS home Printed from https://ideas.repec.org/a/eee/anture/v80y2020ics0160738319301756.html
   My bibliography  Save this article

Disruptive innovation, innovation adoption and incumbent market value: The case of Airbnb

Author

Listed:
  • Zach, Florian J.
  • Nicolau, Juan L.
  • Sharma, Abhinav

Abstract

The purpose of this article is to analyze the market value impact of actions taken in response to disruptive innovation; specifically, actions that incumbent lodging firms implement to adopt the innovation of peer-to-peer trading-based accommodation rental. As incumbent firms need to device strategies to accommodate the disruption stemming from a new entrant with a disruptive business model, we analyze the differentiated efforts of four incumbent lodging firms to compete with the peer-to-peer lodging firm Airbnb. This study is the first to quantify the effects of innovation on incumbent tourism firms challenged by a disruptive entrant. It finds that adoption speeds, that is first vs. late adoption, make a difference as the former are awarded a significant increase in market value.

Suggested Citation

  • Zach, Florian J. & Nicolau, Juan L. & Sharma, Abhinav, 2020. "Disruptive innovation, innovation adoption and incumbent market value: The case of Airbnb," Annals of Tourism Research, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:anture:v:80:y:2020:i:c:s0160738319301756
    DOI: 10.1016/j.annals.2019.102818
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0160738319301756
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.annals.2019.102818?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Volgger, Michael & Taplin, Ross & Pforr, Christof, 2019. "The evolution of ‘Airbnb-tourism’: Demand-side dynamics around international use of peer-to-peer accommodation in Australia," Annals of Tourism Research, Elsevier, vol. 75(C), pages 322-337.
    2. Nelson, Daniel B, 1991. "Conditional Heteroskedasticity in Asset Returns: A New Approach," Econometrica, Econometric Society, vol. 59(2), pages 347-370, March.
    3. Gopalakrishnan, S. & Damanpour, F., 1997. "A review of innovation research in economics, sociology and technology management," Omega, Elsevier, vol. 25(1), pages 15-28, February.
    4. Schumpeter, Joseph A., 1947. "The Creative Response in Economic History," The Journal of Economic History, Cambridge University Press, vol. 7(2), pages 149-159, November.
    5. Marvin B. Lieberman & David B. Montgomery, 1988. "First‐mover advantages," Strategic Management Journal, Wiley Blackwell, vol. 9(S1), pages 41-58, June.
    6. Richard Jensen, 2003. "Innovative leadership: First-mover advantages in new product adoption," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 97-116, January.
    7. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    8. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
    9. Martínez-Román, Juan A. & Tamayo, Juan A. & Gamero, Javier & Romero, José E., 2015. "Innovativeness and business performances in tourism SMEs," Annals of Tourism Research, Elsevier, vol. 54(C), pages 118-135.
    10. Zhu, Yunxia & Cheng, Mingming & Wang, Jie & Ma, Laikun & Jiang, Ruochen, 2019. "The construction of home feeling by Airbnb guests in the sharing economy: A semantics perspective," Annals of Tourism Research, Elsevier, vol. 75(C), pages 308-321.
    11. Glen L. Urban & Theresa Carter & Steven Gaskin & Zofia Mucha, 1986. "Market Share Rewards to Pioneering Brands: An Empirical Analysis and Strategic Implications," Management Science, INFORMS, vol. 32(6), pages 645-659, June.
    12. Ansari, Shahzad (Shaz) & Krop, Pieter, 2012. "Incumbent performance in the face of a radical innovation: Towards a framework for incumbent challenger dynamics," Research Policy, Elsevier, vol. 41(8), pages 1357-1374.
    13. Souto, Jaime E., 2015. "Business model innovation and business concept innovation as the context of incremental innovation and radical innovation," Tourism Management, Elsevier, vol. 51(C), pages 142-155.
    14. David J. Teece, 2007. "Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1319-1350, December.
    15. Rodríguez, Isabel & Williams, Allan M. & Hall, C. Michael, 2014. "Tourism innovation policy: Implementation and outcomes," Annals of Tourism Research, Elsevier, vol. 49(C), pages 76-93.
    16. Zakoian, Jean-Michel, 1994. "Threshold heteroskedastic models," Journal of Economic Dynamics and Control, Elsevier, vol. 18(5), pages 931-955, September.
    17. Glosten, Lawrence R & Jagannathan, Ravi & Runkle, David E, 1993. "On the Relation between the Expected Value and the Volatility of the Nominal Excess Return on Stocks," Journal of Finance, American Finance Association, vol. 48(5), pages 1779-1801, December.
    18. Chaney, Paul K & Devinney, Timothy M & Winer, Russell S, 1991. "The Impact of New Product Introductions on the Market Value of Firms," The Journal of Business, University of Chicago Press, vol. 64(4), pages 573-610, October.
    19. Mani Subramani & Eric Walden, 2001. "The Impact of E-Commerce Announcements on the Market Value of Firms," Information Systems Research, INFORMS, vol. 12(2), pages 135-154, June.
    20. John E. Ettlie & William P. Bridges & Robert D. O'Keefe, 1984. "Organization Strategy and Structural Differences for Radical Versus Incremental Innovation," Management Science, INFORMS, vol. 30(6), pages 682-695, June.
    21. Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
    22. Ashish Sood & Gerard J. Tellis, 2009. "Do Innovations Really Pay Off? Total Stock Market Returns to Innovation," Marketing Science, INFORMS, vol. 28(3), pages 442-456, 05-06.
    23. Gautam Ahuja & Curba Morris Lampert, 2001. "Entrepreneurship in the large corporation: a longitudinal study of how established firms create breakthrough inventions," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 521-543, June.
    24. Brian L. Dos Santos & Ken Peffers, 1995. "Rewards to Investors in Innovative Information Technology Applications: First Movers and Early Followers in ATMs," Organization Science, INFORMS, vol. 6(3), pages 241-259, June.
    25. Hajibaba, Homa & Dolnicar, Sara, 2017. "Substitutable by peer-to-peer accommodation networks?," Annals of Tourism Research, Elsevier, vol. 66(C), pages 185-188.
    26. Zach, Florian J. & Hill, T.L., 2017. "Network, knowledge and relationship impacts on innovation in tourism destinations," Tourism Management, Elsevier, vol. 62(C), pages 196-207.
    27. Frambach, Ruud T. & Schillewaert, Niels, 2002. "Organizational innovation adoption: a multi-level framework of determinants and opportunities for future research," Journal of Business Research, Elsevier, vol. 55(2), pages 163-176, February.
    28. Bart Hobijn & Boyan Jovanovic, 2001. "The Information-Technology Revolution and the Stock Market: Evidence," American Economic Review, American Economic Association, vol. 91(5), pages 1203-1220, December.
    29. Fudenberg, Drew & Gilbert, Richard & Stiglitz, Joseph & Tirole, Jean, 1983. "Preemption, leapfrogging and competition in patent races," European Economic Review, Elsevier, vol. 22(1), pages 3-31, June.
    30. Karlsson, Logi & Kemperman, Astrid & Dolnicar, Sara, 2017. "May I sleep in your bed? Getting permission to book," Annals of Tourism Research, Elsevier, vol. 62(C), pages 1-12.
    31. Dolnicar, Sara, 2019. "A review of research into paid online peer-to-peer accommodation," Annals of Tourism Research, Elsevier, vol. 75(C), pages 248-264.
    32. Mary Tripsas, 2009. "Technology, Identity, and Inertia Through the Lens of “The Digital Photography Company”," Organization Science, INFORMS, vol. 20(2), pages 441-460, April.
    33. Karafiath, Imre, 1988. "Using Dummy Variables in the Event Methodology," The Financial Review, Eastern Finance Association, vol. 23(3), pages 351-357, August.
    34. Abernathy, William J. & Clark, Kim B., 1985. "Innovation: Mapping the winds of creative destruction," Research Policy, Elsevier, vol. 14(1), pages 3-22, February.
    35. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908, Elsevier.
    36. Richard Blundell & Rachel Griffith & John van Reenen, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(3), pages 529-554.
    37. Grimmer, Louise & Vorobjovas-Pinta, Oskaras & Massey, Maria, 2019. "Regulating, then deregulating Airbnb: The unique case of Tasmania (Australia)," Annals of Tourism Research, Elsevier, vol. 75(C), pages 304-307.
    38. Edwin Mansfield, 1963. "Size of Firm, Market Structure, and Innovation," Journal of Political Economy, University of Chicago Press, vol. 71, pages 556-556.
    39. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sharon Teitler‐Regev & Tchai Tavor, 2023. "The effect of Airbnb announcements on hotel stock prices," Australian Economic Papers, Wiley Blackwell, vol. 62(1), pages 78-100, March.
    2. Benoit, Sabine & Wang, Yonggui & Teng, Lefa & Hampson, Daniel P. & Li, Xia, 2022. "Innovation in the sharing economy: A framework and future research agenda," Journal of Business Research, Elsevier, vol. 149(C), pages 207-216.
    3. Negruţiu Cristian & Onea Alexandra & Bădescu Ruxandra, 2020. "Innovation trends in Romanian logistics providers industry," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 14(1), pages 807-818, July.
    4. Heesun Gha & Min Young Kim & Hyeon Jin Ro & Seungho Choi, 2023. "Importance of CEO Attention in Influencing Incumbent Responses to Disruptive Innovation," Administrative Sciences, MDPI, vol. 13(6), pages 1-20, May.
    5. Ziad Alrawadieh & Zaid Alrawadieh & Gurel Cetin, 2021. "Digital transformation and revenue management: Evidence from the hotel industry," Tourism Economics, , vol. 27(2), pages 328-345, March.
    6. Mario Coccia, 2020. "Cyclical phenomena in technological change," Papers 2010.03168, arXiv.org, revised Oct 2020.
    7. Bianco, Simone & Zach, Florian J. & Liu, Anyu, 2022. "Early and late-stage startup funding in hospitality: Effects on incumbents' market value," Annals of Tourism Research, Elsevier, vol. 95(C).
    8. Nawal Chemma, 2021. "Disruptive innovation in a dynamic environment: a winning strategy? An illustration through the analysis of the yoghurt industry in Algeria," Journal of Innovation and Entrepreneurship, Springer, vol. 10(1), pages 1-19, December.
    9. Zhang, Huihui & Zach, Florian J. & Xiang, Zheng, 2023. "Design standardization by Airbnb multi-unit hosts," Annals of Tourism Research, Elsevier, vol. 98(C).
    10. Sharma, Abhinav & Shin, Hakseung & Santa-María, María Jesús & Nicolau, Juan Luis, 2021. "Hotels' COVID-19 innovation and performance," Annals of Tourism Research, Elsevier, vol. 88(C).
    11. Youssef, Mayada Abd El-Aziz & Eid, Riyad & Agag, Gomaa, 2022. "Cross-national differences in big data analytics adoption in the retail industry," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    12. Nicolau, Juan Luis & Sharma, Abhinav, 2022. "A review of research into drivers of firm value through event studies in tourism and hospitality: Launching the Annals of Tourism Research curated collection on drivers of firm value through event stu," Annals of Tourism Research, Elsevier, vol. 95(C).
    13. Lijie Feng & Guo Qin & Jinfeng Wang & Ke Zhang, 2022. "Disruptive Innovation Path of Start-Ups in the Digital Context: The Perspective of Dynamic Capabilities," Sustainability, MDPI, vol. 14(19), pages 1-18, October.
    14. Minhaz Farid Ahmed & Mazlin Bin Mokhtar & Chen Kim Lim & Anthony Wong Kim Hooi & Khai Ern Lee, 2021. "Leadership Roles for Sustainable Development: The Case of a Malaysian Green Hotel," Sustainability, MDPI, vol. 13(18), pages 1-26, September.
    15. Haftor, Darek. M. & Climent Costa, Ricardo, 2023. "Five dimensions of business model innovation: A multi-case exploration of industrial incumbent firm’s business model transformations," Journal of Business Research, Elsevier, vol. 154(C).
    16. Zach, Florian J. & Schnitzer, Martin & Falk, Martin, 2021. "Product diversification and isomorphism: The case of ski resorts and “me-too” innovation," Annals of Tourism Research, Elsevier, vol. 90(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicolau, Juan Luis & Sharma, Abhinav, 2022. "A review of research into drivers of firm value through event studies in tourism and hospitality: Launching the Annals of Tourism Research curated collection on drivers of firm value through event stu," Annals of Tourism Research, Elsevier, vol. 95(C).
    2. Nicolau, Juan L., 2011. "The decision to raise firm value through a sports-business exchange: How much are Real Madrid's goals worth to its president's company's goals?," European Journal of Operational Research, Elsevier, vol. 215(1), pages 281-288, November.
    3. Altaf Muhammad & Zhang Shuguang, 2015. "Impact Of Structural Shifts on Variance Persistence in Asymmetric Garch Models: Evidence From Emerging Asian and European Markets," Romanian Statistical Review, Romanian Statistical Review, vol. 63(1), pages 57-70, March.
    4. Theodore Panagiotidis, 2010. "Market efficiency and the Euro: the case of the Athens stock exchange," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 37(3), pages 237-251, July.
    5. Ender Su & John Bilson, 2011. "Trading asymmetric trend and volatility by leverage trend GARCH in Taiwan stock index," Applied Economics, Taylor & Francis Journals, vol. 43(26), pages 3891-3905.
    6. Catania, Leopoldo & Proietti, Tommaso, 2020. "Forecasting volatility with time-varying leverage and volatility of volatility effects," International Journal of Forecasting, Elsevier, vol. 36(4), pages 1301-1317.
    7. Luc Bauwens & Sébastien Laurent & Jeroen V. K. Rombouts, 2006. "Multivariate GARCH models: a survey," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(1), pages 79-109, January.
    8. Nicolau, Juan L., 2012. "The effect of winning the 2010 FIFA World Cup on the tourism market value: The Spanish case," Omega, Elsevier, vol. 40(5), pages 503-510.
    9. Issler, João Victor, 1999. "Estimating and forecasting the volatility of Brazilian finance series using arch models (Preliminary Version)," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 347, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    10. Turan Bali & Panayiotis Theodossiou, 2007. "A conditional-SGT-VaR approach with alternative GARCH models," Annals of Operations Research, Springer, vol. 151(1), pages 241-267, April.
    11. Výrost, Tomáš & Baumöhl, Eduard, 2009. "Asymmetric GARCH and the financial crisis: a preliminary study," MPRA Paper 27939, University Library of Munich, Germany.
    12. Muhammad Sheraz & Imran Nasir, 2021. "Information-Theoretic Measures and Modeling Stock Market Volatility: A Comparative Approach," Risks, MDPI, vol. 9(5), pages 1-20, May.
    13. Geon Choe & Kyungsub Lee, 2014. "Conditional correlation in asset return and GARCH intensity model," AStA Advances in Statistical Analysis, Springer;German Statistical Society, vol. 98(3), pages 197-224, July.
    14. Nikolaos A. Kyriazis, 2021. "A Survey on Volatility Fluctuations in the Decentralized Cryptocurrency Financial Assets," JRFM, MDPI, vol. 14(7), pages 1-46, June.
    15. da Silva, Carlos Alberto & Ferreira, Leo da, 2015. "Asymmetric Volatility Modeling of Spot Prices of Arabic Coffee in Brazil," 2015 Conference, August 9-14, 2015, Milan, Italy 211556, International Association of Agricultural Economists.
    16. Khim-Sen Liew & Kian-Ping Lim & Chee-Keong Choong, 2003. "On The Forecastability Of Asean-5 Stock Markets Returns Using Time Series Models," Finance 0307012, University Library of Munich, Germany.
    17. Köksal, Bülent, 2009. "A Comparison of Conditional Volatility Estimators for the ISE National 100 Index Returns," MPRA Paper 30510, University Library of Munich, Germany.
    18. Li, Gang & Li, Yong, 2015. "Forecasting copper futures volatility under model uncertainty," Resources Policy, Elsevier, vol. 46(P2), pages 167-176.
    19. Brümmer, Bernhard, 2021. "Preisvolatilität auf Agrarmärkten," IAMO Discussion Papers 310089, Institute of Agricultural Development in Transition Economies (IAMO).
    20. Francesco Audrino & Fabio Trojani, 2006. "Estimating and predicting multivariate volatility thresholds in global stock markets," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(3), pages 345-369, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:anture:v:80:y:2020:i:c:s0160738319301756. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/annals-of-tourism-research/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.