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The failure of firms in the face of technological change has been a topic of intense research and debate,
spawning the theory (among others) of disruptive technologies. However, the theory suffers from circular
definitions, inadequate empirical evidence, and lack of a predictive model. Sood & Tellis develop a new schema to address these limitations. The schema generates seven hypotheses and a testable model relating to platform technologies.
The authors test this model and hypotheses with data on 36 technologies from seven markets. Contrary to extant theory,
technologies that adopt a lower attack (“potentially disruptive technologies”) (1) are introduced as frequently
by incumbents as by entrants, (2) are not cheaper than older technologies, and (3) rarely disrupt firms; and (4)
both entrants and lower attacks significantly reduce the hazard of disruption. Moreover, technology disruption is not permanent because of multiple crossings in technology performance and numerous rival technologies coexisting without one disrupting the other. The proposed predictive model of disruption shows good out-of sample predictive accuracy. The authors discuss the implications of these findings.
Research assistants: Esra Kent, Vivek Pundir, and K. L. Dang.