1. Introduction

The term ‘disruptive Innovation’ has gained wide popularity since it was

first introduced by Christensen (Christensen, 2003). However, this concept

has also caused debate as to what exactly is meant by ‘disruptive Innovation’,

how it can be applied and to what extent it can be useful to anticipate and

respond to the emergence of disruptive technologies.

Chapter 2 will introduce and critically evaluate the concept of ‘disruptive

innovation’ (Christensen, 2003). Chapter 3 will show how this concept can be

applied to the cases of Skype, Nintendo and Linux. Chapter 4 will attempt to

derive conclusions from the literature review on disruptive innovation and its

application to the selected cases.

2. ‘Disruptive Innovation’ - a useful theoretical concept?

Christensen first introduced the concept of ‘disruptive technology’ in 1995

(Christensen & Bower, 1995). In his studies of hard-disk drives, he observed

that many companies operating in the mainstream market had failed in

retaining their market power or gone into bankruptcy. This was due to the

emergence of other companies which offered products which were typically

simpler, cheaper, lower in performance and more convenient to use and were

appealing to customers in a niche market.

1

Established products became ever more complex and sophisticated over time

and exceeded the ability of customers to adopt these products, while

‘disruptive technologies’ offered other features, e.g. low price, simplicity.

‘Disruptive technologies’ occurred at the low-end of the market and was

initially not perceived as a threat by established firms (Christensen & Bower,

1995). Ultimately, the ‘disruptive technology’ improved in performance,

expanded into a mass market and eventually replaced established

technologies.

Christensen distinguishes between ‘sustaining technologies’ which improve

the performance of already established products in the mainstream market

and ‘disruptive technologies’ which have attributes which customers in other

segments of the market value (Christensen & Bower, 1995).

Research emphasises that the reasons why companies invest in established

markets rather than in potentially ‘disruptive technologies’ lies in the

technological trajectories of companies, meaning companies do not have an

unlimited choice of strategies available. A company’s opportunities are path -

dependent, e.g. constrained by its position, knowledge and competencies

accumulated over time (Nelson & Winter, 1982 & Dosi, 1982). This makes

responding to ‘disruptive technologies’ very difficult for established firms.

2

The difficulty in defining what precisely a ’disruptive technology’ is relates to

the question if technologies are in themselves inherently disruptive.

‘Disruptive technologies’ can be a threat to some companies while

opportunities for others, in other words they are either competence -

destroying or competence - enhancing (Tushman & Anderson, 1986). An

example would be the internet, which may be a disruptive technology to some

firms, while an opportunity to others, e.g. amazon in bookselling (Daneels,

2004). However, Christensen emphasised that competence - destroying

technologies serving a mainstream market do not constitute ‘disruptive

technologies’ (Christensen & Bower, 1996).

This points to the possibility that it is not technologies themselves which

cause the disruption to established companies but rather the impact of these

technologies on firm’s internal processes, their accumulated knowledge -

base and competences. Therefore, Christensen eventually extended the term

‘disruptive technologies’ to ‘disruptive innovation’ to extend its potential

applicability (Christensen, 2003).

Nevertheless, the difficulty still remains to accurately define different types of

innovation. For instance, Henderson & Clark classified innovation according to

the knowledge required to develop new products which includes two

dimensions: knowledge of components and knowledge of the linkages

between components (Henderson & Clark, 1990). This includes incremental,

modular, discontinous and architectural innovation (Henderson & Clark,

1990).

3

However, it has been pointed out that researchers classified the same

innovation differently depending on their definitions (Garcia & Calantone,

2001) e.g. the electrical typewriter could be classified as ‘discontinous’ due to

causing industrial disruption (Utterback, 1996) or as ‘incremental’ as it

concerns adding new features for improving an already existing product

(Rothwell & Gardiner, 1988). In addition, the term ‘radical innovation’ is often

used interchangeably with ‘disruptive innovation’. However, while disruptive

innovation refers to products which are specified as being initially cheaper,

simpler and lower performing than rival products and aimed specifically at a

niche market, ‘radical innovation’ seems to be broader defined and refers to a

substantially different technology while offering a distinct increase in customer

benefits (Chandy & Tellis, 1998).

While the terminology for disruptive innovation seems to be confusing, it

becomes even more complicated if the term ‘disruptive innovation’ also refers

to technologies, products and business model innovations.

For instance, Hamel emphasises the need for ‘business concept innovations’

by reconfiguring existing business models to enable a company to stay ahead

of its competitors in a fast changing environment (Hamel, 2000).

The problem arises when ‘disruptive innovation’ refers to technologies,

products and business models alike as conclusions about one aspect of a

specific type of ‘disruptive innovation’ cannot be generalised across all types.

For instance, while Christensen shows that disruptive innovations eventually

dominate the market, this is not true of business model innovations, e.g. low

budget - airlines have captured approx. 20% of the entire market (Markides,

2006). This distinction has important implications as it affects the strategies

established companies may want to adopt in the light of emerging, disruptive

innovations elsewhere. Therefore, imitating a competitor’s product or business

model may not necessarily be adequate as it may lead to an erosion of the

existing customer base (Markides, 2006).

4

It is also difficult to apply the concept of ‘disruptive innovation’ across different

product categories. Utterback shows that some products do not fit into this

concept as some displayed in their initial stages higher performance and / or

higher price than their rival product (Utterback, 2005). This may be due to the

complexity of most products which usually have more performance features in

comparison to the disk drives Christensen studied (Utterback, 2005). There is

therefore the possibility that customers simply trade different features for

others when deciding to purchase a new product (Daneels, 2004).

The distinction between sustaining and disruptive innovation as proposed by

Christensen is based on the innovation, product and technology lifecycle

concepts.

According to the innovation lifecycle model, the innovation process starts with

an exploration phase of technological possibilities and market needs which

are initially unknown. Over time, a dominant design emerges in the

‘transitional phase’ and the choice of options becomes focused along

technological trajectories. This is followed by refining the product to improve

product performance in the ‘specific phase’ (Abernathy & Utterback, 1978).

The Product Lifecycle Concept (PLC) states that products follow a pattern of

market development where a product is first introduced to the market,

followed by market growth when demand begins to accelerate, the stage of

market maturity where demand grows at the replacement rate and finally, the

product enters the market decline stage where consumers lost interest and

sales start to decline. The product lifecycle can be seen as an S-shaped curve

(Levitt, 1965).

The technology life cycle follows a similar pattern as the PLC starting with an

introduction stage, where there is initially slow progress in performance due to

the technology not being well known, followed by a growth phase, where the

technology rapidly improves in performance around a dominant design. The

5

new technology becomes widely known and sales increase rapidly. The

technology then enters a maturity phase, where progress slows down

significantly (Foster, 1986 & Utterback 1994).

However, it has been demonstrated that the development of technologies

follows an irregular pattern with longer phases of no growth interrupted by

performance jumps (Sood & Tellis, 2005). Further, new technologies may

emerge above or below the performance of existing technologies and

originate in established as well as in entrant firms (Sood & Tellis, 2005).

The limited validity of the product lifecycle has been emphasised and

research points to the fact that this model cannot be generalised across

industries, products and services e.g. many brands remain in a leading

market position 2 - 3 decades after their introduction (Mercer, 1993).

It also remains unclear when a product enters a certain stage in the lifecycle

as some products diffuse very slowly while others display rapid growth (Dhalla

& Yuspeh, 1976). The length of the different stages varies between products

and some products experience a sudden revival and proceed to a period of

renewed growth (Dhalla & Yuspeh, 1976). In fact, the time when a product

enters a specific stage of the PLC and its length depends on a variety of

factors, e.g. in the initial stage this may be the perceived comparative

advantage of the new product relative to the alternative, barriers to adoption

or information and availability (Day, 1981). It has also been shown that the

PLC model actually works in reverse order for services where innovation in

processes comes first which create the necessary conditions for product

innovation to occur (Barras, 1986).

6

Based on these observations, it is questionable if the concept of ‘disruptive

innovation’ is useful as some ‘disruptive’ innovations do not necessarily

replace older products.

In addition, Varadarajan shows that incremental innovation plays a vital role

as part of a competitive strategy by extending the timeframe of radical

innovations (Varadarajan, 2009). This can take place by entering new markets

in product categories where the firm is present, e.g. entering new markets,

market segments or new geographic markets (Varadarajan, 2009). Equally, a

firm may enter markets where it does not have a presence yet, e.g. entering

new markets which are currently fragmented or emerging markets

(Varadarajan, 2009). It may also succeed in achieving or defending product

leadership, e.g. responding to price sensitivity (Varadarajan, 2009). Kanter

emphasises that established firms make the mistake on focusing on the next

blockbuster innovation, being too product centric and expecting immediate

profits, while ignoring that incremental innovations can lead to substantial

profits (Kanter, 2006).

However, products in the category of ‘disruptive innovation’ do not

automatically generate profit, but it rather depends on the ability of the

innovator to commercialise the product successfully. Teece shows that where

products can be protected through patents or copyright or the nature of the

product is such that it would be difficult for competitors to imitate, the

innovator is likely to profit from the innovation (Teece, 1986). Therefore,

barriers to entry play an important part in determining success of new entrants

(Karakaya & Stahl, 1989). For instance, a way for established firms to

maintain barriers to entry and remain leader in the market may be through

proprietary software systems, e.g. Microsoft has a market lead due to the

windows platform as a proprietary system.

7

Christensen also seems to overlook potentially disruptive technologies which

did not succeed in the market (Daneels, 2004). Established companies also

have survived to ignore the emergence of disruptive technologies without it

having serious consequences for their business, e.g. Sony initially failed to

develop a portable MP3 player despite its dominance in the market for the

walkman (Kageyama, 2005). Equally, established companies have managed

to successfully respond to disruptive innovations either through internal

reorganisation or establishing other organisational entities, e.g. Motorola, IBM

or Kodak (Macher & Richman, 2004).

Established companies usually have expertise in certain areas due to their

firm - specific capacities and knowledge - base which, due to its often tacit

nature, is difficult for competitors to imitate which may remain a distinct

advantage for established companies.

King and Tucci show that companies with prior experience in hard disk drives

were most likely to enter new market niches and contradict Christensen’s

findings (King & Tucci, 1999, 2002), while Chesbrough comes to similar

conclusions (Chesbrough, 2003). In addition, research also showed that

established firms originating in other industries are diversifying and bring their

resources and transferable knowledge when entering a new market (Helfat &

Lieberman, 2002). It has also been shown that prior knowledge facilitates the

learning of new knowledge, meaning potential indicators for a disruptive

innovation may be better recognised and processed by an established firm

with accumulated knowledge in a specific field. This absorptive capacity is a

necessary prerequisite for firms to make sense of new knowledge (Cohen &

Levinthal, 1990).

8

Companies which are producing disruptive technologies, products or business

models will compete with the tangible and intangible resources an established

company has available as soon as it enters the mass market, e.g. established

firms often dominate supply chains, retail channels and other distribution

networks or have other complementary assets or capabilities such as

marketing or after-sales support (Teece, 1986).

In this case, established firms maintain their market position through joint

ventures, strategic alliances or acquisitions of start-ups which provide access

to the disruptive technology for established firms while at the same time

providing market entrants with the vital resources (Rothaermel, 2001).

Therefore, it seems that some established companies may fail when faced

with the emergence of disruptive innovations, products or business models,

but certainly not all of them do. A recent study of breakthrough innovations in

the pharmaceutical industry has shown that radical innovation is more likely to

originate in established firms. These have greater financial, technological and

market - related resources to manage the risk inherent in radical innovation

(Sorescu et al., 2003). However, the pharmaceutical industry maintains high

barriers to entry for new entrants due to the high degree of concentration,

products are protected by patents and innovation involves a substantial

amount of risk and requires large financial and technological resources.

Therefore, these results cannot be generalised to apply to other industries.

A further study of radical innovations in the consumer durables and office

products pointed to the weak empirical base of the disruptive innovation

literature and emphasise that these have not used cross - sectional studies

with a large sample of products. The study reveals that older innovations were

indeed mainly introduced by new entrants, while recent innovations originated

in established firms (Chandy & Tellis, 2000).

9

It seems that the evidence is rather inconclusive as to under which conditions

firms failed when faced with disruptive innovation. Possible explanations

range from the case of Polaroid and the unwillingness of senior management

to embrace a potentially disruptive technology (Tripsas & Gavetti, 2000) to the

role of routines and organisational inertia (Nelson & Winter, 1982).Therefore,

Daneels points to the need to look at entire systems into which a firm is

embedded as factors for explaining why some firms fail when faced with

disruptive innovation (Daneels, 2004).

2. Case studies

After reviewing the relevant literature and pointing to the limitations of

‘disruptive innovation’, this chapter will attempt to apply this concept to recent

technological innovations. Rather than focusing on one particular innovation

or organisation, this chapter compares three different innovations in order to

derive useful conclusions regarding the validity of ‘disruptive innovation’. The

cases of Skype, Nintendo Wii and Linux were selected on the basis that they

are recent innovations in a product category different from those studied in the

literature which makes them an interesting subject for enquiry.

2.1 Skype

Skype has combined two potentially disruptive technologies, P2P (peer - to -

peer computing) and VoIP (Voice over Internet protocol) into a new business

model and therefore radically transforming the way people communicate (Rao

et al, 2004). It also added other features such as instant messaging and

provides an easy - to use interface.

10

Skype can be downloaded for free and is compatible with all major operating

systems. In addition, Skype is easy to install and does not require a

configuration of gateways and firewalls (Tapio, 2005).

Skype was founded in 1993 and initially offered lower performance in contrast

to communication via landlines or mobiles, is free and easy to use and aimed

at a marginal segment of the market (Tapio, 2005). Skype - Out/In was added

later as a feature to make / receive calls to other networks or landlines as a

charged service (Rao et al. , 2004).

Skype changed the traditional marketing and revenue - based business model

in the telecommunications sector by relying on a peer - to - peer based

platform, free PC - to - PC telephony, its potential for scalability as well as

viral marketing (Osterwalder at al., 2005). Delivery and sales channels differ

substantially from conventional network providers as Skype operates entirely

over the internet (Osterwalder at al., 2005).

It therefore fits into the concept of ‘disruptive innovation’ as proposed by

Christensen (Christensen, 2003). Faced with the disruptive innovation with the

emergence of Skype, existing network providers in the telecommunications

sector may find it difficult to compete against Skype as their business model is

entirely based on revenue generating processes through per - call charges

(Osterwalder at al., 2005). Skype equally derives revenues from SkypeIn/Out

as well as other available premium features. However, its business model is

based on building up a large customer base followed by the introduction of

further premium services, while basic services such as Skype - to Skype calls

remain free of charge (Osterwalder at al., 2005).

11

While at first glance, Skype seems a perfect example of a ‘disruptive

innovation’, the next step according to the concept of ‘disruptive innovation’

would be to replace older technologies, e.g. the revenue - based business

models as per - call charges of the conventional mobile & landline operators

would become obsolete over time and Skype would need to shift into the

mass market.

As Skype was acquired by eBay, there might be possibilities to reach a mass

market (Rao et al. 2004). eBay’s acquisition of Skype could lead to a potential

disruption as for eBay, the partnership has the advantage of adding a free

communications feature to online auctions and thereby accelerate trade, while

PayPal, owned by eBay, can provide simple and secure billing for corporate

customers of Skype (Rao et al 2004).

Another recent partnership with the 3 network may turn out to be another

route to the mass market. The Skypephone in partnership with 3 was released

in August 2008 and offers free PC - to mobile as well as free mobile - to -

mobile calls (New Media Age, 2008). Network operator 3 tries to position itself

in the market as a mobile media company by adding applications such as

Skype, Facebook and Windows Live Messenger (New Media Age, 2008).

Skype in turn could potentially reach a mass market in the conventional

telecommunications sector by entering into partnerships with network

operators (Rao et al 2004).

12

Skype’s business model and peer - to - peer technology could challenge

established players in the telecommunications sector. A major erosion of

revenues was expected in particularly in the business sector and affecting

mainly long - distance calls (Evalueserve, 2005).

In addition, mobile and landline operators have the disadvantage that they are

location specific, meaning customers travelling abroad rely on roaming

agreements with local operators (Tapio, 2005).

However, rather than replacing the business model of conventional mobile

and landline operators, it may just be the case that Skype exists alongside

operators such as O2 or Vodafone as using Skype for SkypeOut calls may not

always be the cheaper option, particularly for local calls (Tapio, 2005).

It can be concluded, that while Skype fits into the concept of ‘disruptive

innovation’, there are doubts as to whether Skype will be able to reach a mass

market in the near future. Equally, it is not clear if peer - to - peer technology

will actually lead to a substantial decline of revenues for conventional

operators.

As Skype relies on extensive partnerships in order to succeed, it seems that

even though Skype’s technology and business model have disruptive

potential, conventional operators still dominate the mass market for

telecommunications. Therefore, it is only through co-operating with other

internet - based businesses or conventional operators that Skype will

succeed.

13

This conclusion confirms the earlier review of the literature that large,

established companies have important distribution and sales channels as well

as a large customer base at their disposal, which means high barriers to entry

for new firms. Skype has so far struggled in particular to attract corporate

customers (Rao et al 2004).

It also confirms that the commercialisation of a disruptive innovation is unlikely

to be performed by a small start - up firm without support and co-operation of

the established players.

2 .2 Nintendo

Nintendo, a Japanese developer of interactive entertainment software and

console manufacturer, is an established player in the electronic games

industry since 1977. Recently, Nintendo enjoyed phenomenal growth in sales

(Datamonitor, 2008). The success of the Ninntendo Wii, launched in 2007,

and its related software is due to adopting the “Blue Ocean” strategy, meaning

Nintendo is no trying to compete with Sony or Microsoft in sophisticated

technical features and graphic capabilities, but is mainly aiming at the casual

gaming sector, in particular female and adult gamers and people who would

normally not play games (Blakely, 2007). Nintendo has also introduced the

Wii motion controller which responds to motions in a 3-D space, and aims at

making games intuitive and accessible through motion control (Nintendo,

2008).

14

Therefore, the Nintendo Wii and its software & accessories are products

which could be characterised as a disruptive innovation: The Wii console is

cheaper, simpler and lower in performance than their Playstation & Xbox

counterparts and is aimed at what other firms had previously regarded as the

margins of the market. However, if Nintendo can be classified as an entrant

firm is debatable as it has been operating in the gaming industry since 1977.

This has implications for the theory of ‘disruptive innovation’ where the

disruption typically originates in entrant firms or start - ups.

Both Microsoft & Sony are investing considerably into developing

technologically advanced hardware. The production prize for the hardware is

not reflected in the purchasing prize and both console manufacturer’s

business model is based on pushing revenues from selling games to make up

for the losses in hardware sales (Niccolai, 2006). By developing an expensive

product with sophisticated technologies, e.g. Sony offers a PS3 with Blu - ray

as well as considerable memory capacity, the established console

manufacturers offer a product which exceeds market adoption capacity. This

would also fit into the concept of ‘disruptive innovation’.

While Nintendo’s popularity is growing and quickly turning into a console for

the masses through its emphasis on a social gaming experience, Sony in

particular is catching up fast. In 2008, Sony has released titles such as “Buzz”

or “LitteBigPlanet”, and “SingStar” still enjoys high popularity. The recent

release of the virtual environment “Home” adds a social space where users

can meet online, chat and play games. Faced with Nintendo’s success, Sony

is now trying to establish itself in casual, family - friendly gaming, while on the

other hand still maintaining its hardcore gaming business (Yin - Poole, 2008)

15

Christensen recommends that Sony should “[…] think about how they can

disrupt the disruptor and find a new way to redefine the space” (Christensen,

2007) rather than imitating the competitor’s products.

While Nintendo Wii can be classified as a ‘disruptive innovation’ which has

already penetrated the mass market, it is questionable as to whether Sony &

Microsoft as established firms in the market will eventually cease to make

profit. It seems that the Wii console will more likely coexist with the Playstation

and Xbox as Nintendo offers a substantially different product range in contrast

to Sony & Microsoft (Gamasutra, 2007).

Another point to consider is that technological development, particularly in the

games industry is moving at a very rapid pace and eventually, a demand for

higher performing technologies may emerge, once casual gamers are

introduced to gaming. This means that Nintendo would have to compete in

the foreseeable future with large firms with years of accumulated knowledge

and technological capabilities.

2.3 Linux

Linux is an operating system based on the Free and Open Source Software

(FOSS) development and is therefore free and its source code is accessible

and can be modified and distributed under the GNU General Public license

(Molinie at al., 2005). As any other open source software such as MySQL or

Apache, Linux is developed by individual programmers who collaborate on a

voluntary basis in a decentralised network (Molinie at al., 2005).

16

The Linux operating system therefore fits into Christensen’s model of

‘disruptive innovation’ as it has been developed as a free software aimed at a

niche market and initially fulfilled the characteristics of lower performing,

cheaper, though not necessarily simpler to use in comparison with its rival

products.

It has been shown that the impact of Linux on established firms in the

software market has been mixed: while it has forced some competitor’s

product out of the market or rethink their strategies e.g. the Apache project’s

impact on IBM, it has not been successful so far in the mass market, e.g.

desktop operating systems (Brydon & Vining, 2008). Linux has found

widespread use as an operating system mainly in a corporate or government

environment, but has not yet entered the mass market, even though software

for the desktop market which compares well with Microsoft Windows in terms

of technical performance and user - friendliness has been developed (Molinie

et al, 2005).

One important aspect of Linux is that it is a knowledge creating network of

customers and suppliers who continuously exchange knowledge and value

(Ballantyne, 2002). This network enables innovation and the creation of ideas

and solutions through collaboration and a deliberate knowledge spill-over

effect in an open network (Ballantyne, 2002). Many companies have installed

Linux as it supports innovation processes (Brydon & Vining, 2006). Other

firms such as IBM or Sun Microsystems actively participate in open source

software development as it facilitates the selling of complementary products

and services (Brydon & Vining, 2006).

17

The Linux operating system also enables agility and flexibility rather than

being “locked-in” to one particular system where the customer is

unable to switch to a different product or service (Hicks & Pachamanova,

2007).

Despite the advantages of open source software, in particular Microsoft

remains a dominant player in the software market due to the high switching

costs firms would face if they migrated to Linux, e.g. the need for retraining

and data stored in proprietary data models (Brydon & Vining, 2006).

Further problems arise when required software components are not

developed by the open source community and there is also no guarantee that

existing hardware or software will be compatible with future versions of the

operating system Linux (Bitzer & Schröder, 2007).

While Microsoft has responded to the open source software development

initially with hostility, it now actively participates in open source development.

Sami Ramji, Senior Director of Platform Strategy, has emphasised the

commitment towards driving Microsoft’s Linux and open source strategy and

working with the open source community at the Apache conference in 2008

(Ramji, 2008). This was also shown with the acquisition of the search engine

Powerset Inc. in 2008, where source code as part of the product is

redistributed into the Apache’s Software Foundation Hadoop’s project

(Montalbano, 2008). In addition, Microsoft started to contribute code to a

patch to ADOdb, a data access layer for PHP, which is also open source

(Montalbano, 2008).

18

It can be concluded that while Linux has not yet reached a mass market

penetration, there are signs that it has certainly disruptive potential.

Microsoft started to take open source more seriously and seems to follow a

dual strategy of both maintaining its position in the market through proprietary

software and at the same time participating in the open source network.

At this point, it is difficult to predict if Linux will eventually replace Windows as

an operating system, but if Microsoft starts to invest significant resources into

open source, the competitive advantage of Linux may eventually decline.

While Linux can be classified as a disruptive innovation, incremental

innovation through collaboration in an open, decentralised network is the

essence of any open source software. This once again relates to the literature

discussed earlier, that for some products, incremental innovation will remain

vital throughout their lifecycle.

3. Conclusion

From the literature review of ‘disruptive innovation’ and its application

to the selected case studies, the concept of ‘disruptive innovation’ is certainly

appealing, but has limited practical value as it cannot be generalised across

industries, technologies, products and business models.

Christensen criticises that a one - size fits all approach, e.g. developing

products which are a continuation of an existing product line, will not lead

companies to succeed in the market. While he emphasises the importance of

‘disruptive innovation’, he fails to show how innovation processes differ across

industries and product ranges and essentially prescribes ‘disruptive

innovation’ as standard (Christensen, 2003).

19

Furthermore, it is largely based on theoretical assumptions which can be

regarded as problematic, e.g. the validity of the product lifecycle.

In addition, while ‘disruptive innovation’ focuses entirely on new product

development, it underestimates the vital importance of incremental innovation.

While disruptive innovation may be applicable to some products, technologies

and services, reality in most cases is far more complex. It has been

demonstrated that adoption of products, technologies and services depend on

a variety of interrelated factors. Equally, innovation does not occur in a

vacuum, but usually in a complex network of customers and suppliers

embedded in national systems of innovation (Freeman, 2002).

The case studies have also shown that due to the complexity of product

development, it is difficult to make ex - ante predictions of successful,

disruptive innovations. Even if they do occur, it seems difficult to attribute its

commercialisation to a single factor. The ‘disruptive innovation’ literature fails

to take into account that business innovation is systemic in nature (Sawhney

et al., 2006).

Christensen argues that the uncertain process of ‘disruptive innovation’ can

be managed by focusing almost entirely on assessing existing market

demand through effective market segmentation (Christensen, 2003).

However, it has been shown that traditional market research techniques may

be of limited value to address emerging markets (Hassan, 2008).

It has also been demonstrated that disruptive innovation can originate as

much in established as in entrant firms and that often, entrant firms rely on co-

operation with resources of large, established firms to enter the mass market

and successfully commercialise an innovation.

Therefore, future research would need to address how firms can balance a

portfolio of different types of innovation and analyse the complex environment

20

firms operate in as well as taking into account that the resulting conclusions

are case and context specific.

21

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