The Performance of Incumbent Firms in the Face of Radical Technological Innovation

A persistent theme in the academic literature on technological innovation is that incumbent enterprises have great difficulty crossing the abyss created by a radical technological innovation. It is argued that incumbents go into decline, while new entrants rise to market dominance by exploiting the new technology. While many incumbent organizations do decline when markets embrace radical new technological innovations, this tendency is not universal. There are outliers in any population, and much can be learned from examining this group. Herein we identify a number of factors that help to explain incumbent performance in markets shaken by a radical technological innovation.