Schumpeter famously popularized "creative destruction" as the process whereby new entrants replaced existing firms. In most cases, however, some incumbent firms survive and even thrive across technological discontinuities. Moving beyond incumbent-entrant dynamics, organizations and innovation research has begun to explore incumbent heterogeneity in response to technological change-why some incumbents do well and adapt, whereas others struggle. As a phenomenon-driven research area, scholars with different theoretical perspectives have brought their own lenses to bear, but these perspectives have evolved independently. The result is a research stream with a scattered collection of detailed, within-industry perspectives on the phenomenon without a clear ability to link different mechanisms or articulate boundary conditions. This article brings these relevant literatures together to paint a more holistic picture of incumbent adaptation to technological change. To improve generalizability and begin building a more general, cross-industry theory, we emphasize recognizing specific nuances of different technological changes and how they fit with the existing capabilities, knowledge, position, and cognition of incumbent firms to understand which incumbents are swept away in the wave of creative destruction and which may survive.
Research summary
We examine how heterogeneity in customers' tendencies to single‐home or multi‐home affects a platform's competitive responses to new entrants in the market. We first develop a formal model to generate predictions about how a platform will respond. We then empirically test it, leveraging a historical setting: TV station entry into local U.S. newspaper markets from 1945 to 1963. A notable feature of this setting is a quasi‐natural experiment: the staggered geographic and temporal rollout of TV stations that was temporarily halted during the Korean War. We find that platform firms indeed take their customers' homing tendencies into account in their responses to competition: after a TV station enters the newspaper market, newspaper firms with more single‐homing consumers had lower subscription prices, circulations, and advertising rates.
Managerial summary
The theoretical and empirical results in our paper suggest that platform firms operating in multi‐sided market settings need to consider their customers' single‐homing and multi‐homing tendencies. Heterogeneity in these tendencies is an important demand‐side factor to consider when formulating responses to a competitor's entry.
Socially dominant partners offer key innovation resources as actors with socially legitimate power, and firms can utilise the geographic proximity to such partners to increase partnership benefits. We examine the impact of geographic proximity to socially dominant partners on firms' innovation outcomes when firms collaborate with partners under varying partnership conditions (i.e., partners' capabilities, partner portfolio size and the presence of local intermediaries) using the Korean implantable medical device industry as a case study. The study found that firms' innovation outcomes increase when teaming up with nearby socially dominant partners if firms collaborate with strongly capable partners and many of them. In contrast, if firms collaborate with less‐capable partners and only a few of them, firms' innovation outcomes increase when partnering with distant socially dominant partners. Moreover, such outcomes also increase when they collaborate with distant socially dominant partners and intermediaries are present in the firms' regions. The study offers theoretical contributions to the extant literature on power imbalance and economic geography regarding inter‐organisational relations.
People prefer harms caused by omission to equal or lesser harms caused by action, a tendency known as omission bias. Several studies, however, have challenged the existence of this bias. In this paper, we study how decision stakes affect people's propensity to show omission bias.
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