(BIZ6033) Seminar on Technological Innovation | 정보대학원박사과정2010521507 김정현
Session 7(10/19): Market Demand, Diffusion, and Social Construction of Technology
: Adner,R. (2002). When are technologies disruptive?A demand-based view of the emergence of competition, Strategic Management Journal, 23(8), 667-688
0. Introduction
First of all, this article contains the economic backgrounds. So I find the meanings of these economy terms.
1) Marginal Utility
- In economics, the marginal utility of a good or service is the utility gained (or lost) from an increase (or decrease) in the consumption of that good or service [1].
- The law of diminishing marginal utility: the first unit of consumption of a good or service yields more utility than the second and subsequent units [1].
2) Diminishing Returns
- In economics, diminishing returns (also called diminishing marginal returns) is decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant [2].
- The law of diminishing returns (also law of diminishing marginal returns or law of increasing relative cost): in all productive processes, adding more of one factor of production, while holding all others constant, will at some point yield lower per-unit returns [2]. The law of diminishing returns does not imply that adding more of a factor will decrease the total production, a condition known as negative returns, though in fact this is common.[2].
1.Summary of the Paper
Adner(2002) conducted the research with the demand condition which made the disruptive technology be the disruptive dynamic in terms of the technology competition. For this, he contemplated two things, how consumers evaluatetechnologies and how these evaluations change as performance improves. Conductingthe analysis using the computer simulation model based on the programming language, Pascal.
In this study, there are three dimensions for describing the disruptive technology/technology disruption in the demand-based side: (1) value trajectory means consumers’relative preferences about the functional attributes; (2) the structure of demand contains two preferences, the preferences overlapmeans the degree of similarity between their functionalpreferences, which is graphically reflected in thedifference between their trajectories, and the preferences symmetry refers to the relative value each segment places on performance improvements along another segment’s value trajectory; (3) a new perspective on the emergence of competition has three regimes, the competitive isolation, the competitive convergence, and the competitive disruption.
Fixing one value trajectory, there is a competitive situation asthe second value trajectory. At the initiation of technology development, most of firms justconcentrate their own market.As preference overlap increases, the competitive isolation disappears when the development dynamics lead to theemergence of two distinct classes of competition.As the competitive convergence from the segment preferences symmetry, we can find the technology expanding not only in firm’s own home market but inits rival’s. In contrast, the segment preferences asymmetry makes us to see the competitive disruption, inwhich one firm maintains dominance of its homemarket while displacing its rival from the rival’s
2. Main contribution
This article has differentiated perspective for studying the disruptive technology/technology disruption. (I do not know the differences between the disruptive technology and technology disruption). In general, many researches have focused on the distinct feature of technology lifecycle. However, this research accesses to not supplier-based, but consumer-based.
Moreover, he finds the general patterns of technology and its change using the computer simulation model. In consequence, he defined the demand structure and the new perspective on the emergence of competition.The most interesting things are the value change of competitive steps by the preferences overlap and the preferences symmetry.
3. My own questions & 4. Critique
The first thinking when I read this article, then the keyword of “disruptive technology” has a positive meaning or not? My individual opinion is “POSITIVE”. Because these disruptive technologies make their market segments upgrade.
Usually, we think that the person try to think rationally. Is it always true? According to this article, there are three dynamic characteristics of disruptive technology: (1) Incumbent technologiesthat are displaced from the mainstreammarket by technologies that underperform them onthe performance dimensions that are most importantto mainstream consumers; (2) Mainstream consumerswho shift their purchases to products basedin the invading technology, even though thoseproducts offer inferior performance on key performancedimensions; (3) Incumbent firms that donot react to disruptive technologies in a timelymanner.Those show that the emergence timing of new dominant technology is impossible to predict. How many real cases could we find in these categories?
The middle of this article, there is a figure (Figure 3) for describing the competitive steps or dimension. Actually, I could not understand the whole things of this figure. Why does the convergence come up the next side of disruption? What is the meaning of this? I think that the author of this article try to suggest another map for reader’s understanding.
The result or the discussion of this research contains the importance of price, especially the absolute prices. For consumers, the lower price has stronger attraction than the price/performance. I do not make a sense in this part. The author really wants to discover this? Is this the only things for supporting the interpretation about consumer’s behavior?
It is good for creating the map of preference relationships and competitive regimes. At the first time, technology isolates for developing its own levels. After that, different competitive regimes arise as the relative preferences of the second segment are varied.If it is possible, then I search for other cases of these relationships.
When the firm make full use of the model which are introduced in this article, then is it possible to predict consumers’ needs or rivals’ progress? I think that the simulation model of this article affects good influence for defining technology demands, but there are some limitations. For instance, this model based on the consumer perspective, so other things– resource allocation, timing prediction, and so on- which root causes or other reasons of technology disruption are not considered.
References
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Thank you for reading this material. I know that there are many mistakes (grammar, logical unfolding). I ask for your understanding regarding this matter.
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