2025/10/14 by Marcin Penconek, Stefano Pagliarani · 1 voice
Business, Management and Accounting · #Business Strategy and Innovation #Innovation and Knowledge Management #University-Industry-Government Innovation Models
paper · doi:10.1080/09537325.2025.2571961
openalex publication_date 2025/10/14 · openalex created_date 2025/10/16 · openalex updated_date 2026/06/15
Companies are believed to make rational profit-maximising decisions. However, many successful incumbent firms fail in adopting disruptive innovations, sometimes leading to their bankruptcy. This phenomenon is explained by the disruptive innovation theory through the innovator’s dilemma, by which incumbents overlook opportunities at the low end of the market. We propose an alternative explanation showing that the profit-maximising strategy in response to market disruption can lead to delayed response and long-term bankruptcy. We use a model of disruptive innovation that assumes perfect knowledge of eventual innovation potential, adoption rate and no constraints in implementing the innovation by an incumbent. This perspective suggests the role of a slow innovation diffusion rate as one of the drivers of ignoring the innovation in favour of the exploitation of established business opportunities. Our analysis also shows the importance of correct expectations on innovation performance. Incorrect expectations can lead to an inadequate incumbent's response and its eventual bankruptcy.