The Competitive Dynamics of Entrepreneurial Market Entry

The Competitive Dynamics of Entrepreneurial Market Entry

The Johns Hopkins University series on Entrepreneurship

Edited by Gideon D. Markman and Phillip H. Phan

Research on general market entry usually focuses on large enterprises. Often, however, small entrants can alter the competitive dynamics of an industry. This volume brings together the most prominent thought leaders and the best research on the asymmetric entrant-incumbent dynamics. The ideas presented offer a more nuanced perspective on how, when, where and with what consequences small, single-product firms enter markets that are dominated by large, multiproduct and multimarket incumbents.

Chapter 10: Towards a Model of Market Disruption

Gökçe Sargut and Rita Gunther McGrath

Subjects: business and management, entrepreneurship, economics and finance, industrial economics


Gökçe Sargut and Rita Gunther McGrath INTRODUCTION Our aim in this chapter is to lay the foundation of a theory of market disruption that sheds new light on our understanding of the types of disruption that occur in product markets. In doing so, we also explore the entrepreneurial conditions and factors that help bring about such disruption. As such, the preliminary model that is proposed here represents two aspects of market disruption. First, we propose a classification scheme based on the severity of disruption caused by newcomers in industry incumbents’ markets. Second, we recognize that disruptive activity is entrepreneurial in its essence. Over the past three decades, research in strategic management and organization theory has uncovered insights into the factors that provide advantageous contexts for entrepreneurs in launching new ventures. Based on these insights, our model also explores factors that are likely to be important in entrepreneurs’ creation of disruptive business models. As a concept, “market disruption” immediately harkens to research in two areas that have enjoyed significant contribution over the years— technology and innovation. Because disruption almost always conveys new ideas or new ways of doing things, it is almost impossible to talk about market disruption without delving into research in disruptive innovations or disruptive technology. This is why we would like to begin our exploration with a few words of caution. Despite valuable research in the area, a great deal of conceptual confusion remains as to the characteristics, types, and hierarchical locus of innovation (Gatignon et...

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