On the effect of strategic industry factor innovation on incumbent reaction, survival, and performance

Abstract

An industry is in constant evolution. Competitors, innovators, or other industry stakeholders can introduce new (hitherto ‘unknown’) resources or capabilities that increase the basis of competition in an industry. Resources and capabilities that form the basis of industry competition and that drive company performance are called ‘strategic industry factors’. The introduction of new resources or capabilities as strategic industry factors is called ‘strategic industry factor innovation’. However, there are also strategic industry factor innovations associated with ‘known’ resources and capabilities. When considering new business models like Netflix, Zara, Dell, iPod/iTunes, amongst many others, the innovation is not necessarily applying ‘new’ resources or capabilities to the industry. Instead, these examples show that new combinations of existing, ‘known’ resources and capabilities can also be difficult for incumbents to respond to.