EXPLAINING THE ATTACKERS ADVANTAGE - TECHNOLOGICAL PARADIGMS, ORGANIZATIONAL DYNAMICS, AND THE VALUE NETWORK

Understanding when entrants might have an advantage over an industry's incumbent firms in developing and adopting new technologies is a ques tion which several scholars have explained in terms of technological c apabilities or organizational dynamics. This paper proposes that the v alue network-the context within which a firm competes and solves custo mers' problems-is an important factor affecting whether incumbent or e ntrant firms will most successfully innovate. In a study of technology development in the disk drive industry, the authors found that incumb ents led the industry in developing and adopting new technologies of e very sort identified by earlier scholars --at component and architectu ral levels; competency-enhancing and competency-destroying; incrementa l and radical-as long as the technology addressed customers' needs wit hin the value network in which the incumbents competed. Entrants led i n developing and adopting technologies which addressed user needs in d ifferent, emerging value networks. It is in these innovations, which d isrupted established trajectories of technological progress in establi shed markets, that attackers proved to have an advantage. The rate of improvement in product performance which technologists provide may exc eed the rate of improvement demanded in established markets. This mism atch between trajectories enables firms entering emerging value networ ks subsequently to attack the industry's established markets as well.