Limitations of low-end disruptive innovation strategies

摘要

Using qualitative data, we build a case study of differentiation and cost contain-ment based on personal interviews from top management team members, secondarydata, and media reports from AirTran Airways and analyze these data from bothstrategic management and human resource perspectives. From a strategic perspec-tive, AirTran Airways offers service attributes for which customers, at least so far,have been unwilling to pay a large price premium. Nevertheless, AirTran Airways'efficiency has positioned it near the top of the industry in terms of profitability.From a human resource perspective, AirTran Airways blends flexibility and controlin an effort to increase labor productivity. This builds on the disruptive innovationliterature by suggesting boundary conditions especially when such conditions areswayed by legacy labor practices. Still, given the intensely competitive structure of theairline industry, AirTran has managed to sustain a competitive advantage. However,AirTran Airways illustrates the limitations of a low-end market disruptive innovationstrategy and illustrates how industry structure places intrinsic limitations on theprofitability of new entrants pursuing such strategies.