Over the last two decades, extensive research has been undertaken to understand incumbentudfirms’ adaptation behavior to disruptive innovation, considering technological change as theudmost important focus of analysis. Recently, there is an emerging literature that views disruptiveudinnovation as a business model problem in which a technological innovation is deployed. In thisudliterature, disruptive innovation is understood to be primarily a function of conflict between anudincumbent’s traditional and an entrant’s new business model. This raises two major questions.udFirst, although the original theory of disruptive innovation evolved from technological studies,udthis theory persists to explain all types of disruptive innovation over time (Markides, 2006: 19).udFurthermore, disruptive innovation has always been studied from an incumbent firm perspective.udWith the need to shift the research focus from a technology to a business model, we also need audnew framework to understand disruptive innovation taking the business model as the unit ofudanalysis taking both the entrant’s and incumbent’s perspectives. Building on business modeludinnovation studies (Govindarajan and Gupta, 2001; Normann, 2001; Hamel, 2000) and theudestablished technology based disruptive innovation theory (Christensen and Raynor, 2003;udChristensen, 1997), this study offers a systematic business model framework to comprehenduddisruptive phenomenon from both an incumbent’s and an entrant’s perspectives.udSecond, disruptive innovation studies predominantly focus on high-tech industries. Increasinglyudmany low-tech industries are being affected by disruptive non-technological market-drivenudbusiness model innovations. Considering that disruptive innovation theory is principallyudiiiudtechnology based, a review of the literature suggests that we know little about the differencesudbetween high-tech and low-tech market-driven disruptive innovations in terms of theirudevolutions, competitive and disruptive effects.udFrom the strategic management literature point of view, the contribution of this study becomesudeven more relevant when the two questions are examined across economic regions. Althoughudthere is ample evidence that shows disruptive innovations are not always restricted to developedudeconomies, little is known about how incumbents in developing economies adapt theirudorganizations to disruptive business model innovations. This study takes South Africa as auddevelopment economy case-study. The empirical setting of the current study includes four SouthudAfrican industries: the mobile and IT industry (high-tech), banking, insurance and airlines (lowtech)udindustries.udIn addressing the two key question of the study, the dissertation presents the empirical analysis atudthe first-order (firm-level study) and second-order (high-tech vs. low-etch study) levels. Theudfirst-order study argues that an innovation creates and grows a niche market through radicaludproduct design, different core competencies and/or a different revenue model long before itudbecomes disruptive innovation. It proposes a framework that attempts to model the evolution ofudthis trajectory from an entrant’s perspective. From the entrant’s perspective, a potentiallyuddisruptive business model innovation is a process that evolves over time in successiveudadaptations to endogenous and exogenous innovation drivers that shape the evolution and path ofudthe new business model. An innovation becomes disruptive only when the new business modeludfully or partially affects an incumbent’s established business model and market.udivudTaking the viewpoint of an incumbent firm, the first-order study further offers a framework thatudseeks to provide a causality model to comprehend the root cause of disruptive innovation and itsudimpact on the incumbent’s traditional business model. One of the major causes of disruptiveudinnovation is the incumbent’s entrepreneurial dilemma. This means that an incumbent’s successudor failure is partly contingent on the senior corporate management’s entrepreneurship readinessudthat is manifested in terms of taking risk initiative, willingness and ability to take appropriateudstrategic approaches to enable disruptive innovation. By articulating the causes of disruptiveudinnovation, it suggests four key strategic approaches an incumbent should follow to enableuddisruptive innovation. While the study finds common patterns for the causes and approachesudamong incumbents across the four industries at a firm-level, some of the hypotheses of this studyudcould not be proven at an aggregated system level. Disruptive innovation is a relativeudphenomenon: Some innovations that are disruptive to some firms or industries may not beuddisruptive to other firms or industries. Therefore, the study further re-examines the aggregatedudfirm-level outcomes by disaggregating the data into dichotomous technology versus marketdrivenuddisruptive innovations. By conducting a second-order analysis at the innovation categoryudlevel, this study adds considerably to extant innovation literature by establishing that a lowtechnologyudmarket-driven disruptive business model innovation entails different business modeludevolutionary processes, different disruptive effects and different managerial implicationsudcompared to high-tech disruptive innovation.
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