Adoption time of a maturing disruptive technology in a duopoly market

Abstract

New disruptive technologies invalidate the traditional competition dimension in continuous innovation and reconstruct the competitive landscape. These technologies leave a management gap in the adoption of new technologies by competing companies. Accordingly, this research establishes a duopoly game model based on horizontal and vertical differentiations for technology competition problems with asymmetric features. Competition between firms and technologies are investigated simultaneously. We find that a profit increase from new technologies is typically eliminated by the increased technology competition. Thus, firms with competitive advantages in the old market might be late in adopting new technologies, and the competition will further delay the adoption process. We then introduce a preemption strategy for adopting disruptive technologies, and test it in both current established competition and threat competition from the entrants. Results show that leading companies might hesitate in deterring new entrants for fear of losing the leadership in the current competition. Finally, we provide a time strategy that can help the market leader maintain a leadership position with minimal losses. Our research has contributed to the studies of both the interpretation of the “innovator’s dilemma” and the direction of technology adoption research under multi-dimensional technologies and multiple competitors.