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Most of the entrant firms celebrated by Christensen as triumphant disrupters, on the other hand, no longer exist, their success having been in some cases brief and in others illusory.
Clayton M. Christensen, a Harvard Business School professor, explored this problem in his 1997 book, "The Innovator's Dilemma," and found that "it was as if the leading firms were held captive by their customers, enabling attacking entrant firms to topple the incumbent industry leaders each time a disruptive technology emerged".
The first of them gets the disk-drive industry quite wrong: "Most of the entrant firms celebrated by Christensen as triumphant disrupters no longer exist, their success having been in some cases brief and in others illusory".
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In 1978, Shugart Associates developed an eight-inch hard-disk drive; Christensen, who is uninterested in the floppy-disk-drive industry, classes the company as an entrant firm and credits it with disrupting established firms that manufactured fourteen-inch hard drives.
Each of these five, he says, introduced "smaller disk drives that were slower and had lower capacity than those used in the mainstream market," and each company that adopted them was an entrant firm that toppled an established firm.
In 1980, Seagate Technology introduced the first 5.25-inch hard-disk drive; Christensen, at this point, classes Seagate as an entrant firm, and Shugart Associates as a failed incumbent, even though Shugart Associates was shifting its focus to what was then its very profitable floppy-disk-drive business.
The aim of the new entrant firm is to determine the location and mill prices by forecasting the reaction of the competitor.
That is, more regulatory tickling from the wings: lower capital requirements for new entrants; firmer policing of the intra-bank payments system, the source of too many grumbles from small banks; and greater transparency on lending rates in the small business market, aided by enforced sharing of firms' credit histories.
If the change is radical to the dominant co-opetitor, new entrant focal firms will start development of the new technology before incumbent focal firms.
Barriers to entry are low: new entrants and foreign firms have gained a foothold in recent years.
Compared with the mature plants, failing plants are burdened by an increasingly larger wage bill as a fraction of their revenues, whereas new entrants and young firms incur a smaller wage bill relative to their revenues.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com