The Emergence and the Defense of Disruption

We study the influence of technological efficiency and organizational inertia on the emergence of competition when firms decide myopically. Using an agent-based computer simulation model, we observe the competitive reaction of a former monopolist to the advent of a new competitor. While the entrant uses a new technology, the monopolist is free either to stick to his former technology or to switch to the new one. We find that—irrespective of details regarding the demand side—a change of industry leadership occurs only if the new (" disruptive ") technology is not too efficient and organizations are inert. Further, the forecast of the positions of the entrant technology allows the incumbent to detect threatening entrant technologies; cloning the entrant firm finally allows to participate in the new market and assures the survival of the incumbent firm group.