Review of Danneels E. (2004), “Disruptive Technology Reconsidered: A Critique and Research Agenda,” Journal of Product innovation Management, 21, 4 (July), 246-258.

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LITERATURE REVIEW SAMPLE SERIES
NO. 5
“Danneels E. (2004), “Disruptive Technology Reconsidered: A Critique and Research Agenda,”
Journal of Product innovation Management, 21, 4 (July), 246-258”
Michael Ling
July 2014 updated

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Disruptive technology
Danneels suggests that disruptive technology “is a technology that changes the bases of
competition by changing the performance metrics along which firms compete.” He goes on to
explain that “a particular technology has performance constraints, which limit the current
product attribute set”, and “disruptive technologies... introduce a dimension of performance
along which products did not compete previously.” It is apparent that Danneels attributes
enormous significance to technologies so much so that they are capable of changing the ground
rules of competition. I agree that technology has taken a significant role in competition to the
extent that they can offer revolutionary and new ways to satisfy customer needs. However, there
are a vast number of value-creating resources and business processes in an organization, such as
product innovation, manufacturing, logistics, distribution channels, that are involved in the
conversion of technology into marketable products. It is a simplistic view that technology alone
is able to change the bases of competition.
Ex ante predictions
Regarding ex ante predictions of disruptive technology framework, Christensen suggests
that we need to “graph the trajectories of performance improvement demanded in the market
versus the performance improvement supplied by the technology.” Danneels raises the issue that
it is difficult to predict “what performance the market will demand along various dimensions and
what performance levels technologies will be able to supply.” I agree that it is difficult to
predict the performance of disruptive technology, which “introduces a dimension of performance
along which product did not compete previously”, and we have no experience nor knowledge of
the new performance dimension.

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Incumbents
Danneels cites King and Tucci’s and Chesbrough’s findings as a contrast to Christensen’s
finding that “incumbents exposed to disruptive technology mostly fail or exit”, but he comments
that the two findings “did not examine the shifts in industry leadership... and therefore did not
test Christensen’s claim that incumbents lose their market leadership when faced with disruptive
technological change.” He cites several more research findings to provide support to successful
incumbents. It is apparent that the research findings are highly inconsistent and subject to
interpretations. So, I agree with Danneels that further research is needed to examine the
outcomes of incumbents when facing disruptive technology.
On the other hand, Danneels calls for further research into the areas of resource allocation
processes, and organizational resources, processes, and values. These two areas have been
identified by Christensen as the causes for incumbent failure. Danneels cites two contrasting
views on incumbent inertia from Henderson & King and Tucci, where the question is on whether
knowledge, experience and capabilities accumulated by incumbents will give the incumbents
inertia to harness disruptive technology. He cites Tripsas’s research finding that Mergenthaler
Linotype remains a leading typesetter manufacturer despite it undergoes three waves of
technological disruptions. Again, I agree that further research is needed in this area.
In comparing the possibility of entering into a new field between incumbents and new
entrants, Danneels draws from Helfat & Lieberman’s research finding that we need to compare
the “resource profile of firms to the resources required by the new field” to identify the
“resource gaps” of a firm, which can be filled by such means as “alliances, joint ventures,
acquisitions, and licensing”.
Drawing from the resource-based theory, Danneels offers a distinction between
“customer competence” and “marketing competence” to explain the different resource

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requirements in an organization at different stages of the technology to marketable product. I
agree that this is a significant issue in many organizations, whether they are incumbents or new
entrants. The common problems in new entrants are the lack of a diversified resource. The
problems in incumbents are often due to functional silos and organizational issues.
Integration vs. Separate decision
Christensen recommends that “incumbents should set up a separate organization for
venturing into disruptive technology.” Danneels cites Cohan’s research that this is not
necessarily the case. He cites Gulati & Garino’s research finding that “the integration versus
separation decision facing traditional retailers venturing into online retailing involves a trade-
off”, but he then draws from more research findings that provide opposite views. The research
findings are inconclusive. Therefore, I agree that further research should be conducted in this
area and, in particular, to explore “what conditions a spin-off is the best way to pursue disruptive
technology.”