What are creative destruction and disruption innovation?

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Chapter 3 in Creative Destruction and the Sharing Economy, 2017, pp 63-91 from Edward Elgar Publishing

Abstract: What are creative destruction and disruptive innovation? Creative destruction is the overall process of change and adaptation of actual industries to novelties. Many traditional business models are driven out of the market processes by new technology, new forms of production, new marketing and new business models. Disruptive innovation is primarily technology-backed innovation starting at the low end of markets or creating a new market foothold. This innovation changes the whole character of market processes in which it is exchanged. It makes it impossible for the marker processes to exist without it. Both are open-textured processes with non-determinate and no-determinable possible outcomes. If a specific innovation was disruptive and if it creatively destroyed any industry can often only be stated during the process and not at its beginning. Is Uber an agent of creative destruction? Uber’s business model innovates on different levels. It lowers costs, it increases quality, it optimizes idle capacity and it has ‘flashy’ marketing. If that is enough to destroy the whole taxicab industry remains to be seen. Actually, it is unfolding disruptive energy and many taxicab providers have already adapted their value propositions to include many of Uber’s elements (app, rating, surveillance, among others). But because of this disruptive energy, many incumbent taxicab companies are trying to stop Uber by using regulation. It is not the task of regulation to stop innovation, but that it what Uber’s competition expects it to do.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2017
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