Disruptive innovation, business models and encroachment strategies: A buyer’s perspective

Smail Benzidia (), Ruxandra Monica and Sergiy Boiko
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Smail Benzidia: CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine
Ruxandra Monica: University of Sussex
Sergiy Boiko: University of Sussex

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Abstract: According to disruptive innovation theory, customers are swayed by new market entrants through low-end encroachment strategies and/or new market disruption, but these predictions do not account for the rising interest in product categories such as electric vehicles in emerging markets. To bridge this research gap, we draw comparisons between disruptive and incremental innovation to account for electric and hybrid vehicles, respectively. We explore the misalignment between technological growth and customer satisfaction by comparing the electric vehicle business model with the hybrid vehicle business model based on three parameters: channels, value propositions, and customer relationships. Primary empirical data are collected from 307 survey participants. Structural equation modeling is then employed to investigate the similarities and differences between electric vehicles based on their disruptive innovation and hybrid vehicles based on their incremental innovation. We find that electric vehicles' unique focus on channels leads to a positive influence on their business model and customer satisfaction, while focusing on value propositions leads to positive results for hybrid vehicles. Finally, we discuss the significance of the results considering electric vehicles' high-end encroachment strategy within the luxury segment and contrast it with the relatively low-end encroachment strategy adopted by sellers of hybrid vehicles.

Keywords: Disruptive innovation; Electric vehicles; Hybrid vehicles; Business Model; Emerging Economies (search for similar items in EconPapers)
Date: 2021-04
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Published in Technological Forecasting and Social Change, 2021, 165, pp.120520. ⟨10.1016/j.techfore.2020.120520⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03030225

DOI: 10.1016/j.techfore.2020.120520

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