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Competence Destruction Theory of Entrepreneurship

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Competence destroying innovations are expected to be brought to market more successfully by new entrants than competence enhancing innovations ( Tushman & Anderson, 1986 ).  Competence = abilities + resources An incumbent firm's competence is destroyed when a technological innovation obsolesces the abilities and or resources that previously composed the competences of the firm. For instance, Blockbuster's retail competence was undermined by Netflix's online model .  The theory goes that incumbents are reluctant to adopt competence destroying innovations because they prefer to preserve and enhance their existing competences. Besides, developing new competences often means shedding the old and that can involved painful layoffs or divestitures . These difficult organizational changes and the coalitions that form within organizations to try to stop them, create a friction that impairs adoption. Instead, the new entrant benefits from adopting competence-destroying innovation