This paper develops a taxonomy of product innovation methods for entering e-businesses. These product innovation strategies share two common features: 1) a goal of disrupting the competitive structure of an existing industry, and 2) the use of digital technology combined with e-commerce to enhance or transform products and services. By disruption, the authors denote the attempt to destabilize the profit structure of an industry such that the incumbent firms can no longer earn economic rents above the industry average. Under these conditions, incumbent firms make no more than new entrants, surrendering their economic advantages. Theoretical frameworks in strategic management and the management of innovation and technology suggest that radical innovations are more likely to lead to destabilized markets. While this paper suggests that the dominant incumbent’s advantage can be toppled, the paper does not suggest that the firm destabilizing the market will become the eventual market leader. While one can readily conceptualize the potential of e-commerce to disrupt existing markets, in practice few e-businesses have replaced entrenched competitors. Some of the failures of e-businesses to disrupt markets can be laid at the feat of strategies that were inadequately radical.
Puia, George M. and Yang, Xiaohua, "Designing E-Commerce Product Innovation Strategies to Disrupt Existing Industries" (2002). ICEB 2002 Proceedings. 46.