Extent of adoption of disruptive products: The role of sales take-off and firm characteristics

Abstract: Prior research notes that as a new industry evolves, there is a sharp increase in the number of firms, which is followed by a take-off in sales. Research also highlights that the time between the two take-offs is often long. We investigate the behavior of firms that enter an emerging industry between the two take-offs and face a technological discontinuity prior to the sales take-off. We concentrate on a disruptive new technology as the discontinuity and use a panel dataset that tracks the extent of adoption of robots with the disruptive Computer Aided Design and Manufacturing technology by the firms who had entered industrial robot manufacturing with mechanically controlled robots. Further we divide the disruption period into two sub-periods-the pre-sales take-off sub-period and post-sales take-off sub-period. We find that the “entrepreneurial startup adopters” adopt the disruptive technology to a greater extent than the “diversified entrant adopters” without prior relevant experience during both the sub-periods. We also find that the diversified entrant adopters with prior relevant experience adopt the disruptive new technology to a greater extent than other diversified entrant adopters, during the post-sales take-off sub-period but not in the pre-sales take-of period. While our results indicate partial support for both Christensen’s predictions and for the findings of prior research that investigates the evolution of market structure, our research sheds new light on the behavior of entrepreneurial startups and diversified entrants during a technological disruption in an emerging industry