Abstract

 

Incumbent digital firms take different approaches to respond to the competitive threat posed by newcomers, in particular acquiring the startup vs raising one’s game. Incumbents must decide on an appropriate response, yet often fail to do so in due course due to a phenomenon known as ‘incumbent inertia.” I investigate the tradeoffs faced by incumbents in such situations. I cast the incumbent digital firm’s choice as a real-options problem specifying the conditions under which the incumbent ignores the threat or decides to either acquire the innovative startup or raise its game. Incumbent inertia may arise if the incumbent waits until the market is ripe or if the incumbent is ambivalent about the appropriate response, i.e., if the various responses generate payoffs that are nearly equal. Different circumstances explain this latter scenario, depending on the magnitudes of the acquisition and implementation costs and on the respective (option) values of either response. This second rationale has not previously been identified as a cause for incumbent inertia in the literature.

 

Το σεμινάριο θα παρουσιάσει ο Δρ. Benoıt Chevalier-Roignant (Emlyon Business School) και θα διεξαχθεί την Παρασκευή 5 Μαιου 2023, ώρα 10:00 – 11:00 στην αίθουσα Συνεδριάσεων στο κτήριο Continental.

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