Out with the new, in with the old: the impact of incremental innovations on market share gains
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2024-10-29
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Guissoni, Leandro Angotti
Teixeira, Thales S.
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Radical innovation has traditionally dominated academic and industry discussions, celebrated for its potential to disrupt markets and secure long-term competitive advantages. However, many dominant firms in R&D-intensive industries face increasing challenges in developing entirely new technologies. In contrast, nondominant firms are increasingly turning to incremental innovations as a more feasible and cost-effective alternative. This thesis systematically examines the effectiveness of incremental innovation. Using a novel dataset from a major knowledge-intensive industry, complemented by governmental and field data, it address key questions: Can incremental innovations capture more market share than radical innovations? Does the effectiveness of incremental versus radical innovations differ between dominant and nondominant firms? Under what conditions can incremental innovations successfully gain market share? My findings reveal that incremental innovations, especially those introduced by nondominant firms, capture significant market share. Moreover, price-adjusted efficacy is a key moderator of market share gains. Finally, I explore factors contributing to the success of incremental innovations.