This thesis comprises three studies on the strategic response of incumbents to environmental change triggered by disruptive technological innovation. Researchers have paid little attention to strategic change of firms under drastic environmental changes in technology-driven industries, especially strategic responses and performance of incumbents. This study examines i) the determinants and diffusion patterns of internet access service in Korea, ii) selection of technology evolution path for Broadband access network, and iii) the relationship between strategic responses and performance of incumbents under environmental change.
The first study identifies numerous determinants of diffusion and diffusion patterns of Internet access service in Korea. The determinants of rapid diffusion are derived from market factors, technological factors, government factors, and social cultural factors. In the rapid diffusion process, there are two different diffusion phases The first phase is diffusion for early adopters who are willing to use entertainment-based new service in nationally widespread the PC bangs. The second phase is diffusion for majority using commerce-based services in Broadband at home provided by large new entrants.
The second study concentrates on the selection of an evolution path for broadband access networks. It developed an optimization model for selecting the best technology and evolution path with the minimum total cost. The problem can be formulated as a mixed Integer Programming model. With a scenario for demands and cost factors, this study finds the optimal evolution path by solving our model with the CPLEX program, and illustrates some sample paths for the broadband access network evolution plan. Once the cost and the demand are defined in detail for reflecting the real-world case, the model can be useful to generate a good technology evolution plan for broadband access networks in real-world applications.
It also explores the relationship between strategic responses and performance of incumbents in environmental change. Based on the results of case study on Internet access service industry in Korea, incumbents have difficulty in earn higher performance when radical environmental changes fundamentally alter competitive structure. Incumbent hardly have responded to radical changes because of governance structure, insufficient organizational capabilities, and tightly coupled strategic alliances within existing business models.
