How do established firms perceive and respond to disruptive technologies? : a strategic approach to competition in the Australian music industry

The emergence of a major innovation often poses a threat of substitution to firms with a base in an established industry. Explanations of how and why established firms respond to new technological paradigms are wide-ranging, although Christensen’s (1997) research of ‘disruptive technologies’ is considered one of the most influential. Despite Christensen’s contribution, limited research exists to understand the effects of a disruptive technology, in its early stages of technological evolution, on established firms within a single industry. This study will explore how the record labels and music retailers in the Australian music industry perceive, and strategically respond, to the emerging disruptive technology (EDT) of digital distribution. The majority of record labels perceived digital distribution as an opportunity, whilst much uncertainty existed amongst the music retailers. A key finding was that an EDT will not have uniform affects on similar types and sizes of established firms within a single industry. From this we can conclude that a disruptive technology is not inherently disruptive, but disruptiveness depends on the perspective of the firm.