Online from: 1988
|Title:||Schumpeter's ghost: is hypercompetition making the best of times shorter?|
|Author(s):||Wiggins R R, Ruefli T W|
|Journal:||Strategic Management Journal, Oct 2005, Volume: 26 Issue: 10 pp.887-911 (25 pages)|
|Keywords:||Competitive Advantage, Economic Theory, Innovation, Organizational Behaviour, Schumpeter|
|Article type:||Research paper|
|Reference:||34AY330 (Permanent URL)|
Design/methodology/approach - Observes that whilst Schumpeter is best known for describing innovation as 'a gale of creative destruction', the key to his work is the view that profit motivates innovation. Explains that he regarded this as the economic function of profit, adding that only innovators are profitable and only for a limited time. Asks whether periods of superior financial performance have become shorter over time in the US economy. Develops a theoretical framework linking Schumpeterian theory to sustained competitive advantage and tests this empirically in a study of firms in forty industries over a twenty five year period, using Compustat data. Supplements this with a large-scale study of business units over a seventeen year period, noting that this was a subset of the data used in a recent and comparable study of hypercompetition.
Findings - Presents evidence that periods of sustained competitive advantage, demonstrated by superior economic performance, have been growing shorter over time. States that these results hold across a wide range of economic sectors, providing support for Schumpeter's theories and for the existence of hypercompetition. Concludes that a substantial part of the US economy is characterized by hypercompetitive behaviour.
Research limitations/implications - Includes an extensive summary of empirical studies of the persistence of superior economic performance.
Practical implications - Demonstrates that managers have responded to hypercompetition by seeking a series of short advantages that result in sustained competitive advantage.
Originality/value - Contributes a valuable perspective to strategic management theory.