Defying value-shift : how incumbents regain values in the industry with new technologies

Historically, incumbent assembly firms with unquestionable strong positions in such industries as the automobile, consumer electronics, computer and mobile phone industries, have lost power when new technology is introduced; at the same time, supplier firms have taken over the power and gained value in the industry. We characterize this phenomenon as value-shift. Many industry experts have intuitive understandings of this phenomenon but not many scholars have identified its mechanism with a full-fledged theory. This paper identifies a mechanism that causes value-shift within the TV set industry, suggesting its application to other industries. This thesis then proposes a clear spectrum of strategies for incumbent assembly firms to prevent value-shift. At the same time, it indicates a set of strategies for supplier firms to take over the industry leadership. The work firstly defines value-shift and presents evidences that it exists in various industries by calculating the transition of value-added. By quantifying the impact of the value shift with this calculation, the thesis urges incumbent firms to take immediate actions to defy the value-shift. Then the thesis closely examines recent technology transition from the Cathode Ray Tube to the Liquid Crystal Display and describes how the value-shift took place in the TV set industry. From this industry analysis, the thesis describes the mechanism of the value-shift and discussed the possible strategies that incumbent firms could use to maintain their power over the industry. Finally, the thesis suggests the generalized mechanism of value-shift as an evolution in four stages using the modularity theory. The thesis implies the proposed mechanism is generally applicable by citing examples from other industries and suggests possible actions for both parties: for the incumbent firms to defy the value-shift and for the supplier firms to obtain industry leadership.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2010

Author dc:creator

• Kuramoto, Yukari

Advisor dc:contributor.advisor

• James M. Utterback.

• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/59123

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/59123