Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? A. Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. B. New entrants are embedded in an innovation ecosystem, while incumbent firms are not. C. Unlike incumbent firms, new entrants do not have formal organizational structures and processes. D. Incumbent firms do not have the advantages of network effects that new entrants have.

Question

Business

Finley Carroll

13 February, 20:05

Why is it easier for new entrants to get involved in radical innovations when compared to incumbent firms? A. Unlike incumbent firms, new entrants do not have to face the high entry barriers, initially. B. New entrants are embedded in an innovation ecosystem, while incumbent firms are not. C. Unlike incumbent firms, new entrants do not have formal organizational structures and processes. D. Incumbent firms do not have the advantages of network effects that new entrants have.

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Celia Bird · Answer 1

C. Unlike incumbent firms, new entrants do not have formal organizational structures and processes.

Explanation:

Having a structure and processes is good for an organization as this often guide any course of action. However, these structures sometimes seems to be too cumbersome and also take a longer process to build hence not immediately preferred by new entrants. Moreover, incumbent firms prefer incremental innovation to radical innovation due to the disruption that will be caused to existing structures if radical innovation is chosen.

For new entrants, it is somewhat easier for them to involve in radical innovation unlike incumbent firms because of absence of structure and processes which takes time to be built and implemented.