A Theory of Visionary Disruption

23 Pages Posted: 7 Jun 2022

See all articles by Joshua S. Gans

Joshua S. Gans

University of Toronto - Rotman School of Management; NBER

Date Written: May 23, 2022

Abstract

Exploitation of disruptive technologies often requires resource deployment that creates conflict if there are divergent beliefs regarding the efficacy of a new technology. This arises when a visionary agent has more optimistic beliefs about a technological opportunity. Exploration in the form of experiments can be persuasive when beliefs differ by mitigating disagreement and its costs. This paper examines experimental choice when experiments need to persuade as well as inform. It is shown that, due to resource constraints, persuasion factors more highly for entrepreneurial than incumbent firms. However, incumbent firms, despite being able to redeploy resources using authority, are constrained in adoption as exploration cannot mitigate the costs of disagreement.

Keywords: disruption, innovation, bias, experiments, entrepreneurship

JEL Classification: O32, M10

Suggested Citation

Gans, Joshua S., A Theory of Visionary Disruption (May 23, 2022). Available at SSRN: https://ssrn.com/abstract=4117691 or http://dx.doi.org/10.2139/ssrn.4117691

Joshua S. Gans (Contact Author)

University of Toronto - Rotman School of Management ( email )

Canada

HOME PAGE: http://www.joshuagans.com

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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