From Creative Destruction to Creative Appropriation: A Comprehensive Framework

2022-05-31 Publications

Photo by Markus Winkler on Unsplash

This paper introduces a conceptual modification of Schumpeter's concept of creative destruction. Identifying a Kuhnian anomaly in a case of creative destruction in the ‘new economy’, we analyze a case study of the Chinese e-hailing firm DiDi Chuxing to show that this firm used a strategy we term ‘creative appropriation’, whereby a new firm utilizes incumbent firms’ complementary assets but without cooperating with the incumbent, to disrupt a market. This exploitation of complementary assets is based on recombining prevailing technological infrastructure(s) as well as flexible business models that facilitate open innovation. Employing documentary analysis, participant-observation, face-to-face interviews with informants, and a quantitative survey, the study finds that DiDi deployed its e-hailing app to disrupt the taxi market in Xi'an, China (as it did elsewhere in China) as a means of creative destruction, appropriating human-resource-based complementary assets (social and personal reputations, tacit knowledge, and connections) of taxi companies in Xi'an, first to dominate e-hailing in the taxi industry and then to destroy that industry by shifting its focus to private cars.

Naubahar Sharif
Acting Head and Professor, Division of Public Policy
Professor, Division of Integrative Systems and Design
Naubahar Sharif (Ph.D., Cornell University, 2005) is Professor of Public Policy at The Hong Kong…
Jack Linzhou Xing
Hong Kong Institute for the Humanities and Social Sciences, The University of Hong Kong

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