An Examination of the Disruptive Innovation Paradox: The Application of the Innovators Dilemma to SMEs

Managing strategic contradiction and paradoxical situations has been gaining importance in technological, innovation and management domains. As a result, more and more paradoxical instances and types have been documented in literature. The innovators dilemma is such an instance that gives a detailed description of how disruptive innovations affect firms. However, the innovators dilemma has only been applied to large organisations and more specifically industry incumbents. Through a multiple case study of six eLearning SMEs, this paper investigates the applicability of the innovators dilemma as well as the disruptive effects of Web 2.0 on the organisations. Analysing the data collected over 18 months, it was found that the innovators dilemma did indeed apply to SMEs. However. inline with the original thesis the dilemma only applied to the SMEs established (pre-2002) before the development of Web 2.0 technologies began. Furthermore, the study highlights that the post-2002 firms were also partly vulnerable to the dilemma but were able. to avoid any negative effects though technological visionary leadership. In contrast, the pre-2002 firms were lacking this visionary ability and were also constrained by low risk profiles.