Tuesday October 1, 2020 – 12:15-13:45pm – Ecully campus – Room B1070

Incumbent inertia: When and how to respond to an innovative startup?

Dr. Benoit CHEVALIER-ROIGNANT, emlyon business school

Abstract: This paper models a situation in which a startup introduces an innovation and an incumbent decides on the appropriate response to the competitive threat. I characterize the incumbent’s optimal policy, specifying the (analytic) conditions under which an incumbent ignores the threat or decides to copy or acquire the innovative startup. Incumbent inertia may arise if the incumbent waits until the market is sufficiently ripe or when the incumbent is ambivalent about the appropriate response. This second rationale has not been identified as a cause for incumbent inertia in the literature.

BIO Benoit CHEVALIER-ROIGNANT, emlyon business school
Benoit is an Associate Professor at emlyon business school. His research is at the intersection of corporate finance and industrial organization, investigating how market uncertainty and strategic reactions affect a firm’s capital-budgeting decisions on capacity expansion, innovation investments, production flexibility and market entry in uncertain competitive environments.