Here's the theory for you, Ten:
en.wikipedia.org
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Examples[ edit]
Polaroid instant cameras have disappeared almost completely with the spread of digital photography.
Schumpeter (1949) in one of his examples used "the railroadization of the Middle West as it was initiated by the Illinois Central." He wrote, "The Illinois Central not only meant very good business whilst it was built and whilst new cities were built around it and land was cultivated, but it spelled the death sentence for the [old] agriculture of the West." [19]
Companies that once revolutionized and dominated new industries – for example, Xerox in copiers [20] or Polaroid in instant photography have seen their profits fall and their dominance vanish as rivals launched improved designs or cut manufacturing costs. In technology the cassette tape replaced the 8-track, only to be replaced in turn by the compact disc, which was undercut by MP3 players, which will in turn eventually be replaced by newer technologies. Companies which made money out of technology which becomes obsolete do not necessarily adapt well to the business environment created by the new technologies.
One such example is the way in which online ad-supported news sites such as The Huffington Post and Zero Hedge are leading to creative destruction of the traditional newspaper. The Christian Science Monitor announced in January 2009 [21] that it would no longer continue to publish a daily paper edition, but would be available online daily and provide a weekly print edition. The Seattle Post-Intelligencer became online-only in March 2009. [22] At a national level, employment in the newspaper business fell from 455,700 in 1990 to 225,100 in 2013. Over that same period, employment in internet publishing and broadcasting grew from 29,400 to 121,200. [23] Traditional French alumni networks, which typically charge their students to network online or through paper directories, are in danger of creative destruction from free social networking sites such as Linkedin and Viadeo. [24]
In fact, successful innovation is normally a source of temporary market power, eroding the profits and position of old firms, yet ultimately succumbing to the pressure of new inventions commercialised by competing entrants. Creative destruction is a powerful economic concept because it can explain many of the dynamics or kinetics of industrial change: the transition from a competitive to a monopolistic market, and back again.[ citation needed] It has been the inspiration of endogenous growth theory and also of evolutionary economics. [25]
David Ames Wells (1890), who was a leading authority on the effects of technology on the economy in the late 19th century, gave many examples of creative destruction (without using the term) brought about by improvements in steam engine efficiency, shipping, the international telegraph network and agricultural mechanization. [26]" |
