Schumpeter's View of Competition

The creative destruction author Bresnahan, Greenstein, Henderson's article "Schumpeter's Competition and Diseconomy, Illustrations from Microsoft and IBM History" is a good attempt to tackle the aspects of technology-driven innovative organizations. The problem of creative destruction is based on industry. In this regard, this paper argues that it relates to the non-economic aspect of the possible cause of solving the problem of creative destruction, and is the answer to the author's argument.

Another criticism is that competition is a dynamic competitive process that constantly changes the structure of the industry. Joseph Schumpeter believes that competition is the driving force of innovation and that it tends to constantly reorganize the industry and become unstable. (M. Grant R., 1998, 2008). Because based on the industrial perspective of the 1980's, if the transformation of the industrial structure is as fast as the high-tech industry, the model with five powers is ineffective for predicting competition and profitability. Today's IT and software industry is constantly revolutionizing through innovation. Organizations are trying to gain competitive advantage from the latest understanding of environmental trends and competitive activities and are trying to gain new possibilities by taking risks to gain the current advantage.

In studying the dynamic model of economic development Schumpeter introduced the concept of "effective competition" and "effective monopoly" by combining it with innovation and entrepreneurial function. According to Schumpeter, innovation is the foundation of new competition, it is more effective than price competition. Innovation not only represents opportunities to change technologies and products, but also influences the demand structure and creates cost and price conditions. Schumpeter calls it "effective competition" and competition stimulated the desires of people trying to benefit from production costs and product quality benefits.

The client's work also includes another wonderful insight by Schumpeter, which is almost always ignored. Schumpeter believes that competition should not be measured only with products of the same "type". He insists that competition can happen from anywhere. You may think that you are alone in the market or have superiority in the market, but competitors unknown to you might steal your customers. The only indication of your problem is to reduce sales. Chapter 8 carefully studied customer work, creative destruction, and competition.