Abstract

In this study, we develop and empirically test the theory that new industry entrants hold advantages over incumbents in the shift from unidirectional to multi-directional revenue streams. Using a Cobb-Douglas production function, modified to isolate returns to innovation, we examine data from three distinct contexts: steamships on western rivers (1810-1860), satellite-based Internet services (1965–2010), and food waste recycling (1995-2015). The results reveal that while incumbents attempt to stretch existing technologies to fit emerging circumstances, entrepreneurial innovators achieve greater success by approaching multi-directional value creation as a distinct challenge, one requiring new technologies, organizational forms and business models. Our findings have implications for diverse multi-directional frontiers, including: social networking, commercial space travel, distance education, and medical treatments using nanoscale technologies.

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