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The networked idealist's advantage

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Abstract:

PurposeThe authors have identified a new type of innovator that combines the rascal-like idealism of Robin Hood with the network-based business models of early internet businesses to revolutionize many markets. These innovators are initially non-profit entrepreneurs who develop organic, cellular, distributed network structures to accomplish their work. They use financial, transportation and communications networks in novel ways to circumvent normal barriers to market entry. Design/methodology/approachThe authors studied the business practices and culture of a number of these network idealists. FindingsNetwork idealist succeed by undermining at least four of the barriers to market entry. They use networks to ramp up scale quickly. They differentiate by appealing to idealistic or radical impulses, often creating a charismatic brand in the process. They overcome capital requirements by using contributed labor and public infrastructures. And, they skirt the regulations that restrict innovation in many industries. Research limitations/implicationsAs network idealist organizations like Craigslist mature, researchers will need to analyze how their business model changes and develops. Practical implicationsAn incumbent options matrix describes four strategies available in response to network idealist competition: eliminate, join, barricade, align. Originality/valueThe authors identify a new and very successful form of competition, explain its strategies, and suggest ways to counter attack.

Keywords: Competitive strategy; Innovation; Internet; Market entry

Document Type: Research Article

DOI: https://doi.org/10.1108/10878570510594406

Publication date: 2005-03-01

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