Journal of Engineering and Technology Management 57 (2020) 101588

Contents lists available at ScienceDirect

Journal of Engineering and

Technology Management
journal homepage: www.elsevier.com/locate/jengtecman

Leading for constructive innovation: Preliminary evidence from

T
China
Jin Chena, Robert A Burgelmanb, Jiaxue Lia,*, Chang Chieh Hangc, Gang Zhengd
a
School of Economics and Management, Tsinghua University, Research Center for Technological Innovation, Tsinghua University, Beijing, China
b
Graduate School of Business, Stanford University, United States
c
Faculty of Engineering, National University of Singapore, Singapore
d
School of Management, Zhejiang University, Zhejiang, China

A R T IC LE I N F O ABS TRA CT

Keywords: Disruptive innovation theory has received widespread attention. With the rapid development of
Disruptive innovation the Chinese economy, Chinese firms accomplished many instances of innovative disruption in
Holistic innovation recent years, and many latecomer companies are gradually growing into world class innovative
Constructive innovation companies. As an emerging economy, it is necessary to analyze how China may achieve more
China
disruptive innovations in the future, and what Chinese companies should do when faced with
disruptive innovation threats and opportunities. We investigated several Chinese companies'
disruptive growth with the aim of further developing the original disruptive innovation theory by
incorporating Chinese experience. We divided disruptive innovation types into disruptive
strategy innovation, disruptive technology innovation, and disruptive business model innovation,
and then analyzed their characteristics separately. Using this perspective to examine different
Chinese companies’ innovation processes, and adopting holistic innovation theory, we built a
model for leading constructive innovation that bypasses the western disruptive innovation and
creative destruction model. We propose this as a useful alternative framework for global cor-
porate innovation.

1. Introduction

In recent years, the rapid economic development of developing countries has aroused global concern, in part because there remain
important gaps between most companies in developing countries and western developed countries. The innovation capabilities of
many firms in emerging market are still limited by the lack of funds, small scale and inexperience (Petti et al., 2019). This raises the
question of how such companies should go about trying to improve their innovation and development capabilities. If the firms in
developing countries adopt only the original imitation and innovation methods, and continue and replicate the innovation devel-
opment path of companies in western countries, they will always lag behind. However, the development of digitalization, online
commerce, artificial intelligence, machine learning, mobility and other technologies, opens up new paths for corporate innovation in
emerging economy countries such as China, and to catch up with existing globally renowned companies (Chen et al., 2017).
The emerging economy has a huge, underserved market (Hang et al., 2010), which provides a market environment that is well-
suited for disruptive innovation (Christensen, 1997), which provides “good enough” products at lower cost. In emerging markets, a

⁎
Corresponding author.
E-mail addresses: chenjin@sem.tsinghua.edu.cn (J. Chen), profrab@stanford.edu (R.A. Burgelman), lijiaxue18@mails.tsinghua.edu.cn (J. Li),
elehcc@nus.edu.sg (C.C. Hang), zhg1213@zju.edu.cn (G. Zheng).

https://doi.org/10.1016/j.jengtecman.2020.101588
Received 29 January 2020; Received in revised form 20 July 2020; Accepted 30 July 2020
Available online 11 August 2020
0923-4748/ © 2020 Elsevier B.V. All rights reserved.
J. Chen, et al. Journal of Engineering and Technology Management 57 (2020) 101588

large proportion of potential customers do not buy the expensive and varied products and services provided by traditional developed
markets. That is why “frugal innovation” succeeded in India, and has huge potential in China. China is the largest developing country
in the world and one of the important emerging markets (London and Hart, 2004). Since the reform and opening up, China's economy
has developed rapidly and has made many remarkable achievements. The vigorous development of the market economy in China
provides fertile soil for the innovative development of enterprises (Hang et al., 2015). Chinese companies have achieved rapid
development, the Chinese government has taken various policies to promote enterprise’s innovation and stimulate the vitality of
enterprises. After 40 years of exploration and development, the innovation of Chinese enterprises has formed into a certain pattern.
Examining this innovation pattern of Chinese enterprises is, more generally, of potential great significance for enterprises in other
emerging markets and even for companies in developed countries.
It is important, however, to situate this pattern in the broader and deeper context of China’s unique system and culture, which
create the external environment for Chinese companies. China’s long history, profound culture and philosophy are manifest in several
crucially important ideas and concepts that are, in general, less well understood by western scholar and practitioners of strategy and
innovation. Taking China's “Harmony” concept as an example, western countries stress transcendence and victory, while China's
“Harmony” stresses integration. Under the guidance of “Harmony”, Chinese company leaders tend to prefer to pursue peaceful
coexistence rather than simply survival of the fittest. The concept of "Shi" as strategic positioning is also unfamiliar to most western
scholars and practitioners, and goes beyond the simpler notion of strategic position that most westerners are familiar with. “Shi”
combines elements of favorable geographical and human conditions. It emphasizes a systematic and overarching view of the si-
tuation, reflecting the internal characteristics and external environment of the enterprise. In contrast, western concepts of strategy
emphasize methods and cannot truly realize the integration of the enterprise and the outside world. Shi, as a comprehensive concept
of strategic position, determines the unique competitive advantage of an enterprise.
While western organization theory and analysis has become more systematic, open and dynamic as a result of decades of social
science research (Scott and Davis, 2014), western open systems organization theory is not yet very comprehensive by the standard of
Shi. This is where further development of organizational theory and practice can benefit from oriental approaches. The theory of
knowledge management that originated from Japan during the 1980−90 s (Nonaka, 1994), for instance, is an important example.
More recent research of corporate innovation management in China offers additional important insights into how China's long history
and culture have gradually developed certain advantages in organizational innovation and management (Barkema et al., 2015). This
opens a window on the oriental wisdom associated with the comprehensive concept of “holistic innovation” (Chen et al., 2018b),
which usefully informs and western open innovation and disruptive innovation theories.
In light of this, sustaining innovation with the established western theoretical model remains important (Christensen, 1997;
Christensen and Raynor, 2003), but by creating new industries and markets disruptive innovation can offer breakthrough oppor-
tunities for latecomers in emerging markets, such as China (Fan et al., 2014). With the continuous development of the emerging
economy and society, these opportunities also show that disruptive innovation is not limited to low-end market segments and may
extend beyond providing low-cost, good enough products. How to catch up with and/or complement the innovation of currently
leading companies through a broader concept of disruptive innovation is a strategic imperative for companies in the developing
world. To provide a roadmap for meeting this imperative in this paper, we integrate eastern and western cultural views on strategy
and propose a new, multi-dimensional perspective on disruptive innovation that is consistent with the Chinese context. The proposed
path shows how Chinese enterprises may achieve disruptive innovation based on strategies (“smart enough”), technologies (“strong
enough”), and business models (“good enough”).
Our paper offers several contributions to received knowledge about disruptive innovation. First, we review the Western-based
innovation literature through the lens of Chinese scholarship, especially as it relates to Christensen’s theory about disruptive in-
novation, and address the question how it applies to the strategic challenges that Chinese companies face. Second, we describe the
three different modes of disruptive innovation – smart enough, strong enough, and good enough – that have developed in the Chinese
context and illustrate these with specific brief company cases. Third, we discuss how the Chinese “holistic innovation” philosophy and
the associated concept of “harmony without uniformity” and the positional strategic concepts of “Shi” and “conquer rather than
destroy” inform our new model of “constructive innovation” that represents an alternative to the disruption and creative destruction
models that still govern eastern theories of innovation.
The next section of the paper provides a review of the relevant literature. The examination of the new Chines models of disruptive
innovation follows this. This creates the foundation for proposing our “Post-Disruption and Creative Destruction Model: Chinese
Contributions to Constructive Innovation.” The paper ends with conclusions and implications.

2. Literature review

2.1. Innovation in developing countries

There are different explanations for the innovation and catching-up of developing countries. One explanation is organization
learning in offshore sourcing, Wan and Wu(2017) explained the process of value chain climbing in the process of offshore out-
sourcing, and proposed that enterprises in developed countries choose offshore outsourcing in order to reduce production costs, and
offshore outsourcing gives suppliers in developed countries opportunities to enter the mainstream market (Wan and Wu, 2017). In the
process of climbing the value chain, the organization keeps learning and accumulating knowledge, thus gradually realizing the
process of climbing from the low end of the value chain to the high end. The other explanation is reverse innovation, which is
developed first in developing countries and then introduced to developed markets (Govindarajan et al., 2012). In recent years, some

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studies have found that some companies in developing countries can successfully achieve technological catch-up by means of reverse
innovation (Hadengue et al., 2017), create disruptive products, and grow into large multinational companies (Hang et al., 2010). For
most managers in western multinationals, it is often difficult to break local thinking and integrate reverse innovation (Govindarajan,
2012). They cannot fully understand the needs and potential of emerging markets, which bring many opportunities to local com-
panies in developing countries. No matter the enterprises in developing countries climb the value chain in the process of offshore
outsourcing, or the reverse innovation generated from developing countries and then transferred to developed countries, these two
ways explain the phenomenon of enterprise innovation in emerging market countries to some extent. However, with the increasingly
development of developing countries the market, enterprises innovation in developing countries show the trend that separating from
the enterprises in developed countries (Hang et al., 2010), the proportion of independent innovation in emerging markets has been
gradually enhanced (Chen et al., 2018b). Therefore, the above two paths of innovation development can no longer fully explain the
innovation behavior of enterprises in emerging markets, so it is necessary to further summarize the law of innovation development of
enterprises in developing countries.

2.2. Disruptive innovation theory

Disruptive innovation has aroused the global common concern (Si and Chen, 2020; Utterback and Acee, 2005), it has also
provided a way for companies in developing countries to achieve rapid innovation (Hang et al., 2010). Disruptive innovation is an
innovative activity that runs counter to the mainstream market trend, which, initially based on a disruptive technology, is able to
enter the market by offering unique values such as low price and convenience to emerging or low-end customers, and eventually
disrupt the incumbent leading firms (Christensen, 1997; Christensen et al., 2018; Christensen and Raynor, 2003). Typically, dis-
ruptive innovation is characterized by lower performance along the traditional trajectory of processes, products, services, or business
models (Lettice and Thomond, 2008). The definition of disruptive innovation builds upon the strategic categorization scheme (Walsh
et al., 2002), and disruptive innovation is essentially a process. During the disruptive innovation process, latecomer companies which
own technology lower than incumbent companies, at first, they would start from low-end market and provide good enough products
with low cost. After entering the low-end market, latecomer companies would continue to carry out significant and sustaining
innovation, while incumbents are still committed to develop current technologies for the mainstream market. When the innovation of
latecomers reaches the needs of the mainstream market, customers in the original mainstream market would find that latecomer's
products and services are superior to incumbents; at this time, latecomers would capture the mainstream market, achieving dis-
ruption of incumbents (Christensen et al., 2015). Disruptive innovation theory strongly explains the development process driven by
innovation (Christensen et al., 2018, 2015).
The opposite of disruptive innovation is sustaining innovation (Christensen, 1997, 2001). Sustaining innovation refers to the
process of continuous innovation based on the original technology, which aims to continuously improve product performance in
competition to other peers (Christensen, 1997). Relying on the theory of resource dependence, large companies will allocate re-
sources towards mainstream markets and the markets that could ensure that they obtain more profits when allocating resources,
hence constraining them to focus on investment in sustaining technology (Christensen, 1997; Lettice and Thomond, 2008). However,
with the continuous development of sustaining technology, the level of technology is bound to exceed market demand. Latecomer
companies, with good enough products as its core, would then be able to achievedisruption of incumbents. In short, the simply way to
distinguish between disruptive innovation and sustaining innovation is to evaluate if this innovation is targeted at the mainstream
market or not – sustaining innovation being an improvement innovation in the mainstream market, while disruptive innovation is for
a marginal market or a new market.
In conclusion, disruptive innovation refers to the technical innovation at the beginning, which called disruptive technologies
(Christensen, 1997), originally refers to the process of overcoming incumbents by providing some inconspicuous but good enough
technologies or products for users, leading to the process of incumbent's destruction. Later in order to expand its application
boundaries, Christensen (2003) developed the concept of disruptive innovation, also to describe innovation process of business model
and so on, but in the theoretical framework of Christensen, disruptive innovation still continue to use the similar way of thinking of
disruptive technology(Si and Chen, 2020). When referring to disruptive innovation, it often infers that a latecomer’s innovative path
would be to enter the mainstream market through a low-end approach (Christensen, 1997; Christensen et al., 2018, 2015). Generally
speaking, disruptive innovation does not mean that it is more advanced than the existing technology, but technology and product that
are just “good enough” for users, because the mainstream technology is already higher than the market demand (Christensen and
Raynor, 2003; Si and Chen, 2020). However, not all disruptive innovations are same, for example, the disruptive innovation of
complex product system is different from the traditional disruptive innovation. It does not start from the low-end market, but satisfies
the demand of the mainstream market at the beginning, and the unit price is higher than that of incumbents (Dedehayir et al., 2014).
Since entering the digital age, we should rethink the definition of disruptive innovation. Disruptive innovation should not only refer
to those innovations that have achieved latecomer's transcendence over incumbents. To a deeper level, disruptive innovations should
refer to those innovations that have changed products, business models, or even enterprise’s strategy, which need a more compre-
hensive and overall thinking of view.

2.3. How to deal with disruptive innovation

Christensen proposed the theory of disruptive innovation and cited 77 business cases to support and substantiate the theory.
Although Christensen's disruptive innovation theory has been endorsed by many business people, there are still many questions about

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the theory (Danneels, 2004; Markides, 2006). For instance, disruptive innovation theory assumes that entrepreneurs' sole goal is to
maximize shareholder benefits, but this is not always the case. King and Baatartogtokh (2015) conducted interviews with relevant
experts on the above 77 disruptive innovation cases and concluded that there were some problematic assumptions and other pro-
blems that make the theory not fit with the practice well, and make suggestions that we need a fuller theory to explain disruptive
innovation in different contexts. In addition, disruptive innovation theory started out based on innovation changes in technology
(Christensen, 1997), but Christensen extended it to product and even business model innovation (Markides, 2006), without due
regards to the difference among technology innovation, product innovation and business model innovation. Although the outside
processes of different disruptive innovations are similar, the competition and disruptive effects may be completely different.
Therefore, it is necessary to separate and explain the specific situation for different disruptive innovation (Markides, 2006).
As emerging economy is playing a key role in global competition, firms in emerging economies will become important challengers
to existing global companies. But facing with the opportunity for disruptive innovation, what should Chinese companies do? As
latecomers, emerging markets have produced many successful cases of disruptive innovations. They took the low-end market entry
mode (Hang et al., 2010), and after entering from the low-end market, they provide “good enough” products or services until they
occupied the market, and then improved related technologies and processes through a bottom-up process (Johnson et al., 2008).
Since the consumption level of people in the developing countries is limited, products and services provided in developed markets
may not be suitable for emerging markets (Li, 2013); hence this kind of low-end disruptive innovation has great development
potential in China. Meanwhile, the process of continuing innovation after disruptive innovation will cause innovation to migrate
upstream and eventually disrupt and change traditional industries (Lettice and Thomond, 2008). With the rise of China's compre-
hensive national strength and the development of technological innovation, Chinese companies no longer face only the situation of
entering and catching up from the low-end markets. As a result, Chinese companies should also think more about how to maintain
their competitive advantages after entering the market, that is, companies should consider how to continue to maintain the devel-
opment of innovation and avoid being overturned by other latecomers when they grow into so-called incumbent companies (Hang
et al., 2010). For this question, Christensen has given an answer that indicates “separation” (Christensen, 1997; Christensen and
Raynor, 2003), as he attributed the incumbents failure to lack of understanding, insufficient attention, inadequate resource allocating
(Christensen et al., 2015), and therefore suggested that incumbents establish an independent department or subsidiary to deal with
the such dilemma. However, in fact, there may be more than just the above reasons. In the era of the digital economy, supply chain
and other some processes in companies have been changed (Sabri et al., 2018), companies may change their minds and actively seek
to cooperate with small, flexible, and technologically distinctive companies, and support small companies with brand, capital, and
platform, to avoid be disrupted (King and Baatartogtokh, 2015). Because of the posteriority of disruptive innovation, how incumbents
could avoid being disrupted and how latecomers could achieve disruption, would need to be studied further.

3. New models-disruptive innovation in China

New companies seem to be advantageous because they are more flexible in terms of resource allocation (Christensen, 1997).
Incumbent companies are more inclined to carry out incremental innovation based on existing technology and products, while
latecomers are more inclined to carry out near-radical innovation. This is because when choosing an innovation type, incumbents
cannot take flexible actions, relying on the original large amount of capital and users, and it is easier for latecomers to perform near-
radical innovation (Henderson, 1993). However, in business practice, we find that both incumbents and latecomers must return to
fundamental consideration when facing with disruptive innovation. Simply speaking, both latecomers and incumbents need to be
alarmed at disruptive innovation and take actions about disruptive innovation. Disruptive opportunity identification would also
require super entrepreneurial leadership, either through distinctive discovery of a potential market ignored by incumbents, or by
creating a new market enabled by a good-enough disruptive technology (Hang et al., 2015).
In Christensen's disruptive technology theory, for how to deal with disruptive innovation, it simply proposes to establish a new
market segment to guide new products to the market's leading edge or early adopters(King and Baatartogtokh, 2015; Utterback and
Acee, 2005), and obviously this formulation is too simplistic. Christensen only emphasizes “attacks from below” and ignores other
discontinuous patterns of change that may be of importance (Utterback, 1994). Not all disruptive innovation processes are static, and
there are many types of disruptive innovations. Different types of disruptive innovations require different approaches(Markides,
2006), we need some more analysis from diff ;erent perspectives (Si and Chen, 2020). Snihur et al. (2018) discussed the disruptor’s
gambit from two perspectives of technologies and business models; Markides(2006) distinguished disruptive business model in-
novation, technological innovation and product innovation, and pointed out that subdivision of innovation categories is needed to
make disruptive innovation theory more applicable. The challenges and obstacles faced by process innovation and product in-
novation in disruptive innovation are different, and the barriers of incumbents and latecomers in disruptive process innovation are
different (Radnejad and Vredenburg, 2019). To explain how to enable a disruptive innovation from various angles of inside – outside
of the firms market and technology is significant to further develop disruptive innovation theory (Yu and Hang, 2010).Looking
through the process of the disruptive innovation development of Chinese enterprises, from the perspective of definition of disruptive
innovation(Si and Chen, 2020), we can describe disruptive innovations from three aspects: disruptive strategy innovation, disruptive
technology innovation, and disruptive business model innovation.
There are many differences between innovations in China and western developed countries. The differences are mainly reflected
from perspectives of culture, institution and market. In terms of culture, China has a long history and culture, the ideological and
cultural traditions formed over the years have exerted a deep-rooted influence on Chinese entrepreneurs. Compared with western
countries, Chinese people have a more systematic and overall view, and strategic orientation is more important in China, which

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influence innovation management in China. Institution can also influence the strategy of companies (Peng, 2003), from institutional
perspective, Chinese government controls the economy much more than western governments do, also has far more resources than
western governments, which leads many enterprises in China are much more dependent on the government than those in western
countries, and policies have a significant impact on the behavior of enterprises. The government has unique advantages in promoting
disruptive innovation and breaking the original ecology, especially in emerging economies like China, the intervention of the gov-
ernment enables enterprises to have more resources to achieve disruptive innovation (Tan et al., 2020), and promote enterprise’s
innovation (Jia et al., 2019; Wareham et al., 2014). In terms of the market, China is an emerging market economy, whose market
economy started later than that of western developed countries, so Chinese market development is at a relatively preliminary stage.
In addition, China has the world's largest consumer group, with diversified consumer demands. China's relatively primitive and large
market provides fertile ground for Chinese companies to innovate disruptively. Disruptive innovation theory is oriented to companies
in western countries, it is not fully applicable to Chinese enterprises, we should expand the western theory of disruptive innovation in
the Chinese context, by cases of Chinese companies. In the traditional theoretical framework of disruptive innovation, Christensen
(1997) only mentioned that users would choose “good enough” products or services. Combining with Chinese situation, we can
extend Christensen’s framework to coexistence of smart enough, strong enough, and good enough types of disruptive innovations.
“Smart enough” refers to company’s strategy just enough for Chinese context, “strong enough” means that companies should develop
the technology that just be demanded in China, and “good enough” indicates that business model caters to consumer’s demand. In our
framework, all “enough” imply applicable to Chinese situation, including China's institution, cultural environment and market de-
velopment needs.

3.1. Smart enough: disruptive strategy innovation

Strategy plays a decisive role in the development framework of an enterprise. Strategy focuses on how an organization should
maintain a competitive advantage over competitors (Teece, 2010), and strategic management is the foundation of business man-
agement. Because of the high uncertainty inherent in disruptive innovation, strategic support and leading are of great significance for
integrating corporate resources and overcoming innovation development bottlenecks and other uncertain innovation difficulties
(Chen et al., 2017), a disciplined strategy-making process is very important to compliment some intuitive and unreliable personal
decisions (Burgelman and Siegel, 2007), to lead the company’s innovation. As in any form of innovation which requires the supports
and leading of corporate strategy, disruptive strategy innovation is an important foundation for enterprises to achieve innovative
development. Disruptive strategy innovation requires companies to clarify strategic intentions, achieve strategic leadership,
strengthen dynamic capabilities, and continue to disrupt.
Also, strategy plays an important role in specific innovation process. Disruptive innovation theory cannot be used to explain all
types of innovation-driven curses for incumbents. The firm level overall strategy is an important factor for the enterprise to predict
the potential disruptive technology innovation and realize the development of disruptive innovation (Radnejad and Vredenburg,
2019). Different types of innovation require different development strategies to support (Christensen et al., 2015). Latecomers can
transcend and disrupt only if they implement a distinctive strategy. Incumbent companies usually adopt conventional and path
dependent strategies. Latecomers must take the strategic choices of other companies into consideration before making a strategy. As
most Chinese companies are not strong enough compared to western companies, many Chinese companies would try to adopt catch-
up strategies at the beginning. The disruptive innovation under strategic leading is no longer to provide good enough products and
services, but to stand high and make a smart enough strategy. Only by relying on smart enough strategic leading can Chinese
companies achieve disruptive innovation and development.
CRRC Corporation Limited (CRRC) is a Chinese company, the world's largest supplier of rail transit equipment. CRRC is a typical
representative of strategic driven innovation. In the current global rail transit transportation equipment manufacturing field, CRRC's
main competitors are Kawasaki Heavy Industries in Japan, Bombardier in Canada, the combination of Siemens in Germany and
Alstom in France. Among them, CRRC's biggest competitiveness is its low price and high quality. According to Public data, CRRC held
about 70 % of the global market share in 2019.1 CRRC was inferior to Kawasaki Heavy Industries in its founding time and was
technically inferior to Siemens and Alstom Consortium, but it became the world's largest supplier of transportation equipment, which
depends on its strategic disruptive innovation. Strategic support is the core force leading CRRC's continuous development, while
technological innovation is an important means to achieve CRRC's transcendence development. The phase strategies of CRRC is
shown in Fig. 1.
As shown in Fig. 1, before 2004, according to the comparative risks of China’s railway resources and relatively backward
technological level, CRRC integrated all its business resources, and reorganized inward and outward advantageous resources, which
aimed to implement further breakthroughs. Subsequently, CRRC adopted innovative development ideas of introduction, digestion,
and re-innovation, making full use of existing foreign technology foundations to enlarge and strengthen China's railway technology.
At the beginning of 2008, CRRC strengthened indigenous innovation, and focused on cultivating brands and core competitiveness.
After 2015, with the maturity of CRRC's high-speed rail technology, and under China's international strategy, CRRC began to expand
its business scope and focus on fostering sustainable corporate competitiveness. Nowadays, CRRC has achieved its position in the
global high-speed rail manufacturing industry (Chen et al., 2018a). Leading by the smart enough full strategy and phase strategies,
CRRC has achieved its leading station in the world.

1
Source: Jinshi Data.

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Fig. 1. The phase strategy of CRRC.

3.2. Strong enough: disruptive technology innovation

The rapid development of new technologies, the globalization of R&D networks, and a more open approach to product devel-
opment may lead to disruptive innovation (Drew, 2006), many changes in modern business are driven by technology. Disruptive
technology is a technology that changes the basis of competition by changing the performance indicators of a company's competition
(Danneels, 2004). With the rapid innovation of modern information technology, new products and services continue to emerge.
Entire industries, departments and business functions are being reshaped in some way through technology. Technology-based dis-
ruptive innovation is characterized by high barriers to entry, strong continuity, and is not easily to be copied. However, disruptive
technology innovation is difficult to identify in advance, and it is hard to predict its market growth, even customers don’t know what
they want (Burgelman and Siegel, 2007). In addition, it requires more capital support, so the risk is greater than other type of
innovation. There are two main ways to disrupt by technology. Some disruptive technology innovations may create a new market,
while others may attack the mainstream market (Adner, 2002).
Because of the long-term and uncertain nature of technology research and development, many latecomer companies are unable to
achieve technological advancements due to lack of funds and capabilities (Radnejad and Vredenburg, 2019). Many studies have
confirmed that incumbents have its unique advantages when facing disruptive innovation. Incumbents have established brand re-
putation, capital accumulation and customer trust in the past, so when developing disruptive technologies, incumbents will have
more financial support and user base than latecomers (Obal, 2013). According to this logic, China, as an emerging economy, will
obviously have a disadvantage in disruptive technology innovation. However, as a developing country, China also achieved many
technological advantages and some companies have also gained global market share with their technological advantages, and have
gradually grown into large-scale enterprises in the world. The path of disruptive technology innovation for Chinese companies is
worth to investigate.
Generally speaking, technological change and accumulation in developing countries require a large number of technological
developments to adapt to and improve imported technologies, and in some cases, to generate new technologies (Choung et al., 2000;
Malecki, 1997). The emergence of new technologies in Chinese latecomer companies involves the transition from competitiveness
based on cheap labor to technology-based competitive advantage (Choung et al., 2000). When companies implement disruptive
technology innovation, the questions that must be considered are: how to find opportunities for disruptive innovation at the early
stage, how to understand the possible development path of disruptive technologies, and how to shape a new technology into op-
portunities for value creation and strategic advantages (Drew, 2006). If the disruptive technology innovation is strong enough, it will
generally create a new market and lead the market demand, and because technology strong enough is difficult to replicate, it can also
help companies stay invincible for a long time.
Huawei's development is a typical technology driven process. In recent years, the rise of Huawei has attracted worldwide at-
tention. Initially, Huawei was only a sales agent for a Hong Kong company that produced customer exchanges (PBXs). Today, it has
achieved annual global sales revenue of more than 100 billion dollars and has become the top 3 mobile phone suppliers in the world.2
Looking though the developing process of Huawei, we can find that it is persisting on technology innovation all the time. It is the R&D
investment of more than 10 % of the annual sales revenue,3 the perfect R&D personnel system, and the unremitting belief in in-
dependent research and development that have created Huawei's success today. Relying on disruptive technology innovation, Huawei
has become a global leader in the field of communications equipment such as 5G and has achieved new breakthroughs in Chinese
chip technology. Strong enough technology can help companies to build barriers that other companies cannot easily to catch up with.
Alibaba Cloud is also a typical representative of Chinese companies in terms of technological disruption, in recent years, it has
risen rapidly relying on indigenous innovation. Alibaba Cloud was established in 2009 and independently developed the cloud
computing system “Feitian”. Today, it not only supports the huge computing volume of the Ali system, but also serves China’s

2
Source: Huawei annual report 2018, Huawei’s official website.
3
Source: Huawei annual report 2018.

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companies in various industries, becoming the third largest public cloud service provider just after Amazon AWS and Microsoft
Azure. Alibaba Cloud is also the market leader in cloud IaaS in China (43.2 %),4 and it is particularly prominent among Chinese
digital enterprises and public sector organizations. Alibaba Cloud's disruptive innovation development is mainly driven by technology
innovation.
Disruptive technology innovation is different from disruptive strategy innovation and disruptive business model innovation,
technology innovation needs more investment, and once it succeeds, it will bring more solid and more sustainable benefits. Cloud
technology is a typical representative of disruptive technology innovation, and its technical characteristics are consistent with all the
elements of technological disruption (Marston et al., 2011), it is also an example of technological innovation to improve the user
experience from the supply side. As we know, megatrends and environments are critical to achieving technological disruption. In
recent years, innovations in internet technology have spawned the digital economy market, and the need for centralized cloud
services has begun to emerge (Antonov, 2013; Soon et al., 2014). Looking back at Alibaba Cloud's ten-year technological develop-
ment process, Alibaba Cloud was officially established in 2009, it aimed at deal with Alibaba's computing power demand for “large-
scale data computing”. Because cloud technology was a very new technology on a global scale at that time, technology research and
development required the joint support of company strategy and capital. The research and development of the technology is not
smooth, and it has very high uncertainty. In the early days of Alibaba Cloud research and development, many products have not been
applied to the cloud well due to the immature technology. The Alibaba Cloud technical team has been questioned from inside and
outside of the company, but the technical team is still persistent and has overcome technical bottlenecks. In 2013, “Feitian” 5K system
was launched to provide external services, becoming the first company in the world to provide such services. Since then, the
technology has leaped forward. In 2016, Alibaba Cloud broke the Could sort world record. In 2018, Feitian's distributed storage
system “Pangu” was upgraded to 2.0, and a new generation of cloud computing operating system was released in the same year,
which is focusing on the connectivity of the Internet of Things. In 2019, Alibaba Cloud continues to develop technology and is
creating a new ecology based on cloud technology.5
For Chinese companies, maintaining sensitivity to cutting-edge technologies is an important way to achieve international catch-
up. It is the emphasis on disruptive technology innovation that makes Alibaba at the front end of the new technology development
cycle. There is also existing a golden period for technology research and development. If incumbents can no longer invest in research
and development at the technology exploration stage, it will inevitably bring a passive situation of late catch-up. Just as in the early
start-up stage of Alibaba Cloud, Tencent, Alibaba's biggest competitor in China, did not pay enough attention to cloud technology.
Although Tencent Cloud has also achieved not bad results with the support of Tencent's strong capital, it has been far away from Ali
Cloud. Facing with complex market environment, technology reserves are vital to the survival of an enterprise, and the emphasis on
cutting-edge disruptive technology innovation is one of the important ways for incumbents to maintain a leading position and
continue to catch up.

3.3. Good enough: disruptive business model innovation

To achieve innovative counterattacks, enterprises do not necessarily have to master core technologies, especially at the initial
stage. For some new entrants who did not have core technological advantages at the beginning, it is very difficult to achieve
technology-driven innovation disruption. The ability to creatively destroy existing business models is actually the key to economic
growth (Christensen, 2001). Business model innovation does not involve new products and services, but redefines existing products
and services (Markides, 2006), means combination of new partners and new activities (Amit and Zott, 2012), a good business model
can help companies to build a new ecosystem (Snihur et al., 2018). Usually, disruptive innovation companies build a very different
business model (Christensen et al., 2015), to provide good enough products and services to the marginal market to influence the
established market and gradually grow, by exploring the void of the current market, and changing the value proposition of existing
customers, or relocating the company's position in the existing value network (Habtay, 2012). For instance, Xiaomi's emergence is
mainly based on the innovation of the business model of internet mobile phones. Another example is Pinduoduo, an e-commerce
platform in China. In the situation of Taobao and JD.com have already occupied most of the first-, second- and third-tier cities and
have served them well enough, they have adopted the strategy of surrounding the cities from the countryside. This new business
model of social e-commerce help Pinduoduo accumulate more than 300 million users in just three years.6 Disruptive business model
generally occurs after technology-driven innovation. In the short term, the economic feasibility and resource endowment of new
business models enable market-driven enterprises to develop relatively quickly (Habtay, 2012). As an emerging economy, many
markets in China are still immature, which makes business model innovation one with great development potential.
Xiaomi is a Chinese internet company whose main business are mobile phone, smart hardware and IoT platform. Since it es-
tablished in 2010, Xiaomi is showing rapid development in recent years, it is a typical company in terms of business model innovation
in China. Disruptive business model innovation is reflected in Xiaomi's multiple businesses. In the mobile phone business, the initial
market positioning of Xiaomi mobile phone is: mobile phone enthusiasts. In the pre-smartphone era, when most smartphone makers
focused on the mid-to-high-end market, Xiaomi focused on young Chinese consumers with low incomes but a strong preference for
smartphones. Therefore, Xiaomi has developed cost-effective products and adopted the marketing model of limited panic buying,

4
Source: IDC. China CITIC Securities Research and Development Department, Global Iaas Market Share 2019.
5
Source: Alibaba’s official website
6
Source: Pinduoduo’s official website

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which has attracted many consumers. This innovation in Xiaomi's business model has led China's young consumer market to focus on
Xiaomi instead of just Apple and Samsung. Xiaomi's “good enough” innovation not only makes it a great success in the Chinese
market, but also opens up the brand and market for domestic mobile phones.
After building up the brand, Xiaomi is faced with the increasingly fierce competition, Huawei, Oppo, Vivo, and other domestic
mobile phone brands have launched such as mid-range pricing strategy. Such product strategies have formed a strong competition
against Xiaomi. At this time, Xiaomi do not simply take actions directly, but still based on the future development trend of the
prediction of the overall strategic layout, begin to build the ecological chain business model
Xiaomi’s business innovation is driven by strategic vision, has helped Xiaomi expand rapidly and march into various fields of
people's life. So far, there are more than 100 enterprises invested by Xiaomi, which has built a huge Xiaomi ecological chain. The
construction of this ecological chain has formed a strong platform advantage, helping Xiaomi's products quickly seize the market.
Take the lug plate market as an example, this is a huge market, the bull brand occupies 30 % market share, and other companies share
the rest of the market. With the huge platform advantage of Xiaomi's ecological chain, the annual sales volume of Xiaomi's plug
boards reaches several million, which has become the explosive product in the traditional plug board industry. Similarly, Xiaomi also
achieved good sales performance in daily appliances such as weight scale and rice cooker, which is not only due to its product
innovation, but also due to its ecological chain business model.
Xiaomi's case fully reflects how Chinese enterprises achieve disruptive innovation development and prevent being disrupted with
business model innovation. Initially, through its unique business model, Xiaomi attracted a young Chinese consumer group neglected
by mainstream phone makers Apple and Samsung, who had lower incomes and were at the lower end of the market compared to the
mid-to-high end. Xiaomi has successfully entered this consumer market through product innovation and business model innovation of
“good enough”. Then, faced with the imitation and catch-up of domestic competitors, Xiaomi, on the other hand, based on the long-
term strategic layout, further constructed the ecological chain business model, formed a huge ecological chain, and entered other
industries, thus maintaining the relative market share. Although in the disruptive process of business model innovation, the in-
cumbents are not disrupted immediately as Christensen said, this is largely because the threshold for business model innovation is
relatively low, and incumbents are easy to achieve transformation, so in disruptive business model innovation, latecomer often does
not squeeze out all market shares of incumbents. In addition, disruptive business model innovation is also easy to be imitated by
competitors, so building a brand image is very important for this type of innovation.

4. Post-disruption and creative destruction model: Chinese contributions to constructive innovation

4.1. The post-disruption and creative destruction model

Christensen’s disruptive innovation theory mainly explained the process in which latecomers catch up with incumbents and
disrupt the incumbents. It has explained the innovative development and disruption process of many enterprises, and has gained wide
recognition. However, we need to rethink disruptive innovation in China, today. China has implemented the market economy much
later than developed countries, and the market development is very immature. In addition, digital technologies lead the change of
human thinking, the time and space for consumers to participate in have been changed, and digital technologies also change people's
contact ways and consumption concepts (Berman, 2012), which led to various market demands. In addition, digital technologies can
influence business models and operation modes of companies (Henriette et al., 2015). In digital age, there is less asymmetric in-
formation in the market, which put forward higher requirements for enterprise innovation. Meanwhile, digital technologies also
provide platforms for companies to innovate, companies can develop their analytical capability and improve their brands by digital
technologies (Westerman et al., 2014). Both of the above historical element and technological element make China a fertile soil for
disruptive innovation.
In the process of disruptive innovation, we should focus on two different subjects, namely disruptor companies and incumbent
companies. For disruptor companies, maybe they do not expect the later disruption at the beginning; a good strategy can not only
help them achieve disruption, but also help them obtain a more sustainable leading position. And for incumbent companies,
Christensen attributed their failure to over-standard corporate management system, mainstream user-oriented resource allocation
scheme, etc. – all these reflect the limitations of organizational learning. To deal with such problems, companies must develop sound
strategies to overcome these limitations brought about by organizational learning. Strategic decisions are a mix of rational, intuitive,
and emotional factors (Nutt, 2004), and just relying on traditional management process is not a smart choice for enterprises. As a
result, a comprehensive and forward-looking strategy is particularly important.
We introduced holistic innovation framework to build a new, Post-Disruption and Creative Destruction Model to illuminate disruptive
innovation process for Chinese firms. Holistic innovation theory is an innovation theory based on Chinese context, oriental wisdom
and western management theory, which provides an innovation paradigm basis based on the holistic view of systems and major
innovation projects (Chen et al., 2018b). The core of holistic innovation theory is strategic vision driven, which is very different from
the general strategy in the West. In general, western strategies lack the holistic view of Chinese culture and eastern philosophy, such
as the overall thinking, unity of opposites, organic integration and dynamic development (Chen et al., 2018b). In China, the peace
view of “harmony without uniformity” in Confucian philosophy and the overall situation view and strategy view in art of war by Sun
Tzu are reflected in enterprise strategy. The integration of these cultural factors will make the enterprise's strategy develop from a
simple strategy to a systematic and overall strategy. Only under the guidance of such a strategy can the enterprise's long-term
development be promoted and its dominant position be maintained for a longer time. Under the guidance of holistic innovation
theory, Chinese enterprises, as late-developing economies, start to climb from the low end of the value chain. Chinese enterprises

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Fig. 2. The formulation of The Post-Disruption and Creative Destruction Model.

persist in independent innovation, comprehensive innovation, open innovation and collaborative innovation under the guidance of
strategy, and continuously realize disruptive business model innovation, technological innovation and strategic innovation. We call
such a process the constructive innovation process of Chinese enterprises. The formulation of Post-Disruption and Creative Destruction
Model is presented in Fig. 2, which shows Chinese contributions to constructive innovation.
As is shown in Fig. 2, disruptive technology innovation may help companies build a long-term competitiveness, but the invest-
ment in technology research and development is high, the cycle is long, and the return is highly uncertain. The threshold for
disruptive business model innovation is lower, but after acquiring a competitive advantage in the initial stage, it may enter a slow
development stage due to factors such as competitor imitation and lack of technology (Habtay, 2012). Technological innovation and
business model innovation are both very important for Chinese companies to achieve the pursuit from entrants, to beyond, to leading
development. But both types of disruptive innovation require superior strategic leadership. Strategy is the foundation and source of
disruptive innovation. From the thinking of strategy, there are many differences between western countries and China. Western
strategists usually think about how to gather superior forces at key points, while China puts more emphasis on how to patiently
accumulate comparative advantages (Kissinger, 2011). The traditional Chinese strategic thought is based on its unique history and
culture, and has an overall view and system. In the field of strategy, China has an important concept called “Shi”, which refers to an
irresistible and mighty trend created by the subjective in the war, in Chinese history, it is a kind of accumulation and outbreak of
power. Sun Tzu mentioned in the art of war by Sun Tzu that the “Shi” developed by good fighting men is as “the momentum of a round
stone to remain motionless on level ground, and to move when on a slope (善战人之势, 如转圆石于千仞之山者, 势也)”. According to
art of war by Sun Tzu, Chinese enterprises have accumulated strength to gain comparative competitive advantages in Chinese market,
so as to achieve creative disruptive and constructive innovative development. So in Chinese culture and context, how should en-
terprises build such so-called “Shi”? As is said in art of war by Sun Tzu, “in all fighting, the direct method may be used for joining
battle, but indirect methods will be needed in order to secure victory (凡战者, 以正合, 以奇胜)”, “In battle, there are not more than
two methods of attack—the direct and indirect; yet these two in combination give rise to an endless series of maneuvers (战势不过奇
正, 奇正之变, 不可胜穷也)”, in the strategic layout of today's enterprises, it still has a very important reference significance. In the
disruptive and constructive innovation process of Chinese enterprises, the so-called “direct” refers to the sustaining innovation that
continues the original innovation curve, while the “indirect” refers to the disruptive innovation that breaks the conventional thinking.
Although the theory of disruptive innovation originated from western countries also emphasizes the combination of disruptive
innovation and sustaining innovation, Christensen's emphasis is more limited to the local technology or product innovation of an
enterprise and lacks comprehensiveness and overall thinking. While holistic innovation originated from Chinese context and oriental
wisdom provides a better reference for China's disruptive and constructive innovation. Under the guidance of the overall view and the
system view, Chinese enterprises conduct comprehensive strategic design, and realize a good application and balance of the two kinds
of innovation from the strategic perspective, so as to form the strategic advantage conforming to the strategic trend and the external
situation, and realize the disruptive and constructive development of innovation.
Combing the Chinese context and oriental wisdom, we build a Post-Disruption and Creative Destruction Model including strategy
smart enough, technology strong enough and business model good enough, to help Chinese companies to achieve disruptive in-
novation. Similar to Christensen’s “good enough”, which refers to just good for some market demands, the “smart enough”, “strong
enough” and “good enough” are also means that “appropriate”. However, in our theoretical framework, “smart enough” means that
strategy applies to the Chinese context, “strong enough” means that technology adjusts to Chinese technological development stage,
while “good enough” means business models cater to consumer demand. The three “enough” is a further extension of Christensen's
“good enough”, by subdividing the connotation of “good enough”, our theoretical framework becomes more comprehensive. The
Post-Disruption and Creative Destruction Model puts forward higher requirements for the innovation and development of Chinese

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Fig. 3. The Post-Disruption and Creative Destruction Model: Chinese Contributions to Constructive Innovation.

companies. In order to build the Post-Disruption and Creative Destruction Model, we introduced holistic innovation theory to our fra-
mework, aimed at analyzing how Chinese companies would deal with disruptive innovation. Holistic innovation is a new innovation
paradigm based on Eastern philosophy and wisdom based on the lack of innovation in the Chinese context. The four core elements of
holistic innovation are strategy, comprehensiveness, openness and synergy. Through the combination of these four elements, to
achieving organic unification. Post-Disruption and Creative Destruction Model is a good solution for companies to adjust their behavior,
to achieve disruptive and avoid be disrupted, the Post-Disruption and Creative Destruction Model is presented in Fig. 3.
Fig. 3 concretely explains the process of constructive innovation of Chinese enterprises. Different from the western theory of
disruptive innovation, the way Chinese enterprises occupy the market presents the phenomenon of creative disruption. Specifically, it
is a global and systematic constructional innovation process driven by strategic vision under the guidance of holistic innovation
thought under the combination of Chinese context and oriental wisdom. As shown in Fig. 3, the dotted line in the figure refers to the
boundary of an enterprise. The reason why we use the dotted line is that in today's digital age, the boundary of an enterprise is
gradually blurred. Faced with the potential disruption brought by digital technology, enterprises should not close their boundaries
but keep in touch with the outside world. The dashed box outside is the boundary of the combination of industrial chain elements
directly related to the enterprise. The reason why the dashed line is chosen is that the boundary of the industrial ecosystem is also in
dynamic change. The arrows inside represent the interactions between the elements.
As shown in Fig. 3, “Strategy” requires companies to formulate full strategies to maintain their position in disruptive innovation,
by integrating their attention to disruptive innovation into their strategies, taking the internal and external innovation environments
and social trends into consideration. “Comprehensive” requires enterprises to integrate internal and external resources to achieve
simultaneous innovation of multiple elements. “Open” mainly refers to open innovation, that is, companies need to be good at using
external resources of the enterprise, improving the innovation ability, and adopting a comprehensive and open method to understand
the competition and business environment (Fahey, 1999). And they should consider China's domestic political and economic situation
and the needs of the global market, accurately position the company's position in the value network, and adopt appropriate in-
novation strategies. “Collaboration” refers to collaborative innovation, that is, to continuously achieve diversified innovation across
industries and fields, build innovation platforms for enterprises, and create an integrated innovation development model. In many
cases, serious path dependence is a major reason for incumbents failed with doing anything wrong (Lettice and Thomond, 2008),
many incumbent companies are disrupted because of resource-dependent decision-making bias, which causes resources are not
allocated to the development of disruptive innovation.
Holistic innovation is a strategy-driven, integrated and interactive, dynamic development framework for innovation and devel-
opment. Both the typical case in the innovator’s dilemma and our familiar case of Kodak (Lo et al., 2020), Nokia (Vuori and Huy, 2016)
share a common characteristic: they were all the leaders in their industry, but ignored the trend of technical change and market
changes (Yu, 2018), and just focused only on their current consumers (Christensen, 1997). And this is core reason to explain why
some incumbents been disrupted in disruptive innovation theory. It is true that the disruptive innovation theory explains this
phenomenon well, but it fails to provide a systematic solution to innovator's dilemma. Similar to other western management theories,
Christensen's advices to innovators is still what's called separation, which is a simple, targeted method. Although it can sometimes
help alleviate the predicament, it does not address the root problem of the disrupted. While holistic innovation theory explains such
problem, in the frame of holistic innovation theory, the enterprise managers lack the advanced judgment and layout of the devel-
opment trend of society, economy and industry. In the holistic innovation theory, the strategic vision driven occupies the most

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important position, and the strategy here is also different from strategy in western theory and practice. The holistic innovation
framework provides an effective strategic reference frame for Chinese companies, which can help them better establish their
knowledge and innovation system, deal with the dilemma bring by disruptive innovation, and catch the opportunities provided by
disruptive innovation. Facing with disruptive innovation, Chinese companies should focus on strategy and realize holistic innovation.
Based on holistic innovation framework, Post-Disruption and Creative Destruction Model provides companies with an effective fra-
mework for enterprises to continuously learn and improve their innovation capabilities. Knowledge acquisition and management play
a significant role in building R&D and innovative learning capabilities (Cohen and Levinthal, 1990; Leonard-Barton, 1992). To deal
with disruptive innovation, enterprises should take into account both exploratory learning and exploitative learning to achieve
comprehensive, open and collaborative innovation development under strategic guidance. The innovation model corresponding to
exploitative learning is sustaining innovation, which is essential because it can meet the existing needs of customers and maintain the
growth of the company's stock. Only by balancing disruptive innovation and sustaining innovation can maintain the company's future
growth in a turbulent market environment and explore the incremental growth of the company.

4.2. BOE’s experiences of constructive innovation

The growth process of BOE Technology Group Co., Ltd. (BOE) fully confirms the above-mentioned process of The Post-Disruption and
Creative Destruction Model. BOE is a Chinese company whose main business is panel, and it is also an IoT company providing in-
telligent interface products and professional services. Initially, it was an electronic component company with a revenue of only 60
million yuan.7 Before BOE, the world's panel market was occupied by companies in Japan, South Korea, Taiwan and other countries
and regions, while BOE overturned the world's panel industry with indigenous innovation for many years, breaking the “screenless”
market situation in mainland China. BOE's disruptive innovation development is embodied in three aspects: strategy, technology and
business model, as is shown in Fig. 4. The disruptive innovation process of BOE perfectly reflects the Post-Disruption and Creative
Destruction framework, combing the holistic innovation and the firm’s development.

4.2.1. Disruptive strategy innovation

At the beginning of entering the TFT-LCD field, BOE formulated a 25-year strategic development plan and divided the process of
moving towards the world's leading into five stages: “entrant-chaser-challenge-challenger-leader”. At different stage, BOE focused on
different strategic initiatives. At the entrant stage, BOE implements a “rooted” strategy, and gradually builds and improves its
capabilities and systems in technology, manufacturing, marketing, supply chain, and professional management through digestion,
absorption, and re-innovation. In the catch-up stage, BOE implemented the “steel sword” strategy, to achieve investment driven and
innovation leadership, expanded production capacity, and actively participated in global competition. At the challenger stage, BOE
implemented the “Iron Sword” strategy to achieve an average compound annual growth of more than 20 %. The leader stage is from
2018 to 2022, BOE is implementing the “Wooden Sword” strategy to further enhance the competitiveness of display technology and
continue to maintain global leadership. At the same time, it is accelerating the development of sensor devices, smart systems and
health care businesses, and rapidly forming leading advantages. In the future, from 2023 to 2027, BOE will implement a “sword less”
strategy to further enhance innovation capabilities, continue to realize value creation, consolidate and enhance global leadership, and
become a respected great enterprise (Chen and Jia, 2018). In addition to the phased strategic planning, BOE also formulated a
sustaining innovation strategy.
Under the supporting and leading of phased strategy and innovation strategy, BOE has established a complete product innovation
system and technological innovation system, as is shown in Fig. 4. In terms of product innovation, BOE fully combines the char-
acteristics of the digital economy era and closely meets the needs of users. The product innovation system is supported by the
technological innovation system, making full use of the company's technological foundation inward, and closely following market
changes outwards. In terms of technological innovation, BOE has a clear division of labor. Its technology laboratory in Beijing is
responsible for research and development of cutting-edge technologies, while the branches' R&D centers are responsible for over-
coming the promotion and application of new technologies. In addition, BOE adheres to indigenous innovation, and always pays
attention to the developing trend of enterprises in the upstream and downstream. BOE’s innovation development strategy and strong
innovation system have provided important guarantees for its disruptive innovation development.

4.2.2. Disruptive technology innovation

Since the establishment of the company, BOE has been using core technologies as its basis for survival and development, and has
maintained a high proportion of R&D investment, which accounts for 7% of operating income,8 ranking first in the industry. In 2018,
BOE ranked 17th in the world in the number of US patents granted, and is the fastest-growing company in the US IFI Claims TOP20.
Due to the technology intensiveness of the TET-LCD industry, just as the disk manufacturing industry mentioned by Christensen in
The innovator's dilemma, the technological development of TFT-LCD industry also has a clear periodicity. On the one hand, BOE has
invested heavily in the development of technological innovation to realize the process of innovation disruption, and on the other
hand, BOE has taken various measures to prevent it from being disrupted by latecomers in the process of rapid growth. In terms of
achieving disruptive innovation, BOE has established a set of technology research and development systems that can ensure that its

7
Source: BOE’s official website.
8
Source: BOE’s official website.

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Fig. 4. The Post-Disruption and Creative Destruction Model of BOE.

technological development can maintain the leading station in 20 years or even longer. To ensure forward-looking and leading-edge
of its technologies and products, BOE makes sufficient technology R&D investment, and conducts short-, medium-, and long-term
collaborative innovation. In terms of preventing disruption by latecomers, BOE pays close attention to the development of new
foreign technologies and invests in promising new technologies. BOE fully values the flexibility and innovative vitality of SMEs in
technological innovation. In 2014, it invested in Meta Corporation in the United States to help it quickly cut into the technical fields
of AR / VR display based on the original technology. At the same time, in order to further strengthen disruptive technology in-
novation, BOE vigorously attracts and trains innovative talents, and regards human capital as the core force to disrupt innovation and
development.

4.2.3. Disruptive business model innovation

With the advent of the digital age, BOE has also gradually paid attention to the transformation of business models and gradually
shifted from a B2B business model to a business model in which B2B and B2C coexist. To this end, BOE has built its own business
platform. In 2018, BOE upgraded its brand identity and developed BOE Alta. The self-built business platform helps BOE to realize
direct perception of customer needs and build brands, products and channels together. At the product level, BOE has established BOE
Multimedia, which operates B2C products independently. In addition, BOE seized the opportunity to realize the transformation of the
Internet of Things and is committed to becoming an Internet of Things company, which provides smart end products and professional
services for information interaction and human health. BOE committed to provide software such as Shelf management systems
solution, Smart bank management system solution, Smart exhibition control system solution, Conference table card management
system solution, Smart home management system solution, UHD telemedical system solution, EPD tags management system solution,
and other software-hardware integrated technology solutions, to enable enterprises to transform to an Internet of Things company.
BOE’s business model innovation is driven by its strategy, it is disruptive because it makes BOE a purely manufacturing firm to a
company of manufacturing services. BOE’s disruptive business model innovation is also combined with its products and technologies,
it is established on the basis of both strategy and technology. By the integration of disruptive innovation of strategies, technologies,
and business models, BOE formed a holistic, disruptive and constructive innovation system.

5. Contributions, limitations, implications and conclusions

5.1. Conclusions

Rooted in western thought about strategy, the original concept of disruptive innovation explains a process that destroys existing
companies. The concept of constructive innovation, in contrast, is rooted in Chinese thought about strategy based on the principle of
conquering rather than destroying rivals. The purpose of Chinese companies is not to destroy the incumbents, but to achieve peaceful
or combative coexistence through intelligent strategic positioning. The large size and relatively still under-developed Chinese market
give Chinese companies significant opportunities to achieve this different type of strategic position with their different types of
disruptive innovations. It provides an opportunity for latecomer Chinese companies to better understand the needs of Chinese
consumers because they share a common cultural background and traditions, while these consumers are also still in the relatively
early consumption and modest income stage. This enables Chinese companies to develop creative new products and services and/or
adopt creative new business models to satisfy the consumer’s demands in terms of quality and price that are “good enough.” Through

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this learning process, companies continue to accumulate knowledge to drive innovative development of these products, services and
business models, which provides Chinese companies with opportunities to also eventually enter the international market. In some
ways, this is an extended form of “reverse innovation”. It may help Chinese latecomers to enter the developed market with potentially
disruptive innovations, but without intending to replace incumbents. This is consistent with the idea of “harmony and integration (和
合),” which is an integral aspect of traditional Chinese culture. Governed by this idea, the purpose of Chinese companies in catching
up is to seek to build unique strategic positions without having to push out incumbents; in other words, to purposefully develop
strategies to achieve “peaceful” even though sometimes “combative” coexistence. As a result, they hope to help achieve a new and
richer “harmony” in the industries that they enter.
This new model of “constructive innovation” depends on the strategic recognition of the multiple possible forms of disruptive
innovation: technology based, business model based, and strategy based. Disruptive technology innovation can help companies build
stronger technical barriers. Some technology-driven innovations can even change the market structure and severely disrupt the
incumbents. In contrast, innovation in business models is usually less disruptive and can coexist with the incumbent’s traditional
business model.
Because innovations in different fields have different characteristics, we explain the process of Chinese companies' realization of
disruptive innovation development from three perspectives of disruptive strategy innovation, disruptive technology innovation, and
disruptive business model innovation based on Chinese cases. Based on the holistic innovation framework, we have built a Post-
Disruption and Creative Destruction Model for Chinese companies. In the Post-Disruption and Creative Destruction Model, corporate
strategy based on “smart enough” is the foundation and guiding principle of corporate innovation. Under the guidance of corporate
strategy, companies build a path to disruptive innovation based on internal and external environments and its resources. Strategy
determines the choice of specific types of innovation. Chinese companies can adopt technological disruption and business model
disruption to achieve disruptive innovation development. The cost of input required for technological disruption is high, and
companies must decide according to their own situation.
In addition, China has a unique political system. The government will invest resources to support the development of disruptive
innovation. The government support provides an important channel for enterprises to obtain external resources to develop their
innovation capabilities (Sternberg, 1999), Chinese companies can make full use of internal and outside resources to build disruptive
technology to achieve “strong enough”. The cost of business model innovation is low, and with the rapid development of innovation,
there is a failure boundary for any value network, therefore, disruptive innovation is inevitable. In addition, as an emerging economy,
the Chinese market is still immature, providing many opportunities for disruptive business model innovation. Chinese companies
need to define product values according to market characteristics and achieve disruptive business model innovation with “good
enough” technology.

5.2. Theoretical contributions

Our constructive innovation model contributes to the literature of innovation, especially disruptive innovation theory. Based on
Chinese traditional thought of strategy, our study explains the relationship between disruptive innovation and sustaining innovation,
which is not very clear in the western disruptive innovation theory. From the thinking of system and total view, we build constructive
innovation model, it is very useful for the development of disruptive innovation theory. Christensen’s disruptive innovation theory is
more fitted with the start-ups, while less value for incumbents. Our constructive innovation model explains for this problem, con-
structive innovation model highlights the combination of disruptive innovation and sustaining innovation under strategic leading.
Constructive innovation model not only broadens the application boundary of the western disruptive innovation theory, but also
enriches the connotation of disruptive innovation. In Christensen’s disruptive innovation theory, “disruptive” means more “de-
struction”, started from marginal market, the new product or technological innovation gradually occupies the mainstream market,
which usually leads to the failure of incumbents, or the big changes of the market environment and ecosystem. However, in our
constructive innovation model, we introduce the thinking of “harmony and integration (和合)” to enrich the connotation of disruptive
innovation, which is not simply destruction, but a kind of peaceful or combative co-existence.
Concerning further theory development, the constructive innovation model is based on the holistic innovation theory, which
provides a broader, more differentiated set of options for companies to conduct disruptive innovation. The concepts of strategy,
comprehensiveness, openness, and synergy emphasize strategy-driven and integrated perspectives, extend beyond the original theory
of disruptive innovation types. Our research, rooted in oriental mental perspectives, therefore also augments western organization
and innovation theory based on the systems view, which has been enriched by contingency theory, resource dependence theory, the
new institutionalism, social network theory, organization ecology theory, and so on. These theories put the organization in the
broader dynamic concept of “field,” rather than statically separating it from the external environment. Our research illuminates
potential advantages for advancing organizational innovation management further by adopting the holistic theoretical perspective
rooted in China's long history and culture.

5.3. Practical implications

Our model of “constructive innovation” is likely to be useful for further theory development about corporate innovation, as well
as for guiding the future practice of Chinese companies and potentially also for companies in other emerging economies.
Concerning the implications for practice, grounded in the actual experience of Chinese companies, we provide an augmented
theoretical framework to help companies that are still in the exploratory stage to understand better the multiple relevant options for

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disruptive innovation better. This will enhance their ability to more clearly analyze their own strategic situation and choose the
appropriate disruptive innovation development model to improve their innovation performance. However, while our research is
based on the Chinese context and the practice our model of constructive innovation can also be useful for non-Chines global com-
panies. The integrative concept of “harmony,” for instance, is based on seeking peaceful (or sometimes combative) coexistence. The
comprehensive strategic positioning concept of “Shi” combines elements of favorable conditions, geographical conditions and
human, as the foundation of ta company’s unique competitive advantage. These concepts can also be used by western companies.
Besides, at the global level of analysis, China’s growing prominence as a global power is attracting increasing interest in un-
derstanding its culture and its perspective on strategy. Henry Kissinger, for instance, in his book On China (2014), provides a deep
analysis of the concept of Shi in Chinese strategy. In light of this, our study of corporate strategic innovation guided by Chinese
culture aims to contribute insight into how oriental civilization can potentially contribute to the progress and development of the
world at large. Our Post-Disruption and Creative Destruction Model based on Chinese context and oriental culture contributes a new
theoretical lens for examining the development of novel disruptive innovation strategies of Chinese companies. This strategy-oriented
comprehensive, open and collaborative innovation model that is guiding Chinese companies may also usefully do so for companies in
developed countries.

5.4. Limitations and future research

As all the construction of theoretical model, some limitations must be stated for further development of the theory. Firstly, our
theoretical model is built based on Chinese context, it may not be fully applicable to enterprises in other emerging economies and
developed countries due to differences in external environment. As a result, judge whether the theory can be applied to local practice
must be fully combined with the actual situation. Future research is hoped to explore the applicability of our models in other
situations other than China, so as to broaden the application boundary of constructive innovation model. Furthermore, in the process
of model construction, we fully consider the particularity of China's institution, culture and market, such as China's non-mature
market mechanism and institution, and relatively primary market demands, which provides fertile soil for Chinese disruptive in-
novation. Based on such assumptions, our constructive innovation model is built. However, these assumptions may not exist in other
emerging economies and developed countries. As a result, although the holistic thought, system view and the disruptive innovation
types may inspire companies from other developing and developed countries, our constructive innovation model cannot be blindly
used in other situations. It is hoped that future studies can analyze the uniqueness of the Chinese context in detail, make comparative
analysis on the application of the constructive innovation model in China, in other emerging economies and in developed countries,
so as to analyze the advantages and disadvantages of the constructive innovation model in different situations and establish a more
perfect theoretical model. Besides, in the process of model construction, we analyze several cases and the amount of data is relatively
limited. At present, studies on disruptive innovation mainly focus on case analysis and qualitative research (Si and Chen, 2020),
hoping that future researches can collect systematic data and obtain quantitative research evidence. Finally, with the rapid growth of
Chinese economy, the integration of traditional Chinese history and culture with western management theories has become a new
focus of management studies. The combination of eastern and western management ideas is not only applicable to enterprises in the
context of China, but also provides reference for enterprises in a wider range of management. Our research has made a preliminary
exploration, and we hope that future research can be further explored in order to further develop management theory.

Acknowledgement

The research is supported by the financial contributions of National Natural Science Foundation of China (grant number:
71941026).

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