Diffusion of Disruptive Innovations with Network Effects: The Electric Vehicle case

Abstract

Disruptive innovations appear year after year in all kind of different technological areas. Not every breakthrough technology that tries to enter a market does it successfully so it is important to understand the key factors that influence on its diffusion. As well, network effects are significant in many of the innovation processes and their influence can be critical to the final success of the introduction of the technology in the industry. For this reason, this thesis will inductively develop a framework with the key factors for the diffusion of this particular case of disruptive innovations with the influence of network effects. To realize the study several historical cases have been used but the analysis is focused on the real-time case of the electric vehicle (EV) and its introduction in the automotive market. It is a perfect example as the necessity of charging infrastructure installed is critical for the diffusion of the technology, which means that indirect network effects and how to deal with them will have a key role. The study will offer propositions on the most important discussions of the case like the standardization process, the chicken-egg paradox on the charging infrastructure, the AC/DC technologies discussion or the geographical drivers that make some markets more suitable for the EV introduction than others. This thesis will have contribution to the theory trying to fill the gap in the literature, explaining the combination between network effects and disruptive innovations, as well as implications to the management being useful for the understanding of the development similar cases and helping them to make future decisions.