Strategic Paranoia and Disruptive Innovations

Author: Murat Tarakci  (Rotterdam School of Management)

Abstract: We introduce and examine the concept of strategic paranoia as a psychological foundation for disruptive innovation strategies. We define strategic paranoia as a fear-induced state of mind about competitors' actions and intentions. We hypothesize that decision-makers with strategic paranoia are more likely to invest in disruptive innovations, but they also overcommit these resources and do prematurely so. Across three experiments, we develop a scale to measure strategic paranoia, provide empirical evidence for our hypotheses, and unearth the underlying mechanisms. We, thereby, introduce fear into organizational research as a positive motivator. We also shed light on the socio-psychological antecedents of disruptive innovations, which have so far been limited to economic, structural, and cognitive explanations.

Host: Amy Zhao-Ding