"Within a value network, each firm’s competitive strategy, and particularly its past choices of markets, determines its perceptions of the economic value of a new technology." The concept of value networks is crucial in understanding why established firms fail in the face of disruptive technologies. A value network is the context within which a firm identifies and responds to customers' needs, solves problems, procures input, reacts to competitors, and strives for profit. This perception shapes the allocation of resources, driving firms to focus on sustaining innovations that align with their existing value networks, while neglecting disruptive ones. | Clayton Christensen | The Innovator's Dilemma

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Value Networks and Resource Allocation

"Within a value network, each firm’s competitive strategy, and particularly its past choices of markets, determines its perceptions of the economic value of a new technology." The concept of value networks is crucial in understanding why established firms fail in the face of disruptive technologies. A value network is the context within which a firm identifies and responds to customers' needs, solves problems, procures input, reacts to competitors, and strives for profit. This perception shapes the allocation of resources, driving firms to focus on sustaining innovations that align with their existing value networks, while neglecting disruptive ones.

-- Clayton Christensen