Archetypes of incumbents’ strategic responses to digital innovation

Abstract

Purpose The purpose of this paper is to explore how incumbents adapt their business models in response to digital innovation whose impact is either incremental or radical and source industry is either their own industry or other industries. The authors propose a conceptual matrix that is built on these two dimensions. Design/methodology/approach The authors build examples of four multinational incumbents operating in different sectors and known for their forefront approach to digital innovation to populate the matrix. Cases were chosen because of their polar nature that could provide variation in the two dimensions. The authors draw on a variety of qualitative secondary data sources to build the cases. Findings The study reveals how incumbents’ response to digital technologies (DTs) may differ depending on the resources or assets (including knowledge-based ones) that need mobilising. Business model changes and innovations may require full reconfiguration of a firm’s activity system; hence, one business model may be preferred to others depending on how burdensome the reconfiguration process will be. Research limitations/implications As the study is exploratory in nature, the anecdotal evidence provided in the paper are only some of the possible strategic responses of firms. Future studies may further into the dimensions the authors identified by empirically testing their validity with primary data. Practical implications The research offers managers and executives of incumbent firms a clear indication as to which elements of their business model ought to be adapted given the opportunities as well as the challenges brought about by DTs. Originality/value This research has explored incumbents’ response to DTs by primarily focusing on the nature and source industry of the underpinning innovation, besides any consideration of the drivers or processes that may lead to business model change.