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Timeline of the Adaptation Process in Two Phases and Two types of Disruption

Timeline of the Adaptation Process in Two Phases and Two types of Disruption

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Despite the growing importance of digital transformation and the notion of disruptive innovation, strategy literature still lacks a more complete picture of how incumbent organizations adapt their business models after disruptions. This research sheds light on this important process by analyzing a major Italian news media publisher reacting to the...

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... Many incumbent companies collaborate with startups to explore new knowledge and ideas and enhance their innovation performance (Kohler et al., 2009;Narayanan et al., 2009;Weiblen & Chesbrough, 2015). Startup collaboration enables incumbents to overcome internal barriers and explore novel markets and technologies (Bruneel et al., 2013;Keil et al., 2008), which is particularly beneficial in times of disruption, where companies compete with radically new products and services (Anderson & Tushman, 1990;Cozzolino et al., 2018). ...
... Open innovation, defined as "the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively" (Chesbrough, 2006, p. 2), has been identified as a strategy to respond to disruptions (Cozzolino et al., 2018). Traditionally, banks have mainly focused on closed innovation (Schueffel & Vadana, 2015), but recently, to respond to the increasing pace of change, they have started to engage in open innovation (Chesbrough, 2003;Fasnacht, 2009) with fintech startups in particular. ...
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Driven by digitalization, the emergence of startups, and regulatory changes, the banking industry is undergoing a “fintech revolution” where the competitive advantages of incumbents are disrupted. In response, banks collaborate with startups by organizing accelerators and incubators to promote corporate innovation. A critical challenge is achieving a strategic fit with startups. In this research, a longitudinal case study of Nordea, the largest retail bank in the Nordics, was conducted. Three startup programs between 2015 and 2018 during a major fintech boom were investigated, and how the programs implement corporate sponsorship and enable corporate innovation was analyzed. We found that achieving a strategic fit was an iterative process fueled by the accumulation of technological and market knowledge from the startups, where Nordea adjusted its mode of startup collaboration according to the phase of the disruption to meet its evolving learning goals.
... Behavior change is a necessity where digital technology positively helps performance more quickly and efficiently [2], [38], [39]. On the other hand, digital technology can also reduce direct interaction, hence digital transformation in the business world needs to be anticipated [40]- [42] to maintain employees' emotional and intellectual involvement. Work engagement in terms of closeness and involvement, can be grouped into three levels, namely (1) job resources, (2) personal resources and (3) job demand, which is often referred to as JD-R Theory [32] [43]. ...
... Technological progress adds pressure on this need for continuous BMI by periodically enabling "truly new business models" (Teece, 2018): Digital photography disrupted existing BMs of firms such as Kodak and Fuji (Koen et al., 2011;Komori, 2015;Lucas Jr. and Goh, 2009). The internet, as another example, led to a disruption of BMs by online companies (Cozzolino et al., 2018;Teece, 2018;Wirtz et al., 2010). Spoiled by the success of the internet, more and more firms built platform-based BMs, effectively outcompeting traditional companies (Baden-Fuller and Haefliger, 2013;Parker et al., 2016;Rochet and Tirole, 2006). ...
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Continuously innovating business models is necessary to leverage technological progress but remains a complex challenge for firms. Dynamic capabilities explain how organisations ensure long-term success by continuously transforming. Still, how continuous business model innovation unfolds and how dynamic capabilities might support remains understudied. Therefore, we use a 27-year old longitudinal case study of CEWE. CEWE transformed from an analog B2B2C business to a digital B2C and B2B brand in the photo industry. We derive a process model on continuous business model innovation, which explains how modular business model innovation builds dynamic capabilities and how architectural business model innovation utilises them. We enrich business model innovation and dynamic capabilities research by demonstrating how both enable and build on each other. For practice, we show explicit dynamic capabilities and routines to manifest them that guide firms to successfully navigate their business model innovation journey.
... Firms are shifting from the exclusive use of digital assets that they fully control to the use of a variety of digital solutions developed internally and externally or co-designed with external partners (Gregory et al., 2018). A firm's introduction of disruptive digital technologies requires openness to external knowledge and simultaneous efforts toward internal knowledge production (Cozzolino et al., 2018;Di Vaio et al., 2021). ...
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The ongoing and ubiquitous digital transformation challenges the raison d'être of firms and forces managers to rethink business strategies and operations and academics to reconsider related theories. To aid these efforts, we conduct a systematic review of research on firms' digital transformation, generating a database of 537 peer-reviewed academic articles and analyzing it using a novel multi-layered framework. The framework separates three layers: an organization's core activities, its peripheral activities, and its external environment. We find that firms that have come far in their transformations are more embedded in platform ecosystems with unclear business boundaries. Relatedly, we identify a tension between decentralizing versus centralizing power across organizational layers during a firm's digital transformation and how this dynamic affects corporate strategies and firms' internal and external boundaries.
... From a variety of reasons why incumbents struggle to pursue disruptive business models, research on organizational inertia (e.g., Rumelt 1995;Mateu and March-Chorda 2016;Cozzolino et al. 2018) has highlighted five major barriers concerning asymmetric resource allocation (e.g., Assink 2006;Chesbrough 2010;Wan et al. 2015;Cozzolino et al. 2018;Chen et al. 2021), cultural inertia (e.g., Velu and Stiles 2013;Iranmanesh et al. 2021), rigid cognitive patterns (e.g., Rumelt 1995;Ahuja and Lampert 2001;DaSilva et al. 2013;Wan et al. 2015;Kammerlander et al. 2018), top management disinclination (e.g., Rumelt 1995;Christensen and Raynor 2003;Yu and Hang 2010), and structural barriers (e.g., Christensen and Raynor 2003;Yu and Hang 2010;Wan et al. 2015). ...
... From a variety of reasons why incumbents struggle to pursue disruptive business models, research on organizational inertia (e.g., Rumelt 1995;Mateu and March-Chorda 2016;Cozzolino et al. 2018) has highlighted five major barriers concerning asymmetric resource allocation (e.g., Assink 2006;Chesbrough 2010;Wan et al. 2015;Cozzolino et al. 2018;Chen et al. 2021), cultural inertia (e.g., Velu and Stiles 2013;Iranmanesh et al. 2021), rigid cognitive patterns (e.g., Rumelt 1995;Ahuja and Lampert 2001;DaSilva et al. 2013;Wan et al. 2015;Kammerlander et al. 2018), top management disinclination (e.g., Rumelt 1995;Christensen and Raynor 2003;Yu and Hang 2010), and structural barriers (e.g., Christensen and Raynor 2003;Yu and Hang 2010;Wan et al. 2015). ...
... Thereby, established projects are disproportionately favored at the expense of disruptive business models as companies generally allocate their resources to the most profitable uses (Assink 2006;Chesbrough 2010;Kammerlander et al. 2018). On the other hand, resource dependency affects the resource allocation process, as a company's investments are usually based on the profile of available resources (Cozzolino et al. 2018). Thus, companies are locked into the business in which they have accumulated resources and are unwilling to devote those resources to a more uncertain, lower-margin business (Velu and Stiles 2013;O'Reilly and Binns 2019). ...
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Today companies are facing challenges to survive due to substantial transformations induced by digital technologies, ever-changing consumer demands, and environmental uncertainties. Thus, companies need to be innovative to sustain competitive advantages. Scholars and practitioners have recognized the potential of disruptive innovations as a key factor for a company’s competitiveness. Yet, such innovations often challenge established companies due to the tensions between their traditional business model and the newly emerging business model required for disruptive change. The theory of ambidextrous organizations has offered a variety of solutions to tackle these barriers referring to the alignment of exploration and exploitation within an organization’s structure. Current literature, however, faces inconsistencies regarding how this can be achieved. With this study, we therefore aim to provide a comprehensive understanding of how ambidextrous structures enable incumbent companies to reduce the barriers to disruptive business models. On the basis of a systematic literature review, we analyze and compare potential structures and their characteristics proposed in the ambidexterity literature. Drawing on our review, we conceptualize a framework linking the different organizational structures to the barriers associated with disruptive business models. Our framework identifies a range of seven structures which can resolve the barriers and thus support managers in their structural decisions on how to align exploration and exploitation to pave the way for disruptive business models.
... Within the domain of business model innovation, scholars put forward the notion of disruptive innovation to understand change initiated in niche markets (Christensen et al., 2018;Snihur et al., 2018). The latest empirical contributions take a business model innovation perspective for theorizing (Cozzolino et al., 2018;Schmidt & van der Sijde, 2022). Spurred by advancements in digital technologies, debates revolve around how digital disruptors, i.e., new market entrants with digital business models, unlock disruptive dynamics in established markets (Schmidt et al., 2021). ...
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Scholars are debating how new market entrants transform industries by growing new business models from niche markets. The concept of disruptive innovation captures parts of these debates. Likewise, there is a discussion about how business models are used to contribute to a more sustainable future. The focal study aims to combine those debates to explore how new market entrants build on strategic alliances when growing their sustainability business models towards the mainstream market. We chose the travel industry as our empirical context because of a.) its considerable economic relevance, b.) its contribution to global greenhouse gas emissions, c.) the dominance of established companies who create a vacuum for change potential. We propose to collect secondary data from and about three new market entrants, who are currently growing their digital sustainability business models in the travel industry. Based on a qualitative content analysis, we expect to contribute findings about the generative mechanisms underlying how companies manage sustainability business model innovation in an inter-company setting. Our study contributes to building a theory of disruption by offering an early attempt to study disruptive innovation "in becoming".
... Due to global population growth, technology has played a large role in food production as food needs become more demanding in societies. Concerns about the production of poor-quality foods have been linked to increased rates of death, disease, and human suffering, which places a greater economic burden on humanity [1][2][3]. To reduce waste, poisoning, and spoilage in food, great efforts have been made in the industrial sector [4]. ...
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The rapid development of the human population has created demand for an increase in the production of food in various fields, such as vegetal, animal, aquaculture, and food processing. This causes an increment in the use of technology related to food production. An example of this technology is the use of gases in the many steps of food treatment, preservation, processing, and ripening. Additionally, gases are used across the value chain from production and packaging to storage and transportation in the food and beverage industry. Here, we focus on the long-standing and recent advances in gas-based food production. Although many studies have been conducted to identify chemicals and biological contaminants in foodstuffs, the use of gas sensors in food technology has a vital role. The development of sensors capable of detecting the presence of target gases such as ethylene (C2H4), ammonia (NH3), carbon dioxide (CO2), sulfur dioxide (SO2), and ethanol (C2H5OH) has received significant interest from researchers, as gases are not only used in food production but are also a vital indicator of the quality of food. Therefore, we also discuss the latest practical studies focused on these gases in terms of the sensor response, sensitivity, working temperatures, and limit of detection (LOD) to assess the relationship between the gases emitted from or used in foods and gas sensors. Greater interest has been given to heterostructured sensors working at low temperatures and flexible layers. Future perspectives on the use of sensing technology in food production and monitoring are eventually stated. We believe that this review article gathers valuable knowledge for researchers interested in food sciences and sensing development.
... Disruptive innovations enable (disrupted) firms in an industry's value chain (Gnyawali et al., 2008) to reconsider their extant competitive and cooperative strategies to create and capture value from the disruptive business model (Ansari et al., 2016;Cozzolino, Verona, & Rothaermel, 2018). There have, however, been only a few attempts to connect the coopetition and disruptive innovation literature streams (Ansari et al., 2016;Gnyawali & Park, 2009). ...
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Coopetition may help firms to respond collectively to technological change, and compete against disruptive innovation. Yet, coopetition often creates tensions, as coopetitors need to engage in persistently contradictory activities. While existing research focuses on dyadic coopetition, we know much less about multilateral coopetition; specifically, how tensions in multilateral coopetition arise and how they are managed in response to disruptive innovation. We use an in-depth case study of nine Dutch firms, who respond to digital disruption by introducing a new digital music platform, to analyse how tensions evolve in a multilateral coopetition entity. Our findings reveal two coopetitive tensions: a novel multilateral generalist–specialist contribution tension, and the well-known value creation–capture tension. The generalist–specialist contribution is an actor-activity-based tension that originates from the variable contributions of different vertical and horizontal coopetitors over time. Coopetitors try to resolve or balance this tension constantly via commensuration and orchestration of individual coopetitors' contributions, but the tension remains dormant and therefore re-appears. The second tension appears to stabilize over time as the coopetitive entity manages to balance the value creation–capture tension through an iteration of cooperation-inducing, competition-inducing and attendance to redirecting external events. The tensions are interlinked: the generalist–specialist contribution tension triggers subgroup coalition formation, which spurs the value creation–capture tension. We contribute to the coopetition literature by explaining how tensions emerge and are managed in multilateral coopetition, pointing to a new tension inherent in multilateral coopetition. Furthermore, we show how disruptive innovation uniquely shapes multilateral coopetition by inducing cooperative behaviour.
... For other scholars, search is dealt with when they address business model design (e.g., Eurich, Weiblen, & Breitenmoser, 2014;Frankenberger et al., 2013). Nevertheless, our understanding of how industrial firms innovate their business models is poor and requires more research (Cozzolino, Verona, & Rothaermel, 2018;Sjödin et al., 2020). For example, Sosna et al. (2010: 385) state that business model innovation "lacks theoretical grounding in the established literature which would allow us to understand its underlying mechanisms better and move the still shaky conceptual frameworks of business model development and innovation to more solid theoretical grounds." ...
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This study explains the business model innovation processes in industrial firms. Drawing on three case studies of leading business-to-business firms shifting from product-based to service-based business models, it introduces problems as a theoretical concept to explain business model innovation processes. We show how formulating and solving problems guide the search for a viable business model and why some problem formulation and solving activities lead firms to shift between backward-looking and forward-looking searches. The decision to shift to a forward-looking search is triggered by the perception of failure to continue with an established way of working, while the shift to a backward-looking search is based on the perception of high alternative costs. We contribute to the business model innovation and servitization literature by theorizing the process of business model innovation and providing implications for managers.
... In traditional market systems, the focal firm is the producer that controls all the process of manufacturing, assembling, and distributing products or services. This firm might rely on subcontractors to outsource one or multiple operations, but it still has the ownership of the delivered offering and rely on internal resources (Cozzolino & al., 2018). In platform ecosystems, participants provide specific resources (e.g., data, skills) and products to offer a unique value proposition to final users (Thomas & al., 2014). ...
... By using its upstream core technological knowledge to diversify its offerings and develop in new categories, the digital platform owner gains economies of scope (Cozzolino & al., 2018). We introduce a process that we label hybridizing, which consists for platform owner of leveraging their technologies to create digital based categories. ...