Archetypes of incumbents' strategic responses to digital innovation

Digital technologies (DTs) are significantly changing industrial and organisational activities, as well as the underlying processes and competencies. These impacts are particularly relevant when referring to firms’ business models, in particular on how incumbents have struggled to innovate their business model to react to the disruption triggered by DTs. These technologies have posed new challenges that seem to differ from those going along with previous technological shifts. We argue that such challenges depend on the incremental or radical nature of the technology at stake, as well as how far this is from the technological path of the incumbent, focal firm. By investigating how incumbents are adapting their business models in response to the disruption triggered by DTs, this paper proposes a conceptual matrix that draws on two dimensions: (i) the extent to which the impact of the digital technology is incremental or radical; and (ii) whether the industry of origin of the digital technology is the same or a different one from the focal firm. Through four illustrative case studies, we discuss different strategic approaches, highlighting how incumbents may mobilise different resources and assets following a more defensive or proactive posture in adapting their business model to the digital transformation.