Incumbent capability enhancement in response to radical innovations

Schumpeterian market disequilibrium marked by entrepreneurial entry and incumbent exit has long held an important place in management literature. The extant literature has overwhelmingly championed the newcomer, despite incumbents' obvious advantages in resources, experience and market knowledge. The current research provides evidence for the effectiveness of the incumbent's strategy of capability enhancement (along an established technological trajectory) while responding to radical technological innovations. We develop a cognitive process model that integrates managerial cognition with capability development and deployment views, depicting the dynamics of the incumbent's capability enhancement process. We analyze the cognitive drivers of organizational actions in all stages (rigidity, triggering event, and capability renewal) and elucidate the role of top management cognition in the processes of detecting and correcting errors in a strategic course of action. We ground our model in the case of a cork-stopper industry veteran's decline as corks ceded ground to screw tops and other stoppers in the wine industry. How a major company fought back in response to the emergence of these, in the industry context, radical technological innovations, provides the basis for our narrative. The proposed theoretical model contributes to literature on technology management (with regard to incumbent strategies in response to radical innovation threats) as well as the role of cognition in strategy (providing an explanation of the cognitive underpinnings of capability development).     

Organizational change and rigidity during crisis: A review of the paradox

When and how do existential crises, threatening business continuity, stimulate organizational change or cause the opposite—rigid preservation of established business practices? This question remains unresolved, despite three decades of deliberations in the academic literature, which still yields contradicting theoretical arguments and empirical results. One view argues and finds support for the hypothesis that posits an amplified propensity to change within threatened organizations. The other view supports the threat-rigidity thesis, implying reinforcing habitual practices. In this paper, we provide a novel holistic typology of organizational crises and then review the literature on the topic, summarizing existing insights within a theoretical framework comprising three interrelated sequential processes: organizational cognition, decision-making, and implementation. We analyze the gaps in the field's knowledge within each process and propose a research agenda to address these voids.     

The pressure cooker: When crisis stimulates explorative business model change intentions

How do firms respond to critical threats, such as regulatory turmoils or disruptive innovations? After more than three decades of contradicting theoretical arguments and inconsistent empirical results, this question remains unresolved. One view argues for and finds evidence for amplified propensity to engage in change when organization members perceive critical threat. The other view supports the threat-rigidity phenomenon, reinforcing resistance to change through a focus on habitual practices and routines. To resolve this puzzle, we draw on the multi-dimensional framework of ‘crisis’ strategic issues processing, supplemented with the behavioral decision making perspective. In particular, we investigate the conditions of emergence of radical (explorative) business model change intentions within organizations in response to major threats. The resulting model suggests that cognitive moderators – perceived predictability and time pressure – lead to highly divergent results of critical threat perception, such that low predictability and high time pressure attenuate the threat-induced explorative business model change intentions. The model is tested in two empirical contexts, real estate brokerage and higher education, finding strong empirical support.