Explorative/Exploitative Business Model Change: The Antecedents of Responses to Ongoing Disruption

Abstract

Entrepreneurial disruptors entering established industries are the agents of Schumpeterian creative destruction. Although creative, they are nevertheless destructive for incumbents. Focused on business model disruptions, we develop a typology framework of heterogeneous incumbent adaptations to gaining momentum disruptive innovations, based on juxtaposing two strategic paths: i) the explorative adoption of disruptive business model, ii) the exploitative strengthening of an existing business model. Applying theories of managerial decision making, we derive and test hypotheses concerning situational and dispositional antecedents to managerial intentions to embrace each of the two adaptation strategies. Empirically, we study Canadian realtors at a time when a salient disruptive innovation was gaining momentum. Structural equation modeling results revealed that explorative business model change intentions were positively influenced by recognition of opportunity, perceived non-critical threat, and prior successful risk experience. On the other hand, exploitative intentions were negatively associated with perception of critical threat and tenure within the industry, and positively associated with prior successful risk experience. We contribute to the growing literature on business model disruptions by collecting prior research into one definable framework of incumbent responses, and by developing and testing replicable hypotheses of influences on incumbent strategic responses in a dynamic setting.