Abstract
“Digital revolution” presents great challenges to incumbent firms in many industries. How could incumbents successfully renewal the assets and capabilities in digital innovation shocks is a question remains unanswered. Drawing on strategic adaptation and asset reconfiguration literature, we take a finer grained approach draw a distinction between retrenchment-oriented reconfiguration, and growth-oriented reconfiguration. Using commercial banks’ divestiture of offline branches and adoption of online innovation as the empirical context, our results suggest that incumbents could benefit from divesting devalued legacy assets, while the innovation adoption could contribute to the performance only when the incumbents are also engaging in legacy divestiture simultaneously.
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