Incumbent Companies Research Articles

Servitisation on consumer markets: entry and strategy in Dutch private lease markets

ABSTRACT Servitisation, which occurs when products are offered with service components as product-service bundles, has increased rapidly in consumer markets during recent years because of digitalisation. Digital technologies have enabled the emergence of peer-to-peer marketplaces and made it possible for B2B lease and rental actors to push for B2C markets. Despite extensive research on servitisation, we know little of what kinds of companies can best exploit the opportunities created by it and how digitalisation affects inter-company relationships regarding these opportunities. This article addresses these research gaps by making a revelatory case study on the entry order and strategy of established B2B lease companies to enter the B2C private leasing and carsharing markets. We collect an interview-based dataset on key companies in the Dutch car lease market, that we analyse abductively. We find that knowledge of the opportunities, position in the value chain, and resources are focal elements that define which companies are pioneers, early followers, and late entrants. In contrast to former servitisation literature, manufacturing incumbent companies are not active in exploiting opportunities created by private leasing. Additionally, we discover that the leasing companies create capabilities for private leasing themselves whereas they partner to enable carsharing. We discuss the contribution of these findings to research on disruptive innovation, servitisation, and digital innovation.

Drivers to implement the circular economy in born-sustainable business models: a case study in the fashion industry

PurposeThis study aims to identify the drivers for adopting the circular economy (CE) in a born-sustainable business of the fashion sector.Design/methodology/approachAn exploratory case study was carried out with a unique and relevant case: the only Brazilian company implementing circularity practices defined through a sectoral commitment, the 2020 Circular Fashion System Commitment.FindingsFrom an analysis of the literature, a theoretical scheme composed of internal and external drivers is proposed. In the case studied, there is a prevalence of internal drivers that led the company to implement the CE. Most of the internal drivers described by the literature were identified in this research, except for two: profitability and available technology. Regarding the external drivers, of the 12 listed, only laws and regulations were identified. Thus, the results suggest that internal drivers are more numerous and may be more prominent than external ones for CE adoption in the born-sustainable business.Research limitations/implicationsDue to its exploratory design and unique case study, the research does not allow generalizations, suggesting replication with a larger number of companies and carrying out quantitative research with born-sustainable companies and incumbent companies, for comparison. Considering that there is a difference between companies that decide for sustainable practices and companies that were already born sustainable, it can be questioned if the drivers for implementing CE for both companies are also different.Originality/valueThis study proposes a theoretical scheme that indicates the main internal and external drivers for companies' CE implementation. Developed from a literature review and applied in an empirical case, this scheme is comprehensive and can be adopted to analyze companies of different sizes and industries. Hence, this paper generates new perspectives for CE literature.

Spatial Distribution of the Rail Freight Demand in Turkey Prior to Railway Reform

Starting in 2013, a reform process in the Turkish rail freight sector resulted in liberalisation in 2017. This paper assesses the state of the demand before the liberalisation using rail commodity flow data of 2011–2016 period. With the GIS-based analyses, the study discusses the demand characteristics for city-based and station-based production/attraction values to detect important load centres and corridors for rail freight demand. The results include major rail commodity flows and origins-destinations in terms of transported net weights and revenue earnings. The evaluation of the relationship between city-based rail freight demand and gross domestic product (GDP) values showed that the origins/destinations of significant rail freight are not necessarily the most industrialised cities, but those are either port or mineral ore producing ones. Furthermore, analysis of the international rail freight traffic, mainly on the European borders, showed a decreasing trend in recent years. The findings of the study are expected to help new entrants and incumbent companies, including domestic or international ones, to compete in the freight market and offer competitive and reliable service to existing rail customers. This will attract new customers and thus, will hopefully contribute to the modal shift to rail from other modes of transport.

Medium, Small and Medium Enterprises and Digital Platforms

A new business platform is a must for companies that are disrupting new media technology, especially during the Covid 19 era. However, many incumbent companies are less able to keep up with changing business trends. Anticipate all changes in the competitive climate in the digital era in carrying out the company transformation program along with the implementation of good corporate governance values to avoid oral hazards and a greater risk of failure. The qualitative method used in this research is a case study approach. The analysis focuses on efforts to raise Medium, Small and Medium Enterprises (MSMEs) that contribute to improving the Indonesian economy. The findings show that credit, training, and mentoring programs have not been able to strengthen their position in small and medium enterprises but they are still working to increase the literacy index and financial inclusion to accelerate income distribution in Indonesia.

How do incumbent companies’ heterogeneous responses affect sustainability transitions? Insights from China’s major incumbent power generators

Transitions research has often been unintentionally biased toward novelty and assumes incumbents as homogeneous groups that are “locked-in” to certain sociotechnical regimes. In reality, incumbents are heterogeneous at the company and industrial levels and thus have heterogeneous responses that can both accelerate and deter sustainability transitions. To fill the research gap, this paper explores the determinants of such heterogeneous responses and insights for sustainability transitions, taking China’s major incumbent power generators as its case study. The results are: first, incumbent companies respond heterogeneously if firm-specific, socioeconomic, and institutional factors give different opportunities and barriers. Policy feedback effects and development of complementarities in infrastructure, instruments, and organizational elements can increase heterogeneous responses. Second, their heterogeneous responses can accelerate sustainability transitions if they go beyond destabilization of regime, legitimization of alternative policy instruments, and development of infrastructure and institutions that trigger co-evolution with socioeconomic and institutional factors.

Business Model Dynamics from Interaction with Open Innovation

In today’s competitive environment, firms face strong challenges. We live in a volatile, uncertain, complex and ambiguous (VUCA) environment where open innovation is a strategic choice and, on top of that, the COVID-19 pandemic has emphasized most of these disrupting forces. Incumbent companies must act strategically by adapting their business model to minimize the risk and to capture the new value that emerges. This article intends to contribute to the development of the nascent stream of research that seeks to understand the evolution of Business Models through time—known as Business Model Dynamics (BMD)—and explores how to better align this evolution to the implementation settings of strategy. This exploratory study is built upon a meta-synthesis approach to identify, analyze, and clarify how academics have dealt with the three terms used in the Business Model Dynamics research strand: Business Model Innovation, Business Model Adaptation, and Business Model Evolution. The results of the meta-synthesis show that a disambiguation of concepts is necessary as, from an organizational learning point of view, it is required to provide a better connection between strategic value appropriation and changes on Business Models. This article contributes to the researcher and practitioner’s literature on Business Model Dynamics offering a clear and rigorous definition of each term from a strategic point of view, thus preventing the conceptual incoherence and their reiterated wrong use as synonyms.

Incumbents achieving coopetition with disruptively technological entrants: a case from Chinese animation industry

ABSTRACT A disruptive technology threat replaces incumbents. While a prior disadvantage of incumbent competing against disruptive technological entrants lacks an effective incumbent’s competitive response. This research studied the case of a Chinese top animation firm, Comicfans Co., Ltd. This study aims to process a triangular qualitative research in the form of integrated qualitative research in terms of more comprehensive triangular formats. Furthermore, this study expands coopetition theory into entrant vs. incumbent under disruptive technology context and reveals how an incumbent-built competitive forbearance and formed coopetition with disruptive technological entrants by intra-industry integration (upstream and downstream) and cooperation (exploration and exploitation). When the disruptive entrants are in upstream substitution and show extension downstream, incumbent companies can adopt a strategy of diversified integration of downstream channels and cooperation with upstream entrants to increase the multi-point advantage and resource symbiosis in the downstream sectors against the entrants to obtain competitive priorities. When disruptive entrants are in downstream substitution and show an extension to upstream, incumbent companies can adopt a strategy of diversified integration of upstream product/business and exploitation cooperation with downstream entrants to improve the multi-point advantages and resource complementarity in the upstream sector against the entrants so as to obtain competitive priorities.

The impact of digital logistics start-ups on incumbent firms: a business model perspective

PurposeDigital freight forwarder (DFF) start-ups and their associated business models have gained increasing attention within both academia and industry. However, there is a lack of empirical research investigating the differences between DFFs and traditional freight forwarders (TFF) and the impact of digital start-ups on incumbents' companies. In response, this study aims to examine the key business model characteristics that determine DFFs and TFFs and propose a framework illustrating the extent to which digital logistics start-ups influence incumbent logistics companies.Design/methodology/approachBased on the primary data gathered from eight interviews with experts from start-ups' and incumbents' logistics companies, as well as secondary data, the authors identify the main factors of DFFs start-ups that have an impact on TFFs and analyze the similarities and differences in regard to the business model components' value proposition, value creation, value delivery and value capture.FindingsThe results show that differences between DFFs and TFFs appear in all four business models' components: value proposition, value creation, value delivery and value capture. In particular, the authors identify three main factors that need to be considered when assessing the impact of DFFs on TFFs: (1) the company size, (2) the market cultivation strategy and (3) the transport mode.Originality/valueThis is one of the first studies to specifically examine the key business model differences between DFFs and TFFs and to propose a conceptual framework for understanding the impact of digital logistics start-ups on incumbent companies.

Influencing factors for the digital transformation in the financial services sector

Digital transformation affects almost every area in societies and has consequences for incumbent companies. With qualitative research, we explore the influencing factors for digital transformation in the financial services sector. We use a PEST-model and Porter’s Five Forces as the underlying structure for our analysis. Our interviews and findings show that the financial services sector face the same current challenges, but their impact is perceived higher in the banking than in the insurance sector concerning social factors and bargaining power of buyers. The character of the current development is evolutionary rather than disruptive. Almost all incumbents currently focus on modernizing and consolidating their backend-systems. The aim is to enable them for new customer-oriented services. A primary driver for the digital transformation is the threat of a broader market entry by BigTechs. Our research provides a comprehensive overlook about the influencing factors of digital transformation using statements from experts in the field.

Transformation in a mature industry: The role of business and innovation strategies

This paper investigates how business and innovation strategies explain companies' responses to transformational pressures in a mature industry. The analytical framework combines two perspectives on business and innovation strategies: competitive position and resource position. Based on an embedded case study of eight companies in the Swedish pulp and paper industry, the paper contributes to previous innovation literature by connecting companies' innovation responses to their business and innovation strategies. Most notably, it reveals a new type of ambidextrous innovation strategy, i.e. “market-driven exploitation”, and shows that the responses by incumbent companies in the pulp and paper industry are the result of deliberate and justifiable strategic choices rather than path dependency and inertia. The study also confirms the value of integrating the two perspectives on strategy. On the one hand, the explanations provided by each perspective overlap with the other, so that they together provide a more nuanced understanding of the companies’ choices and activities. On the other hand, the perspectives complement each other, so that one perspective explains observations that cannot be explained by the other. The results of the paper inform both managers and policy makers about the trade-offs involved in changing a strategic direction while retaining core capabilities.

Organizational Re-Design for Business Model Innovation while Exploiting Digital Technologies: A Single Case Study of an Energy Company

Digital technologies are bringing a wide spectrum of business opportunities as well as significant organizational challenges for incumbent companies operating in traditional industries such as the energy one. The diffusion of new technologies is changing the way energy solutions are consumed and experienced, while consumers increasingly take ownership of their consumption, acting as “prosumers”. In this evolving scenario, incumbents are urged to reshape their business models, explore new opportunities and change their organizational structures accordingly. Still, the required organizational re-design process that enables companies to undergo business model innovation (BMI) while exploiting digital technologies is partially neglected in literature. Hence, this study explores how established companies embrace organizational re-design process to innovate their business model. To this end, we leverage a single case study methodology focused on an incumbent energy company. Our findings show how the establishment of a business unit dedicated to digital technologies exploitation has enabled the company’s BMI. More specifically, we point at the critical role played by the know-how and the industrial capabilities to sustain not only the innovation activities of the new business unit, but also the overall company performance and the shift towards a renewed business model.

Digitalization of Complex Manufacturing - A Disruptive or Sustaining Innovation

How to approach digital technology, or digitalize, is a question that executives in most industrial manufacturing companies are struggling with. Past evidence from sectors such as newspapers or video rental suggests that digital technology is disruptive for the incumbent companies, calling for the creation of a standalone digital business instead of a gradual digitalization the existing business. Our study provides evidence to the contrary. From experiences of four successful and one unsuccessful industrial incumbent, we isolate the processes of digitalization that lead to success versus failure. Based on this evidence, we argue that industrial incumbents, who approach digitalization as a sustaining innovation succeed, whereas the ones that approach it as a disruptive innovation fail. More specifically, we find that the process of digitalization in manufacturing resides on two distinct phases with diverging organizational setups. First, trial-and -error process is used within the existing product and service units and in collaboration with early adopter clients and external digital tech experts to develop pilots of digital solution. This “incubation phase” where the aim is to reach digital problem-solution fit, relies heavily on the knowledge of the client needs, physical as well as digital technology, deployed in internal and low risk context. This “scaling phase”, where the aim is to develop a business model and product- market fit, relies on the structural independence but also maintenance of strong relationships with the existing product and service units. In the article, we examine the contingency factors that determine the sustaining nature of the transformation and then elaborate on the process where digitalization is treated as sustaining, as opposed to disruptive innovation.

Exploring the main drivers influencing brand loyalty to motorway services areas in Italy

Due to the emergence of new shopping trends in alternative retailing formats, the paper aims at exploring the role of assortment levers to increase customer loyalty to the retailer’s brand in an on-the-go retailing format, such as motorway service areas (MSAs). Specifically, the paper investigates how the grocery assortment perception (GAP) of MSAs influences shopping satisfaction and shopping enjoyment, generating customer loyalty to the MSA. A mobility proxy, measured in terms of the number of kilometres driven in a month, was included as an antecedent of consumers’ loyalty to MSAs. Survey data were collected from 526 respondents during their stop in three MSAs. The covariance-based structural equation model was computed to estimate the direct and indirect effects. The findings show that the perception of assortment is a significant driver of loyalty to the MSA retailing format. Most remarkably, the results show a positive relationship between the customer’s mobility and his/her loyalty to the MSA brand. The paper focuses on an emerging, although poorly investigated retail context, MSA, in which companies are enlarging the grocery assortment to offer the opportunity to shop during the consumption. Implications in terms of competition between incumbent grocery retailers and companies operating MSAs are derived. Moreover, a new conceptualisation of consumers’ mobility in influencing the retailer’s brand loyalty is prosed when shoppers are on-the-go.

Business model innovation in strategic alliances: a multi‐layer perspective

Business model innovation (BMI) has recently become a topic of interest for research as well as corporate practice. However, we lack specific insights into actors, drivers, and different forms of BMI as the concept is by now mainly addressed in a very general way. In this paper, we analyze how BMI takes place in strategic alliances with the focus of enhancing the recent knowledge about BMI by developing a concept that links firm‐level BMI with alliance‐driven innovation of business models. Against the background of an in‐depth explorative qualitative study, we shed light on the basic nature business model innovation alliances (BMIA) and their effects on both, alliance level and firm level. We develop a process model of BMIA that is the first model providing a holistic picture of this particular type of BMI. Our findings allow for deep insights into BMI processes in incumbent companies and uncover in detail the importance of boundary spanning activities in this realm. By providing these insights, we pave the ground for a new stream of BMI research that focuses on the in‐depth understanding of the role of collaboration and network effects in recent BMI processes. In addition, we show practical benefits for partners in BMI alliances. These insights may help to overcome the traditional fear of negative effects that is still very often prevalent in companies when it comes to issues of partnering with firm external players in strategic issues.

The Present and Future of the Space Sector: A Business Ecosystem Approach

An increasing direct participation of private companies in the space sector started in the early 2000s and became known as the New Space movement. Despite the media buzz from this movement and the corresponding increased interest in space, most analyses focus on a specific industry such as launch systems or satellites, producing limited insights. History shows that disruptive innovation usually comes from adjacent industries that threaten incumbent companies and change several industries at once (microelectronics, the internet, and streaming services are some of the examples). Industry leaders of the past have become irrelevant not by their direct competitors but because of new products and services coming from other industries that enveloped the old ones. Can the same phenomenon happen in the space sector? To answer that, this research offers a multi-industry analysis of the space sector's contemporary business environment by studying it through an ecosystem approach, producing a first draft of the space ecosystem based on a comprehensive literature review. It opens discussion on upcoming trends and uncertainties regarding potential transformations in the space sector, comprehending space launch vehicles, satellites, commercial space applications, and multi-industry reconfigurations. From those, a scenario planning process is conducted producing four possible futures for the space ecosystem in a 5- to 10-year timeframe. Those scenarios are described and discussed, contributing to the strategic perspective of both academics and practitioners and also of policy makers and executives.

Digitalization of Agri-Cooperatives in the Smart Agriculture Context. Proposal of a Digital Diagnosis Tool

The use of digital technologies has been recognized as one of the great challenges for businesses of the 21st century. This digitalization is characterized by the intensive use of information technologies in the different stages of the value chain of a sector. In this context, smart agriculture is transforming the agricultural sector in terms of economic, social, and environmental sustainability. In some countries, cooperatives, as the most common legal form of the incumbent companies, in this rather traditional low-intensive technology sector, are going to develop a relevant role in the process of adoption of these technologies. In this context, this paper provides, first, a review of the evolution of the main digital technologies, such as Internet of Things, robots, Artificial Intelligence, Big Data, and Blockchain, among others. Second, a description of the digital innovation process in agri-cooperatives in order to help them in the decision-making process, and third, a digital diagnosis tool for measuring cooperatives’ digital innovation. This tool is initially applied to two cases of agri-cooperatives in Spain. All of this contributes to a better understanding of digitalization of agri-cooperatives in the context of smart agriculture.

Translating High Hopes Into Tangible Benefits: How Incumbents in Supply Chain and Logistics Approach Blockchain

Blockchain is expected to have a transformational effect on supply chain and logistics due to its promise to improve the information flow between the supply chain partners. However, despite their high hopes, incumbent companies from supply chain and logistics are still struggling to deliver on this promise. In this explorative, qualitative interview study, we identify how incumbent companies try to make use of Blockchain in supply chain and logistics and we also analyze the barriers hampering them. The analysis of twenty-four semi-structured expert interviews and extensive secondary data collates a comprehensive picture of incumbent companies’ activities around Blockchain adoption. We find that companies use Blockchain to drive digital transformation, constitute new business models and unify the industry through consortia. The main barriers to such solutions are a lack of technological usability and long-term uncertainties. The results of our study provide evidence for theoretical constructs and guide managerial practice.

The anatomy of successful digital transformation: The role of analytics

Among incumbent companies, digitisation (ie the process by which companies leverage digital technologies in order to transform their business system), tends to be a rather slow process. This is in no small part due to the complexity of mastering the various elements of successful digital transformation. Based on extensive statistical analysis of the failure and success of almost 1,000 digital transformations by traditional firms worldwide, this paper finds that success is increasingly linked to mastering analytics.

Inovasi Disruptif di Industri Perhotelan

ABSTRACT The concept of a market provider of room rentals or residential units using online networking information technology systems such as those conducted by the Airbnb company is now a new competitive concept in the hotel industry. It is still unclear whether it is considered a threat or not in the development of the hotel industry. The purpose of this study is to analyze the concept of online market place whether it is a disruption to the hotel industry and to analyze the reaction of incumbent companies and government policies in addressing the development of the hotel industry. This research used qualitative method that is constructive with literature review and documentation as the premier data source. The results of the study cover the advantages and disadvantages of the existence of online market places for the hotel industry. This research contributes to the hotel industry that the presence of Airbnb companies as an online market place provider is not a nuisance for incumbent companies in the hotel industry. However, standardization of the quality of rooms or residences that are leased needs to be done to ensure the quality of the products and services offered at online market place. Further studies can be conducted to analyze the application of policies for minimum rental rates for rooms offered both by online market-place provider companies such as Airbnb and incumbent companies in the hotel industry.

Why “majors” surge in the post-disruptive recording industry

PurposeThe recording industry has gone through a far-reaching disruption, but the major record companies from the past continue to surge. The following question is addressed: Why has disruption in the recording industry not followed the patterns of generic examples from other sectors? The purpose of this paper is to describe and explain why the digital disruption does not lead to the disruption of all types of companies.Design/methodology/approachThis longitudinal study is based on a large set of secondary sources combined with in-depth interviews in Sweden’s recording industry.FindingsFindings indicate that when customers turn to streaming, the major record companies’ direct control of which music the consumer is exposed to increases. This main finding contrasts statements that streaming services would facilitate peer-to-peer sharing activities between music customers and make record companies redundant. The major record companies have remained at a prosperous position due to the control of valuable content and marketing assets, as well as asymmetric interdependency among parties in the supply chain.Research limitations/implicationsThe recording industry is different to many other sectors based on the latent value of catalogues, and the conclusions drawn from this paper should thereby not be taken for granted for other industries.Practical/implicationsFindings suggest that by “reading” the development of the industry and understanding what key resources create dependencies and revenue flows, managers would be better at tackling disruption.Originality/valueThe paper contributes to previous literature by describing how incumbent companies survive and even prosper post-disruption. It adds to the understanding of the digitalization of the recording industry and points at how dependencies help to understand disruption.