Confronting digital disruption: how organizational dynamics shape response strategies in incumbent firms

Despite growing recognition for the pervasive impact of digital technologies in driving disruption, surprisingly little theoretical guidance or empirical evidence exists for how digital technologies impact organizational processes of the incumbent firms and how and why do the ensuing organizational dynamics shape the incumbent’s strategic responses to the threat of disruption? Our paper addresses this question by combining a ‘processual’ approach with a ‘performative’ perspective to investigate the digital disruption process confronting incumbents firms. Our research with participants from two firms operating in two different industries allowed us to capture the digital disruption experienced by these incumbents while also examining how and why they are responding to the lurking threat of digital disruption. Our analysis unearthed three distinct organizational dynamics which we have called Dynamics of the Pioneer-Settler Dilemma, Dynamics of Technology Affordances and Dynamics of the Red Queen Effect that shape an incumbent’s response to digital disruption. We expand and elaborate on these dynamics which were seen to influence the entwinement of the digital disruption process with the incumbent’s organizational processes. By identifying the dynamic processes through which digital technologies trigger disruption within incumbents and by illuminating how and why these processes shape the incumbent’s strategic response, our study offers theoretical and practical guidance for managing digital disruption.