Adaptation to Competence-Destroying Change: A Real Options Perspective

Many recent studies on entrepreneurial opportunity view opportunity identification as a collective process and call for further research on incumbent firms. In this article, we respond to this call and reveal a positive relationship between a specific organisational learning activity (i.e., organisational improvisation) and incumbent firms’ opportunity identification. Our empirical analysis of survey data for 282 Chinese firms partly supports our argument that there is a positive relationship between organisational improvisation and opportunity identification, and this relationship is weaker when the firm is under strong formal control and has a culture of being less tolerant for failure. This study contributes to the literature on opportunity and corporate entrepreneurship with an in-depth investigation of how improvisational learning leads to incumbent firms’ opportunity identification. It also provides implications for organisational improvisation theory by demonstrating that improvisation, as a specific learning activity, facilitates subsequent entrepreneurial activities under certain contextual conditions.

Incumbent firms are often thought to focus on incremental innovations and only respond to a major technological change once its impact on established markets and/or dominant designs becomes clear. We argue, however, that incumbent firms have many reasons to proactively invent early in cycles of technological change. Our interest is in the strategies that allow incumbents to be successful in this endeavor during the infancy of an emerging field—the period before it is clear how the field will affect dominant designs. Our evidence counters the stereotypical view that incumbent firms play a passive role in major technological changes by adhering to incremental inventions in the existing dominant designs. Rather, we find significant inventions by incumbents outside the existing dominant designs and relate their success to their willingness to search novel areas, explore scientific knowledge in the public domain, and form alliances with a balanced portfolio of partners. We find support for our hypotheses using data from the global semiconductor industry between 1989 and 2002. Copyright © 2010 John Wiley & Sons, Ltd.

New Firms - Different Jobs? An Inquiry into the Quality of Employment in Start-Ups and Incumbents

Profiting from Technological Capabilities: Technology Commercialization Strategy in a Dynamic Context

This mixed-methods study examines how organizations develop AI-first HR functions by fundamentally reimagining people operations rather than merely adopting new technologies. Drawing on survey data from 152 HR leaders, 24 in-depth interviews, and longitudinal case studies of 8 organizations during 2022-2024, the research identifies three foundational pillars of successful AI-HR integration: augmented capabilities, data-driven culture, and ethical governance. Organizations implementing AI-first approaches demonstrate significant improvements in talent acquisition efficiency (38%), performance management effectiveness (27%), and learning personalization (41%). However, implementation success is hindered by data quality issues (74% of organizations), capability gaps (68%), and employee resistance (61%). Statistical analysis reveals that organizations emphasizing augmentation over automation achieve significantly higher implementation success rates (p < .01), with change management effectiveness emerging as the strongest predictor of successful adoption (β = .42, R² = .53). The resulting evidence-based implementation framework provides practical guidance for organizations navigating this complex transformation, highlighting the critical importance of strategic alignment, process redesign, data architecture, capability development, change management, and ethical governance in realizing the potential of AI-HR integration.

A large body of research has explored the factors that impede established firms' responses to radical technological changes. While it is widely acknowledged that managers face pressures from financial markets to choose strategies that maximize shareholder value, little work in the technological change literature has considered the possible influences of public equity markets and the securities analysts who mediate them on incumbent firms challenged with technological change. In this paper, I begin to address the topic by empirically exploring how securities analysts react to the different strategies undertaken by incumbent firms faced with radical technological change. I study the question in two settings: the shift to digital technology in photography and the advent of Voice over Internet Protocol (VoIP) technology in wireline telecommunications. I find evidence that analysts are more attentive and positive toward incumbents' strategies that extend and preserve the existing technology than toward strategies that respond directly to the new technology. In these settings, analysts largely ignore incumbents' strategies that directly incorporate the new technology for several years following the discontinuity. This study provides insights into the nature and direction of analysts' reactions to firms' strategies in the context of technological change, and is a first step toward better understanding of the potential role of analysts' and financial markets in incumbent adaptation.

Technological change (TC) is a critical process in every industry. However, old technologies and products rarely disappear from the market after TC. Incumbent firms might support old technology and revitalize or retrofit old products. Similarly users can proactively act in order to prolong the lifetime of the older technology. In so doing they may trigger a wave of technological innovation aimed at bridging the old with the new technology or with other existing complementary products. The research question of this article is therefore: how do old technology users contribute to technological change? The paper reports three illustrations of communities of practice providing critical evidences about this unexplored phenomenon. Drawing on the illustrations, some prescriptions are developed.JEL Codes: O31, O33

Technological change (TC) is a critical process in every industry. However, old technologies and products rarely disappear from the market after TC. Incumbent firms might support old technology and revitalize or retrofit old products. Similarly users can proactively act in order to prolong the lifetime of the older technology. In so doing they may trigger a wave of technological innovation aimed at bridging the old with the new technology or with other existing complementary products. The research question of this article is therefore: how do old technology users contribute to technological change? The paper reports three illustrations of communities of practice providing critical evidences about this unexplored phenomenon. Drawing on the illustrations, some prescriptions are developed.JEL Codes: O31, O33

Past research using the resource-based view of a firm suggests that it is important to consider how firms develop, manage, and deploy resources and capabilities to influence the overall process of strategy formation and implementation. Relatively little research has been conducted in conceptualizing how firms implement and manage modularity of organizational routines during capability development. Yet, most companies would benefit from implementing modularity in organizational routines when competing in dynamic market conditions. Such implementations may require fundamental organizational reorientation that incurs significant coordination costs, and in some cases, such modularization attempts may fail, costing organizations significant amounts of valuable resources. This study seeks to conceptualize how modularity of organizational routines can be achieved during the capability development process. We inductively develop a process model of modularization, using qualitative data of an in-depth case study of the capability development experience of a call center. The model reveals that modularization is a complex process, whereby an organization's key functional activities are decomposed into specific operating and strategic routines that are reconfigured iteratively during the process of capability development. Practitioners may derive strategies and tactics from our findings to help them implement and manage the modularity of organizational routines during capability development so as to achieve sustainable competence in fast-moving marketplaces. Researchers should be able to use and develop the theory further with new case studies.

Given their complex, company-specific and history-dependent nature, organizational capabilities are generally considered as the foundation of a firm’s long-term strategy and as major source of competitive advantage. While the strategic significance of firm capabilities is uncontested, we still have an incomplete understanding how they emerge, develop, and change over time. In particular, given discontinuously shifting environments, the question of how incumbent firms reconfigure their capabilities in response to such changes and successfully move from one capability configuration to another, is of great significance. It is the aim of this symposium to push the discussion and advance the theoretical understanding in this realm. Topics such as capability rigidity, learning barriers, capability integration and redeployment as well as dynamic capabilities will be covered. The symposium will bring together different capability scholars and provide a platform for a productive discussion of how to push the field forward. Overcoming social breakdowns in capability reconfiguration Presenter: Joakim Hans Netz; Jönköping U. Presenter: Patrick Reinmoeller; IMD The best of two worlds? Corporate ventures for capability renewal of an incumbent Presenter: Kathrin Borner; Vrije U. Amsterdam Presenter: Fleur Deken; Vrije U. Amsterdam Presenter: Hans Berends; Vrije U. Amsterdam Presenter: Frans Feldberg; KIN Research, VU Amsterdam Reconfiguring or rather redeploying capabilities in the face of technological change? Presenter: Stefan Konlechner; Johannes Kepler U. Linz Presenter: Arne Keller; Vienna U. of Technology Presenter: Wolfgang H. Guettel; TU Wien Overcoming barriers to the open innovation capability: A cognitive perspective Presenter: Ralf Wilden; Macquarie Business School, Macquarie U. Presenter: Krithika Randhawa; U. of Technology, Sydney Presenter: Siegfried P. Gudergan; Waikato Management School

The factors propelling the competitiveness of industry clusters have been subject to extensive research. While these factors are reasonably understood, the conditions that lead to the emergence and evolution of clusters still warrant further examination. This chapter proposes that the emergence and development of at least some clusters are endogenously driven by the generation of new insider entrepreneurial spin-offs1 from incumbent firms. The specific conditions that lead to spin-off opportunities are beyond the scope of this chapter, but because these opportunities exist — for example because of technological or market changes or employee dissatisfaction — new firms will be founded. The majority of these spin-offs shape the cluster’s birth, configuration, technological specialization and evolution by remaining in the same region as the parent firm (Arthur, 1990; Zander, 2003). Hence, knowledge of the genesis of inter-firm ties in a cluster may permit a better understanding of the formation and evolution of the inter-firm organizational forms that prevail in clusters. This line of enquiry builds on recent research on how the emergence and growth of clusters are essentially an entrepreneurial process and on research studying entrepreneurship as a regional phenomenon associated with unusual innovativeness and dynamism (for example Saxenian, 1994; Zander, 2003).KeywordsSocial CapitalInternational BusinessEntrepreneurial ActivityStrategic Management JournalParent FirmThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Knowledge and learning capabilities assist organizations to become more innovative and adaptive as the capabilities help organizations to recognize and assimilate knowledge and apply it toward new ends. The development of the capabilities becomes critical if organizations are to become and remain competitive. Previous literature-based research suggests that Neuro-Linguistic Programming (NLP) helps to facilitate the development of knowledge and learning capabilities in organizations. NLP suggests that subjective experience is encoded in terms of three main representation systems namely: Visual, Auditory, and Kinesthetic (VAK). Based on 15 qualitative in-depth semi-structured interviews across 7 Australian nonprofit organizations, this chapter argues that NLP may be used as a key approach for nurturing organizational knowledge and learning capabilities for innovation in the knowledge economy. Examples are used in the chapter to illustrate the possible benefits of utilizing NLP in developing the capabilities for organizational innovativeness. Future research direction and limitations are also discussed.

Passive acoustic systems used to study and monitor marine mammals generate enormous datasets which are costly and time‐consuming to analyze. As part of a Joint Industry Programme sponsored effort, we reviewed automated and semi‐automated methods and software packages available to detect, extract, and classify marine mammal sounds; identified gaps in capabilities and knowledge; and suggested ways forward. Because of the variability in marine mammal sounds, no single method is effective for all species. While spectrogram correlation works well for stereotyped calls, more general methods like band‐limited threshold detection are more effective for variable sounds. Feature extraction is a rapidly evolving field, but a reliable, automated method has yet to be successfully implemented into existing software. A major gap in our capabilities is the ability to reliably detect and classify the highly variable signals produced by some species. The development of effective, efficient, and standardized methods applicable to many species will require large, validated datasets. The acquisition, maintenance, and availability of such datasets will entail concerted, collaborative efforts. Development of common datasets and organization of workshops that focus on furthering detection, extraction, and classification methods are two ways to address these important issues in the automated analysis of marine mammal sounds.

Soils are the foundation of agricultural production, ecosystem functioning and human well‐being. Bridging soil knowledge gaps and improving the knowledge system is crucial to meet the growing EU soil policy ambitions in the face of climate change and the ongoing trend in soil degradation. The objective of this article is to assess the current state of knowledge, knowledge use and knowledge gaps concerning sustainable soil management in Europe. This study is based on interviews with 791 stakeholders and 254 researchers and on a comprehensive review of >1800 documents carried out under the European Joint Programme on agricultural soils. Despite differences in stakeholder groups, the conclusions are rather consistent and complementary. We identified major knowledge gaps with respect to (1) soil carbon stocks, (2) soil degradation and fertility and (3) strategies for improved soil management. Transcending these three areas, particularly the loss of soil organic carbon, peatland degradation and soil compaction, are most critical, thus, we stress the urgency of developing more models and monitoring programmes on soils. Stakeholders further report that insufficient transfer of existing soil research findings to practitioners is a hindrance to the adoption of sustainable soil management practices. In addition to knowledge production, soil knowledge gaps may be addressed by considering seven recommendations from the stakeholders: (1) raising awareness, (2) strengthening knowledge brokers, (3) improving relevance of research activities and resource allocation for land users, (4) peer‐to‐peer communication, (5) targeting advice and information, (6) improving knowledge access, and (7) providing incentives. We argue that filling and bridging knowledge gaps should be a priority for policymakers and the insights provided in the article may help prioritise research and dissemination needs enabling a transition to more sustainable soil management in Europe.

Incumbent industrial firms are putting in a lot of effort in developing capabilities for machine learning (ML) systems that help them better predict and perform a variety of industrial and business processes and decisions. Given the data-, process-, and organizational structure-related requirements for effective implementation of such systems, these organizations encounter a major challenge in developing capabilities in this context. However, the existing literature has yet to unravel the organizational processes and practices associated with artificial intelligence (AI) capability development and deployment in industrial incumbent firms. The present study frames AI adoption in established industrial firms as a process of history-embedded, situated organizational learning involving explorative and exploitative learning. Based on a qualitative study of seven firms utilizing ML algorithms in their industrial and business processes, we develop a grounded model that explains AI capability building as both enabled and constrained by perceptual and functional triggers and barriers, leveraged via communicative and structural practices, and resulting in ongoing and interdependent processes of exploration and exploitation. The study contributes to the literature by showing how the convergence of organizational learning and AI technology's unique features promotes a distinct dynamic of AI capability building and deployment.