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This paper aims to study how three incumbent mobile network operators (MNOs) in Germany forecasted, framed and responded in terms of their strategy to the emergence of the wireless local area network technology (W‐LAN) and how they interpreted this potential technological disruption in their own strategic context.

Drawing on empirical evidence from case studies conducted with these three major MNOs in Germany using the theoretical framework of disruptive technology, the results were then evaluated in a cross‐case analysis to study how these firms interpreted and reacted to the potential disruptiveness of W‐LAN. To meet this objective, an explorative, multiple and holistic case study design was utilized. Data was collected by the combination of information gained through semi‐structured interviews with key informants and background information that were publicly available. Interviews were conducted with company representatives using a semi‐structured interview guide. Information gathered from the interview, documentation and direct observations was transposed into a content analysis framework to enable easy analysis of the information gathered for each company.

As a result, significant differences for the respective MNOs between their perception of W‐LAN as a potential disruptive technology, their strategic development processes inside the organisation to understand the potential impact of W‐LAN on their respective business model, and to enforce an appropriate response strategy and structural implementation were identified. The results indicated that corporate representatives from each incumbent interpreted potentially disruptive technologies like W‐LAN from a different perspective and direction depending primarily on the strategic and structural context and their organisation's resources, processes, and values. The findings also identified that practitioners inside the organisation were aware about the disruptive technology concept but however did not react in accordance with the theory. Forecasting results and categorisation that prove wrong can still lead to taking the right action since it seems to provide better results than non‐forecasting and inactivity due to a lack of awareness of potential risks.

Because of the chosen research approach, the research results may lack generalisation and need to be further studied in a larger number of cases with different technologies and industries.

For managers and forecasters the study indicates that they should consider the impact of the heterogeneity in firms when formulating a response strategy based on their respective perception of the impact of a potential disruptive technology on their business. They should also be considerate about the consistency between their motivation to respond, the strategic development processes inside their organisation supporting the development of the response strategy and the subsequent structural implementation. Threat‐framing seemed to be a key factor in unlocking resources even in the face of sustaining technological change and can be activated by threatening forecasts.

The consideration of incumbent heterogeneity in different framing settings and the resulting innovation categorisation with respect to the organisational actions and outcomes was not studied before.

The constructs of re-deployment and co-deployment have been central to discussions of scope economies in diversified firms. We argue however that these constructs are also significant in the context of single-business firms. Increasingly, changes in technology and demand preferences have provided opportunities for entrants to attack incumbents with a different business model, one that may neutralize the incumbent’s advantage for at least some set of customers (e.g., Netflix vs. Blockbuster). In such a context incumbents often respond by modifying their business model. We note that several of the business model-altering responses of the incumbent can be characterized in terms of co-deployment and re-deployment benefits and costs, where co-deployment benefits/cost apply to the scope economies/diseconomies in running multiple business models within the same firm and re-deployment benefits/costs apply to the implications of moving assets from one business model to another. We then examine the set of strategic choices faced by the incumbent in competing with an entrant with a different business model. We identify five set of factors that are likely to influence the decision to choose between these alternatives – uncertainty spawned by the new business model, market segment targeted by the new model, the within-business-across-business-model co-deployment and re-deployment benefits and costs, the across-business co-deployment and re-deployment benefits and costs, and the incumbent’s prior performance history. Although some of these choices have seen some work, most remain relatively underexplored in the strategy literature. We highlight the potential for research in this area with a set of propositions that identify key conditions that should hold true for a particular strategic choice to be picked by an incumbent.

The purpose of this paper is to explore how incumbents adapt their business models in response to digital innovation whose impact is either incremental or radical and source industry is either their own industry or other industries. The authors propose a conceptual matrix that is built on these two dimensions.

The authors build examples of four multinational incumbents operating in different sectors and known for their forefront approach to digital innovation to populate the matrix. Cases were chosen because of their polar nature that could provide variation in the two dimensions. The authors draw on a variety of qualitative secondary data sources to build the cases.

The study reveals how incumbents’ response to digital technologies (DTs) may differ depending on the resources or assets (including knowledge-based ones) that need mobilising. Business model changes and innovations may require full reconfiguration of a firm’s activity system; hence, one business model may be preferred to others depending on how burdensome the reconfiguration process will be.

As the study is exploratory in nature, the anecdotal evidence provided in the paper are only some of the possible strategic responses of firms. Future studies may further into the dimensions the authors identified by empirically testing their validity with primary data.

The research offers managers and executives of incumbent firms a clear indication as to which elements of their business model ought to be adapted given the opportunities as well as the challenges brought about by DTs.

This research has explored incumbents’ response to DTs by primarily focusing on the nature and source industry of the underpinning innovation, besides any consideration of the drivers or processes that may lead to business model change.

The historical development and size of China’s audit market provides an opportunity to investigate important questions regarding the functioning of the market for audit services that are difficult, if not impossible, to test in other globally established markets. The purpose of this paper is to examine the effect of the market entry of the Big Four accounting firms into China on the audit fees charged by its local accounting firms.

In this paper the authors rely primarily on the incumbent pricing literature (Simon, 2005; Geroski, 1995) to assist them in developing the specific hypotheses and empirical tests. This paper is an empirical study, which examines whether local incumbent accounting firms cut prices in response to the Big Four’s entry by using data from annual reports and audit reports for China’s listed companies from the 1994 to 2008 period.

This study shows that local incumbent firms cut prices post-entry. This study also finds that it was local large-sized accounting firms as well as accounting firms located in regions with highly developed- and competitive markets that cut prices in response to the Big Four’s entry.

This study has important implications for the Big Four accounting firms as it provides useful information about pricing strategies that would likely be used by local accounting firms in a new market. Local accounting firms in emerging markets can also gain useful insights about the pricing strategies adopted by the Big Four accounting firms when they enter a market.

Audit market research has little to offer on how local accounting firms respond in their pricing to the entry of Big Four accounting firms into their market, mainly because in western countries such as Canada, England, and the USA, the Big Four accounting firms are the oldest firms operating in those markets. This paper is the first study that examines the effect of the market entry of the Big Four accounting firms into China.

The purpose of this paper is to explore the audit price reactions of local accounting firms to the entry of the Big Four accounting firms into the Indian audit market, providing unique insight into emerging market dynamics.

Using financial data from Indian audit clients for a ten-year period from 1996 to 2005, the authors conduct a multivariate regression analysis based on extant audit fee literature.

This study finds evidence of a price-cutting strategy on behalf of the local incumbent accounting firms in response to the entry of the Big Four firms. It also shows small-sized incumbent firms to cut prices more drastically relative to medium-sized incumbent firms.

This study provides empirical insight into the pricing dynamics of professional services in an emerging market setting. Such insight is increasingly important in our evermore globalized economy where emerging markets are frequently the targets of expansion.

The article explores what forms of disruption are prioritized by top executives of large manufacturing companies in Finland and what strategies they consider appropriate for the management of disruptive threats and opportunities.

The empirical study was based on interviews with top executives in some of Finland's largest manufacturing companies.

Based on the data, we identify exploitative and explorative strategies in four dimensions that executives consider important in anticipating and responding to disruptions: internal development efforts, stance on new entrants, ecosystems and institutional change. Due to the presence of multiple potential disruptions, which often generate conflicting demands, executives have to consider them simultaneously and balance between them when making strategic decisions. They therefore do not necessarily have a specific response strategy, but their aim is to develop their companies' capabilities so that they are well-placed to face the future with confidence.

The findings indicate that the executives envision a disruption landscape that is more complex than typically described in the literature. In addition, it answers the call for a more systematic understanding of incumbents' response strategies by linking different disciplinary views with well-grounded empirical data.

This paper examines the effect that foreign bank entry into China had on transaction fees and service fees charged by domestic Chinese banks.

This paper is an empirical study using financial data for listed Chinese banks collected from the China Stock Market Financial Statement Database.

This paper finds that domestic banks cut transaction fees and service fees shortly before the entry into China of foreign banks, and domestic banks did not cut transaction fees and service fees after foreign banks entered into China.

This paper does not examine any non-price strategies employed by local Chinese banks in response to the entry of foreign banks.

This is the first study to examine transaction fees and service fees charged by domestic Chinese banks in response to the entry of foreign banks into China.

This paper aims to develop and argue for a new research path to advance theory on incumbent firm adaptation to discontinuous technological change. Integrating variance and process epistemologies, implications of distinguishing a firm's capacity to adapt from their adaptive choices are highlighted.

The concepts and argument presented are based on an extensive review and synthesis of the literature on the phenomenon.

Distinguishing resource-based capacity variables and behavioral-based choice variables can fuel progress in the literature on incumbent adaptation to technological changes. More attention is needed on the direct, proximate determinants of what occurs in the process of adaptation, e.g. the intermediate choices to adapt, the timing of adaptive actions and the selection of a means for adapting. Work must then associate specific choices with performance outcomes to complete both sides of the mediated cause-effect model connecting characteristics of the decision issue to performance.

Most studies toward understanding how incumbent firms adapt to discontinuous technological innovation have used variance analyses to identify firm and technology characteristics that explain adaptation outcomes. Focusing on characteristics and content, however, does not adequately explain why or how firms adapt. Scholars thus continue to lament the lack of clear, practical theory. I contend one heretofore unaddressed reason for this dissatisfaction is that too much of the research base neglects the importance of understanding choices and the factors affecting them.

The purpose of this paper is to quantify the impact of Wal-Mart Supercenters (WMSs) on supermarkets’ profit margins using fluid milk in the Dallas/Fort Worth metropolitan area in the USA as a case study.

The authors develop a two-stage dynamic entry game to model market competition in the pre- and post-WMS stages, and test the theoretical model using the method of simulated moments and milk scanner data from Dallas/Fort Worth supermarkets.

The empirical findings show that the entry of WMSs accounts for an average of about 16.29-25.69 percent decline in milk profit margins of nearby, or incumbent, supermarkets. Economies of scale and chain synergies are found to be five times more significant for WMSs than for incumbent supermarkets, granting Wal-Mart a significant competitive edge.

This paper quantifies the impact of WMS’s entry on incumbent supermarkets’ profit margins through a structural model of entry. In addition, this paper assesses the effect economies of scale stemming from the ability to provide shopping convenience to consumers as well as chain economies from operating stores near each other.