Despite the growing importance of digital transformation and the notion of disruptive innovation, strategy literature still lacks a more complete picture of how incumbent organizations adapt their business models after disruptions. This research sheds light on this important process by analyzing a major Italian news media publisher reacting to the advent of the internet and the emergence of new business models by entrants into the industry . We specifically examine: (1) the drivers and impeding factors of business model adaptation; (2) how incumbents change strategies to cope with different components of the disruption process; and (3) how a closed business model can be renewed to develop an open, platform-based business model to seize external opportunities, incur lower costs, and fend off disruptors. This study contributes to the burgeoning literature on disruption, business models, and platforms.Keywords: digital platforms, disruptive innovation, incumbent adaptation, open business models, value creation and capture 'We can no longer make a lot of money from a few readers, but we will make relatively little money from many more readers' Jeff Bezos, chairman and CEO of Amazon and owner of The Washington Post. 'The Future of Newspapers' conference, Italy, 2017, organized by GEDI and La Stampa. Our study presents a series of important findings. First, we disentangle two separate forces in the disruptive process: (1) the initial advent of disruptive technologies; and (2) the subsequent entry of disruptors introducing new business models. We specifically highlight the mechanisms through which these forces trigger business model adaptation (BMA) in incumbent organizations. The availability of disruptive technologies offers new opportunities, favoring 'incumbents' experimentation' with new business models (that is, new forms of value creation and capture). The emergence of entrants employing new disruptive models tends to represent a threat and induces incumbents to respond more defensively, through 'alliances and acquisitions' to speed up the adaptation process. This first main finding addresses the identified gap in business model literature regarding the drivers and mechanisms of BMA after disruption (see e.g., Foss and Saebi, 2017). It also extends the analysis of disruptive innovation by breaking down the process into two separate components: technologies and business models (see also Markides, 2006 for a similar conceptual point). Furthermore, it empirically reveals the effects on the incumbents' adaptation process, in terms of opportunities and threats, leading respectively to stand-alone experimentation and alliances/acquisitions.The second major finding relates to how incumbents reconfigure their models after disruption. We examined the specific case of disruptions in manufacturing, distribution, and sales-that is, the downstream complementary assets of vertically integrated incumbents (see Teece, 1986). We argue that, when disruption occurs in factors of production, incumbents tend to increase external kn...

Research Summary: We advance an integrative model in which distinct types of technological discontinuities (core‐knowledge vs. complementary‐asset) are combined with different appropriability regimes (strong vs. weak) to predict competitive and cooperative dynamics between incumbents and entrants. We posit that incumbents ally with entrants following a core‐knowledge discontinuity when the appropriability regime is strong. When the appropriability regime is weak, incumbents are more likely to acquire entrants. We submit that the additional consideration of complementary‐asset discontinuities reveals a more integrated theoretical model of competition and cooperation between incumbents and entrants. In particular, incumbents tend to cooperate among themselves following complementary‐asset discontinuities, although we highlight theoretical nuances due to different appropriability regimes. We provide falsifiable propositions, and introduce contingencies such as firm‐level heterogeneity and time dynamics. Managerial Summary: Interfirm cooperation is one possible avenue for existing firms to address the challenge of responding to discontinuous technological changes. What is not clear, however, is who should the incumbent ally with: other incumbents or new entrants? We provide an integrative framework to help managers to decide when to cooperate with competitors and when to cooperate with new entrants. When the core knowledge of incumbent firms is made obsolete by technological advances and intellectual property is fairly well protected, managers of existing firms should search out collaboration with new entrants. If intellectual property protection is weak, managers of incumbents firms are better off acquiring new entrants. When the downstream complementary resources such manufacturing, distribution, and sales are replaced by radically new technologies, then incumbents best option is cooperate with other incumbents in order to compete against new entrants.

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We investigate the process through which incumbents respond to disruptions by opening up their business models. We conducted a longitudinal study (1995-2016) of a major media publishers responding to the Internet. We find that incumbents increase the access to external knowledge to seize opportunities and fend off low-end disruptors.