Leading digital transformation in incumbent firms: A strategic entrepreneurship framing

Abstract

Today's business landscape is undergoing a profound shift as digital technologies reshape and even create entirely new industries around digital disruptors. Although the unique properties and affordances of digital technology are bound to create many entrepreneurial opportunities for new types of innovation (Nambisan et al., 2017;Yoo et al., 2012), seizing those opportunities requires that firms undertake a digital transformation (Furr et al., 2022).Building from recent reviews of the topic (Hanelt et al., 2021;Vial, 2019), we define digital transformation as substantive strategic, organizational, and ecosystem changes through which firms seek to leverage digital technology to pursue new strategies, business models, and capabilities.Research suggests that digital transformation should be especially challenging for established or legacy organizations-so-called incumbents (Eggers & Park, 2018). Because many incumbent firms have architectural systems refined and optimized for analog environments, digital technologies often render their existing competencies obsolete (Tushman & Anderson, 1990). Digital technologies also challenge established paradigms of how value is created and captured in the larger business ecosystem (Ansari et al., 2016). Thus, contrary to de novo entrepreneurial firms, most incumbents need to acquire and assimilate substantially different resources and adapt new organizational processes and structures to embrace digital transformation (Bradley & O'Toole, 2016). Incumbents also face significant socio-cognitive barriers to change when they need to undergo digital transformation, including inertia in cognition and capabilities (