Incumbent Adaptation to Technological Change: The Past, Present, and Future of Research on Heterogeneous Incumbent Response

Schumpeter famously popularized “creative destruction” as the process whereby new entrants replaced existing firms. In most cases, however, some incumbent firms survive and even thrive across technological discontinuities. Moving beyond incumbent-entrant dynamics, organizations and innovation research has begun to explore incumbent heterogeneity in response to technological change—why some incumbents do well and adapt, whereas others struggle. As a phenomenon-driven research area, scholars with different theoretical perspectives have brought their own lenses to bear, but these perspectives have evolved independently. The result is a research stream with a scattered collection of detailed, within-industry perspectives on the phenomenon without a clear ability to link different mechanisms or articulate boundary conditions. This article brings these relevant literatures together to paint a more holistic picture of incumbent adaptation to technological change. To improve generalizability and begin building a more general, cross-industry theory, we emphasize recognizing specific nuances of different technological changes and how they fit with the existing capabilities, knowledge, position, and cognition of incumbent firms to understand which incumbents are swept away in the wave of creative destruction and which may survive.