Institutional Tensions and Complexity in the Digital Innovation of Incumbent Business Models

Abstract: Digitalization has influenced all areas of our lives, including businesses. It has provided numerous opportunities to organisations; at the same time, it has significantly challenged established business models in many sectors that were traditionally proven to be stable and successful, thus a need to innovate was called for. In this research the focus is on the newspaper industry, representing one of the contexts which has been highly affected by digitalization. Digital technologies enable new ways of operating which in turn challenge prevailing business assumptions and cause complexities. This leads to the aim of this research which is to explore institutional complexity in digital business model innovation in a newspaper organization.This research builds on business model theory, conceptualized as an activity system. It adds literature from digital innovation and finally utilizes institutional logics to explore the complexity emerging in the avenue of digital business model innovation. A case study design has been undertaken drawing on several data sources such as: interviews, observations and the study of documents.The outcome of this research illustrates that digitalization has a profound impact on business models of newspaper organizations. Innovation brought by digitalization entailed challenges but also enabled complementarities in value offering, activities, and competences, including new actors entering the market. The complementarities caused complexity based on different institutional logics, each with its own rationality, which needed to be governed. Research outcomes also include institutional mechanisms that were applied to govern the digital business model innovation, such as strategies leading to a hybrid of print and digital mode of operation; and also more concrete purposive actions and activities in the form of e.g. education and learning, theorization and top management commitment.This research contributes to the theoretical frameworks of business model innovation, digital business model innovation and institutional logics, both separately and in combination. Further, the research provides some recommendations to practice for managing the complexity that digitalization of incumbents entails.

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