Digital Innovation Management and Path Dependence: An Integrated Perspective of Manufacturing Incumbents

Is digital innovation a big chance or a big threat for physical product-centric incumbents? Building on the unique characteristics of digital innovation, new market players can break the dominance of incumbents by providing digitally enabled products with distinct characteristics. Therefore, this paper empirically explores the dynamics within incumbents related to digital innovation management. Qualitative methods are used to systematically and inductively gain insights into how digital innovation is considered in the context of incumbents with physical product-driven business models. We use path dependence theory to explain the findings and support theoretical generalization of our results. The study contributes to the literature on digital innovation, how incumbents manage digital innovation under certain circumstances, and the related impacts on their business model. Further, we suggest three stages of digital innovation management in the context of path dependence.