PERFORMANCE IMPLICATIONS OF DIGITAL DISRUPTION IN STRATEGIC COMPETITION

Abstract

Pervasive digitalization is changing how firms engage in strategic competition. Some firms are pursuing digital disruption strategies, using digital resources to rewire their value chain and change the landscape of their industry by redefining performance expectations. Other firms are adapting to digitalization by adding digital resources into their existing value chain. Through NK model simulations, we advance our understanding of digital disruption vis-à-vis adaptation in strategic competition in two main ways. First, we unearth important nuances in performance trade-offs: A digital disruption strategy may be effective for relative performance at the expense of absolute performance gains. Second, we explore relevant market- and competitor-related conditions under which firms should opt (or not) for a digital disruption strategy.