The Role of Dynamic Capabilities in Responding to Digital Disruption: A Factor-Based Study of the Newspaper Industry

TLDR

Internet and digitization are reshaping newspaper companies’ traditional operating models, and disruptive innovation theory explains why firms succeed or fail in responding to such disruptions. This study extends disruptive innovation theory by examining how dynamic capabilities influence the performance of newspaper firms’ responses to digital disruption. Empirical evidence shows that first‑order dynamic capabilities—created by modifying existing resources, processes, and values—enhance the development of digital platform capabilities and improve response performance, offering IS researchers a clearer theoretical role and managers actionable factors for accelerating digitization.

Abstract

Internet and digitization are fundamentally changing and disrupting newspaper companies' traditional operating models. Disruptive innovation theory offers explanations for why companies succeed or fail to respond to disruptive innovations. This study builds on disruptive innovation theory by ascertaining the role of dynamic capabilities in the performance of response to digital disruption. Empirical results suggest that first-order dynamic capabilities that are created by changing, extending, or adapting a firm's existing resources, processes, and values are positively associated with building digital platform capabilities, and that these capabilities impact the performance of response to digital disruption. For information systems (IS) researchers, this study clarifies the role of first-order dynamic capabilities in responding to digital disruption. For IS practice, it helps managers to focus on the most promising factors for creating first-order dynamic capabilities, for building digital platform capabilities, and for reinventing their core functions to accelerate digitization.