New Wine in Old Bottles?: The Overlooked Role of Incumbents in Co-Opting Discontinuous Technological Change in the US Newspaper Industry

This paper examines the relationship between incumbents’ responses to technological discontinuity at the level of product features and the resulting performance in the US newspaper industry. We argue that by emphasizing the similarity between the existing and new technologies at the product-feature level, which is defined herein as co-option, incumbents’ products in the new market are more likely to gain acceptance from external audiences, making their existing resources more valuable and appropriable in the new market. As a result, through co-option, incumbents have better adoption performance than other incumbents, which could help them shape a pre-existing discontinuous change into a less discontinuous one ex post. Fixed-effects panel and Arellano-Bond dynamic regression models from 2007 to 2012 in the context of US daily newspapers and discontinuous technology, namely, digital media, support our hypotheses. Newspapers that reduced their focus on web interactivity over time—the product feature that most clearly changes what newspapers are—had higher online readership, with the potential to shape a ‘print media-like’ digital media. In contrast, newspapers that emphasize a expectation- reinforcing product feature—multimedia capability—had higher online readership.