KAUNAS UNIVERSITY OF TECHNOLOGY IMANTĖ MARKEVIČIŪTĖ FACTORS BEHIND RESPONSE STRATEGIES OF INCUMBENT FIRMS TO DISRUPTIVE INNOVATION: CASE OF TV BROADCASTING INDUSTRY Doctoral dissertation Social Sciences, Management (03S) 2017, Kaunas This doctoral dissertation was prepared at Kaunas University of Technology, School of Economics and Business, Department of Strategic Management during the period of 2011– 2017 Scientific Supervisor: Prof. Dr. Giedrius JUCEVIČIUS (Kaunas University of Technology, Social Sciences, Management, 03S). Scientific Advisor: Prof. Dr. Paolo BOCCARDELLI (LUISS – Libera Università Internazionale degli Studi Sociali Guido Carli, Social Sciences, Management, 03S). Doctoral dissertation has been published in: http://ktu.edu Editor: Armandas Rumšas (Publishing Office “Technologija”) © I. Markevičiūtė, 2017 ISBN 978-609-02-1353-7 The bibliographic information about the publication is available in the National Bibliographic Data Bank (NBDB) of the Martynas Mažvydas National Library of Lithuania 2 KAUNO TECHNOLOGIJOS UNIVERSITETAS IMANTĖ MARKEVIČIŪTĖ VEIKSNIAI, LEMIANTYS RINKOJE ĮSITVIRTINUSIŲ ĮMONIŲ ATSAKO STRATEGIJAS Į PERTRAUKIAMĄSIAS INOVACIJAS: TV TRANSLIUOTOJŲ INDUSTRIJOS ATVEJIS Daktaro disertacija Socialiniai mokslai, vadyba (03S) 2017, Kaunas Disertacija rengta 2011–2017 m. Kauno technologijos universiteto Ekonomikos ir verslo fakultete, Strateginio valdymo katedroje. Mokslinis vadovas: Prof. dr. Giedrius JUCEVIČIUS (Kauno technologijos universitetas, socialiniai mokslai, vadyba, 03S). Mokslinis konsultantas: Prof. dr. Paolo BOCCARDELLI (LUISS Guido Carli universitetas, socialiniai mokslai, vadyba, 03S). Interneto svetainės, kurioje skelbiama disertacija, adresas: http://ktu.edu Lietuvių kalbos redaktorius: Aurelija Gražina Rukšaitė © I. Markevičiūtė, 2017 ISBN 978-609-02-1353-7 Leidinio bibliografinė informacija pateikiama Lietuvos nacionalinės Martyno Mažvydo bibliotekos Nacionalinės bibliografijos duomenų banke (NBDB) 4 CONTENTS List of Figures ........................................................................................................................ 7 List of Tables .......................................................................................................................... 8 Abbreviations ....................................................................................................................... 10 Introduction ......................................................................................................................... 11 1. Disruptive innovation and strategies of incumbent firms: conceptual background and linkages .......................................................................................................................... 15 1.1. Concept of disruptive innovation: C. Christensen‘s theory, its criticism and adaptations ..................... ..................................................................................................15 1.2. Disruptive innovation in the general strategy discourse .................................. 19 1.3. Variety of response strategies of incumbent firms in the context of disruptive innovation ................................. .......................................................................................27 2. Choice of response strategy to disruptive innovation by incumbent firms: integrated theoretical framework linking strategies with sets of factors ....................... 33 2.1. Nature and type of disruptive innovation .......................................................... 33 2.2. Human / managerial factors and response strategies to disruptive innovation ........................................................................................................................ 36 2.3. Structural / organizational factors and response strategies to disruptive innovation ........................................................................................................................ 38 2.4. Integrated theoretical framework ...................................................................... 39 3. Research methodology .................................................................................................... 42 3.1. TV industry: its specifics, trends, and data in the era of disruption ................... 42 3.2. Empirical research design and variables ............................................................... 50 4. TV broadcasters and global disruptive innovation: strategies and underlying factors ................................................................................................................................... 60 4.1. A global TV broadcasting company: key findings ............................................ 60 4.1.1. Key trends and new disruptive business models in global TV industry ..... 60 4.1.2. TV broadcasters as specific actors within the modern global media value chains: key challenges ..................................................................................................... 61 4.1.3. Catalysts and factors manifesting globally in the light of disruptive innovation ........................................................................................................................ 63 4.2. Lithuanian TV broadcasters: key findings using within-case and multiple case analysis ................................. ....................................................................................69 4.2.1. Key trends and new disruptive business models in Lithuanian TV industry ............................................................................................................................74 4.2.2. TV broadcasters as specific actors within the modern local media value chains: key challenges ..................................................................................................... 76 5 4.2.3. Response strategies of Lithuanian TV broadcasters in the context of disruptive innovation ...................................................................................................... 78 4.2.4. Factors determining the choice of response strategy by local TV broadcasters to global disruptive innovation ................................................................ 84 4.3. Linking the choice of response strategy by local TV broadcasters to influencing factors in Lithuanian TV broadcasting industry ..................................... 91 5. Discussion and recommendations .............................................................................. 94 Conclusions ........................................................................................................................ 104 References .......................................................................................................................... 106 Appendices ......................................................................................................................... 115 6 List of Figures Figure 1. Response strategies……………………………………………………...……..…28 Figure 2. Conceptual model……………………………………………………...…………40 Figure 3. Sequence of the research……………………………………………...………..…53 Figure 4. Empirical research framework……………………………………………...…....54 Figure 5. Variables behind the disruptive innovation in global TV broadcasting companies…………………………………………………………………………………...64 Figure 6. Variables behind the disruptive innovation in FIC ………………………………68 Figure 7. Manifestations of variables in Lithuanian TV broadcasting companies, facing disruptive innovation……………...………………………………………………..…….....75 Figure 8. Relations among Value network and other variables …………………….....…...77 Figure 9. Relations between Response strategy and other variables …..…………………...79 Figure 10. Factors influencing the response strategy based on multiple case analysis, LNK case.........................................................................................................................................85 Figure 11. Factors influencing the response strategy based on multiple case analysis, Lietuvos Rytas TV case……………………………………………………………………..86 Figure 12. Factors influencing the response strategy based on multiple case analysis, LRT case……………………………………………………………………………………….....87 Figure 13. Factors influencing the response strategy based on multiple case analysis, TV3 case……………………………………………………………………………………….....88 Figure 14. Factors influencing the response strategy based on within-case analysis………89 Figure 15. Tested conceptual model…………………………..…………………………….92 7 List of Tables Table 1. Catalysts of disruption………………………………………………...………...…33 Table 2. Human/ managerial factors ……………………………………………...……..…36 Table 3. Structural/ organizational factors……………………………………...…………..38 Table 4. Incumbent companies: Free-TV broadcasters in Lithuania………...……………..45 Table 5. J60, Programming and broadcasting activities……………..……………………..46 Table 6. J60, Type of innovation in programming and broadcasting activities………..…...47 Table 7. Manifestations of disruptive innovations in TV related contexts…………..……..47 Table 8. Semi-structured interview questions for FOX International Channels…….…..….56 Table 9. Semi-structured interview questions for Lithuanian TV broadcasters….…….…...57 Table 10. Factors and catalysts determining the choice of response strategy globally..……….………………………………………………………………................…64 Table 11. LNK TV Group overview …………………………………………...………..…70 Table 12. TV3 Group Lithuania overview…………………………………...……………..71 Table 13. Lietuvos Rytas TV overview…………………………………………………..…72 Table 14. Lithuanian