Whatever you want, whatever you like: How incumbents respond to changes in market information regimes

Paola Zanella, Paola Cillo and Gianmario Verona

Strategic Management Journal, 2022, vol. 43, issue 7, 1258-1286

Abstract: Research Summary How do incumbents respond to a market information regime change? We employ literatures on product portfolio strategies and capability adaptation to analyze the information regime change induced by the advent of streaming in the U.S. music industry. Our findings highlight that an information change impacts the strategy of organizations. We observe that the inclusion of streaming reveals increasing demand for novelty and variety. Finally, we identify breadth of experience as a driver of the type of innovation adopted. Incumbents with broader experience proliferate across‐niches. Incumbents with focused experience increase the novelty of their offerings. Overall, incumbents with higher breadth of experience perform better. We discuss the implications of these results in literatures of environmental changes, capability adaptation, product proliferation, and democratization induced by new technologies. Managerial Summary In several industries, rankings influence firms' decisions. Recently, many of these rankings have experienced changes to account for new demand behavior induced by digitization. We study the introduction of streaming into the Hot 100 Billboard music chart in the U.S. We find that the inclusion of streaming reveals more demand for novelty and variety. Also, we show that firms respond differently to this information change and their response depends on their experience breadth, that is the capability to address different market segments at the same time. Music labels with broader experience are capable of addressing the new demand, while those with limited experience bet on novelty as a way to defend their niche. Overall, the music labels with higher breadth of experience are the ones that perform better.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1002/smj.3372

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:stratm:v:43:y:2022:i:7:p:1258-1286

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0143-2095

Access Statistics for this article

More articles in Strategic Management Journal from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().