Responding in kind: How do incumbent firms swiftly deal with disruptive business model innovation?

Disruptive business model innovation (BMI) is a threat to incumbents. This study elaborates a new approach, developing a novel business model (BM) swiftly, to dealing with this threat rather than either imitating disruptive BMI or strengthening the existing BM as prescribed in the literature. Findings show that incumbent firms can swiftly develop a new BM through a two stage process. In the separation stage, firms establish autonomous units to experiment via experiential learning, which creates multiple BMs in co-existence. Subsequently, in the integration stage, the various BMs are consolidated into an integrated new BM, via learning from other industries.