Transformation in a mature industry: The role of business and innovation strategies

This paper investigates how business and innovation strategies explain companies' responses to transformational pressures in a mature industry. The analytical framework combines two perspectives on business and innovation strategies: competitive position and resource position. Based on an embedded case study of eight companies in the Swedish pulp and paper industry, the paper contributes to previous innovation literature by connecting companies' innovation responses to their business and innovation strategies. Most notably, it reveals a new type of ambidextrous innovation strategy, i.e. “market-driven exploitation”, and shows that the responses by incumbent companies in the pulp and paper industry are the result of deliberate and justifiable strategic choices rather than path dependency and inertia. The study also confirms the value of integrating the two perspectives on strategy. On the one hand, the explanations provided by each perspective overlap with the other, so that they together provide a more nuanced understanding of the companies’ choices and activities. On the other hand, the perspectives complement each other, so that one perspective explains observations that cannot be explained by the other. The results of the paper inform both managers and policy makers about the trade-offs involved in changing a strategic direction while retaining core capabilities.