So far, hotel companies largely have failed in responding to players from the so-called „Sharing Economy,“ especially Airbnb. As such, one may wonder: "What were executives in hotel companies thinking?"
Four researchers from the University of Passau – Florian Weber, Julian Lehmann, Lorenz Graf-Vlachy and Andreas König – attempt to answer this question in a new article in the Journal of Product Innovation Management. Specifically, their inductive study explores how institutions, i.e., regulations, deeply ingrained ways of thinking, and social and industry norms, shaped hotel managers’ perceptions of, and reaction to, the disruptive sharing economy.
The authors identify three patterns of what they label as “institution-infused interpretation” in incumbent managers’ sensemaking – interpretations that are triggered by decision makers’ perceptions of the ways in which discontinuous innovations challenge established rules, norms, and taken-for-granted assumptions. First, as incumbent managers perceive new entrants that introduce the innovation as violating regulative and normative rules, they develop a sense of unfairness regarding the new competition enabled by the discontinuous innovation. Second, as new entrants deviate from normative and cognitive institutions, they cause collective confusion among incumbents. Third, perceiving discontinuous innovations as challenging regulatory and cognitive institutions, incumbent managers cognitively marginalize new entrants and their offerings as illegitimate and sub-standard niche phenomena. Interestingly, these institution-infused interpretive patterns not only contribute to early incumbent inertia, but also motivate incumbents to question established rules and engage in institutional work. Overall, this article adds to the emergent conversation on the role of institutions in organizational adaptation to discontinuous innovations by revealing the importance of institutional violations for managerial sensemaking and responses in this context.
The article is available at https://onlinelibrary.wiley.com/doi/10.1111/jpim.12499