Mixing Bricks and Clicks: Organization Designs for Business-to-Consumer Electronic Commerce in Incumbent Retailers

Researchers disagree over the extent to which organizations can introduce innovations such as electronic commerce within existing organizational structures. Some argue that such innovations require completely autonomous innovating units. Yet, such autonomous units may have difficulty making use of scale, skills, and infrastructure in the established organization. This paper attempts to resolve the apparent conflict by building and testing a new theoretical model of organizing to adopt a discontinuous innovation. Using concepts from technology strategy and organization theory, it builds a hybrid model in which organizations simultaneously build new subunits and leverage existing ones to adopt the innovation. Two characteristics of each component in the innovation translate to two aspects of subunit-level organization design. The theoretical model is tested using a novel database of organizational structure and financial performance for the e-businesses launched by 36 incumbent retailers. The study contributes to theory by helping to resolve a long-standing debate, and contributes to practice by providing guidelines to help managers in organizing to adopt innovations.