How Brokerage in Supply Networks Affects Incumbents’ Adaptation to Technological Discontinuities

Incumbents often face technological discontinuities to which they struggle to adapt. During this adaptation process incumbents can become embedded in two buyer-supplier networks, one for the old and one for the new. While simple embeddedness in a technology buyer-supplier network may create inertia to adaptation, brokerage in these networks could lead to external integrative capabilities that facilitate adaptation. In a study of the U.S. automotive industry between 2013 and 2020 responding to a regulatory shock which accelerated the discontinuity, we find that brokerage in the old technology network predicts both half-steps into the new technology (i.e., number and performance of hybrid technology models) and adaptation to the new technology (i.e., number and performance of new technology models). Surprisingly, brokerage in the old technology network was more impactful than brokerage in the new technology network for the transition from internal combustion engine to electric vehicles.