Repositioning strategies for incumbent SMEs in response to technological discontinuities: based on the Korean automotive component industry

Purpose Technological discontinuities threaten the survival of incumbent firms by rendering their core resources obsolete. This study aims to explore the repositioning strategies available to incumbent small and medium-sized enterprises (SMEs) in saturated markets and investigates how these strategies can be implemented through the lens of dynamic capabilities. Design/methodology/approach This study categorized four repositioning strategies based on a literature review and developed an a priori framework explaining how dynamic capabilities are operationalized for each strategy. To strengthen the coherence between theory and empirical data in the a priori framework, this study performed a content analysis of 21 incumbent SMEs manufacturing automotive components, leading to a revised framework. This revised framework was then applied to the repositioning behaviors of the case firms to validate its effectiveness. Findings Using an abductive approach to align theory with data, this study developed a revised framework to capture the unique characteristics of incumbent SMEs in the automotive components industry. Testing this revised framework against the case firms’ repositioning behaviors confirmed that the deployment of dynamic capabilities varied significantly according to the chosen repositioning strategy. Originality/value This study offers insights into the efficient reallocation of resources in response to discontinuous technological innovations by examining how incumbent SMEs use dynamic capabilities differently based on their repositioning strategies.