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1. Introduction
Today’s engineering firms encounter intense competition from existing competitors along with rapid disruptive innovations also from potential new competitors, which could render the current market non-existent. These organizations are required to be prepared to handle such an eventuality to increase their survival rate. Apart from relying on effective utilization of internal resources and the firms’ ability to reconfigure the internal and external resources, they must be agile to respond to such events (Warner and Wäger, 2019).
Technology-driven multifaceted innovation in the automobile industry has started transforming the existing market and the industry. The legacy capacity as the barrier to entry is fast disappearing, opening a level playing field for new entrants (Teece, 2019). This has the potential to impact the whole supply chain from engineering outsource partners to raw material and component suppliers, which ultimately can result in job loss and larger economic implications. Similarly, hardware and software innovations in the electronic industry have altered the status quo (Lee and Pilkington, 2017) in the industry by bringing entirely fresh players, whereas several existing players were forced to exit. Although many innovations are from incumbents, several new entrants make an entry with ground-breaking innovation. Many firms fail to notice the oncoming turbulence and prepare themselves to handle it, which may ultimately lead to the failure of the organization (Christensen et al., 2015). Broadly the existing research works suggest three possibilities to manage the turbulence created by disruptive innovation:
Use traditional sources of competitive advantages, e.g. barriers to entry, high capital investment and government regulations (Porter, 1979).
One time or continuous competitive innovation to counter disruptive innovation (Hamel and Prahalad, 1994).
Sharpened and enhanced organizational capabilities to leverage, strengthen and diversify the internal resources (Chakravarthy, 1997).
An engineering services company that supports another Original Equipment Manufacturer (OEM) may not necessarily have direct control over product innovation. Similarly, they may not be in a position to effectively leverage traditional sources of competitive advantage due to the limited opportunities to differentiate their services from their competitors. The option left to them is service innovation and proactively enhance and reconfigure organizational capacities to prepare for the oncoming turbulence. These constraints make the engineering services firms quite different from OEMs or other comparable services industries like software services,...