Strategic decision‐making at platform transitions: The case of Nokia (2010–2011)

Abstract

Research SummaryWe develop new theory on incumbent firms' strategic decision‐making and the associated emotional dynamics at platform transitions. Based on in‐depth interviews with Nokia's senior leaders about their decision to adopt the Windows platform in 2011, we suggest that highly capable platform companies' entry into the established phone industry invalidated senior leaders' long‐held core assumptions about the industry, triggering existential anxiety and stunting self‐regulation. Distinct mechanisms then influenced senior leaders' emotions toward external platform options—myopic appraisals of firm competitiveness inside a platform (vs. platform competitiveness against other platforms), appraisals of changing firm boundaries, and emotional resonance of potential partners. These emotions contributed to emotional drift, with top managers ultimately favoring the emotionally attractive option. Our theorizing extends theory on platforms, strategy, and emotion.Managerial SummaryThis research provides fresh insights into how emotions play a crucial role in incumbent firms' strategic choices, especially in the context of evolving technology platforms and major industry shifts. Our research focused on Nokia's 2011 decision to adopt the Windows platform. We discovered that when new players, like platform companies, enter a market, they can unsettle longstanding beliefs, causing anxiety and decision‐making challenges among top management. Specifically, we found that executives often focus too narrowly on their firm's ability to compete within a new platform rather than the platform's overall competitiveness. Additionally, changes in company boundaries and the emotional appeal of potential partners significantly influence these decisions. Executives' analyses emotionally drift such that they start favoring the emotionally attractive options.