The strategic advantage of mature-stage firms: Digitalization and the diversification of professional sport into esports

Abstract Digital innovations provide mature organizations with opportunities to grow beyond their core industry and thereby compete with formerly tangentially related firms. In this research, we examine how mature organizations generate a competitive advantage when diversifying beyond their native industry. We address this question, withing the context of mature professional sport organizations that are affiliating with esports – organized video game competitions. Esports exemplify the growing number of digital innovations influencing the way organizations operate. Our study adds to existing knowledge by demonstrating how resources initially developed to compete with intra-industry organizations may transform into sources of competitive advantage when entering inter-industry competition. Drawing on strategic management perspectives based on the resource-based view (RBV) and knowledge-based view (KBV), we found that the experience-based tacit knowledge embedded in a firm (and its human capital) generates competitive advantage in these new industries. However, this knowledge is only as valuable as the versatility of the resources guiding its use. Our findings indicate that a firm’s versatile resources, when coupled with its knowledge, are the basis for generating a competitive advantage. Thus, as mature organizations diversify, they stand to benefit from identifying the versatile resources developed in their native competitive environment that represent strategic resources when challenging new competitors and using said resources in tandem with their knowledge-based competencies.