No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Ecosystem Advantage: How to Successfully Harness the Power of Partners
Abstract
Changes in the global environment are generating opportunities for companies to build advantage by creating loosely coupled networks or ecosystems. Ecosystems are larger, more diverse, and more fluid than a traditional set of bilateral partnerships or complementors. By leveraging ecosystems, companies can deliver complex solutions while maintaining corporate focus. This article describes six keys to unlock ecosystem advantage: pinpointing where value is created, defining an architecture of differentiated partner roles, stimulating complementary partner investments, reducing the transaction costs, facilitating joint learning across the network, and engineering effective ways to capture profit.
... Discussing empirical insights into NeuroSys, we suggest that a synchronized value proposition and a suitable 'transformative' ecosystem model should co-evolve, and we further reflect on our experiences in cultivating system-level capacities meant to enable and structure the process of co-evolution (section 5). We EM, or both can be developed together from less to more complex articulations (Adner 2012;Williamson, James, and de 2012). It is possible to refer to assembling the right partners, coordinating their work, and establishing mechanisms to distribute the product or service as working towards 'internal alignment' or 'internal development' (Walrave et al. 2018, 103). ...
... Crucial for a transformative model, in contrast, is the creation of a form of surplus value or shared value (Arena, Azzone, and Piantoni 2022), which cannot (at reasonable cost) be retrieved from other sources. 10 Some writers suggest that such an EM usually cannot be built from scratch, but should be experimented with, and slowly developed from simple to more complex value propositions (Adner 2012(Adner , 2006Williamson, James, and de 2012). Similarly, transition scholars argue for co-evolution of governance and technology options (Kemp, Loorbach, and Rotmans 2007). ...
To address societal challenges, innovators committed to responsibility need to find ways to break away from unsustainable, or otherwise undesirable, path-dependencies in sociotechnical regimes. Such path-breaking innovation should not come at the expense of socioethical desirability. The emerging literature on responsible innovation ecosystems has focused on socioethical desirability but has neglected sociotechnical viability beyond a protected niche. Drawing on theoretical insights and concepts from the literature on Responsible Innovation, innovation ecosystems, and transition studies, we distinguish four types of ecosystems along the axes of desirability and viability and discuss examples of these types. We introduce the concept of transformative innovation ecosystems to refer to a type of ecosystem that combines desirability with viability. The concept is developed by bringing theoretical perspectives into conversation with empirical insights from the high-tech research and innovation cluster NeuroSys, which aims to create an ecosystem around brain-inspired computing.
... In conclusion, this literature review aims to contribute to the ongoing discourse on the role of MNEs in urban ecosystems, advocating for a nuanced understanding of their interactions with global cities. By leveraging insights from interdisciplinary perspectives and leveraging novel methodologies (Rossi, 2017;Williamson & De Meyer, 2012), this review Studia Ekonomika Vol. 22 No. 2 JULI 2024 seeks to advance theoretical frameworks and practical implications for policymakers, practitioners, and scholars engaged in the study of IB and urban development. ...
... Iammarino and McCann (2013) argue that MNEs' activities in global cities are influenced by regional differences in innovation capabilities and regulatory environments, shaping their strategic decisions (Iammarino & McCann, 2013;Oh & Oetzel, 2022). Understanding these dynamics is crucial for optimizing MNEs' contributions to local economies while aligning with global corporate objectives (Rossi, 2017;Williamson & De Meyer, 2012). ...
This qualitative literature review explores ecosystem approaches in international business, focusing on non-equity collaborations and partnerships within evolving global cities. Global cities serve as critical nodes for multinational enterprises (MNEs), facilitating strategic interactions and innovation through diverse collaborations with local firms and stakeholders. The review synthesizes current research to highlight how such collaborations enhance MNEs' competitive advantage by leveraging local knowledge, resources, and market access. Key findings illustrate the role of global city ecosystems in fostering innovation, operational efficiency, and sustainable development for MNEs. However, challenges such as regulatory complexities and institutional misalignments constrain effective collaboration, necessitating adaptive governance and strategic alignment among stakeholders. Future research directions include integrating quantitative analyses to complement qualitative insights, exploring diverse geographic and sectoral contexts, and advancing digital and sustainable strategies within global city ecosystems.
... This study explores the use of blockchain technology by companies across the United States (US) in a sustainability context. Since retrieving data on such a specific topic from traditional databases is them (Asheim & Gertler, 2006;Williamson & Meyer, 2012), it remains an open question whether local milieus still matter for digital technologies. To answer these questions, we related the use of sustainable blockchain applications with the local business ecosystem and infrastructure. ...
... Research shows that local characteristics such as the innovation ecosystem and infrastructure impact the regional innovation performance by facilitating and contributing to the adoption and diffusion of new technologies (Asheim & Gertler, 2006;Gschnaidtner, Dehghan, Hottenrott, & Schwierzy, 2024;Williamson & Meyer, 2012). Access to employees and financial resources as well as agglomeration benefits from the co-location with other companies or universities are among the key elements of a local ecosystem conducive to innovation (Czarnitzki & Hottenrott, 2009;Feldman, 1994). ...
While many digital technologies provide opportunities for creating business models that impact sustainability, some technologies, especially blockchain applications, are often criticized for harming the environment, e.g. due to high energy demand. In our study, we present a novel approach to identifying sustainability-focused blockchain companies and relate their level of engagement to location factors and entrepreneurial ecosystem embeddedness. For this, we use a large-scale web scraping approach to analyze the textual content and hyperlink networks of all US companies from their websites. Our results show that blockchain remains a niche technology, with its use communicated by about 0.6% of US companies. However, the proportion of blockchain companies that are committed to sustainability is significantly higher than in the overall firm population. Additionally, we find that such sustainability-engaged blockchain companies have, at least quantitatively, a more intensive embedding in entrepreneurial ecosystems, while infrastructural and socioeconomic location factors hardly play a role.
... These tensions can be governed depending on the power and influence of the orchestrator to steer the actors in a common direction while ensuring variety. The governance model can be based on a more hierarchic model, where one stakeholder has the power to lead and coordinate others, or on a more horizontal model, where there is no formal decision-making power on the side of the orchestrator (Kapoor & Lee, 2013;Williamson & De Meyer, 2012). Formal governance mechanisms include contracts and intellectual property regimes (Ritala et al., 2013), informal ways of governing an ecosystem include trust building, a clear business case, and a growing positive reputation (Bosch-Sijtsema et al., 2015). ...
... Another set of activities relates to developing fair value capture mechanisms to incentivize actors to engage and to stay engaged (Brown et al., 2021b;Den Ouden, 2012;Williamson & De Meyer, 2012). This is important for a healthy and a sustainable ecosystem. ...
To achieve a transformation toward the circular economy, organizations need to take an ecosystem perspective and consider multiple complementary actors that are needed to deliver circularity as a collective outcome. However, practitioners and scholars lack an understanding of the initial phases of ecosystem creation, in terms of how to get started, and what to consider. We therefore investigate how organizations can initiate an ecosystem for a circular economy. The method consists of a concise review of the ecosystem literature and three instrumental cases, to identify important activities that are needed when initiating an ecosystem for circularity. The cases include: (1) an alliance for circular safety footwear, (2) a startup that turns old coffee ground and orange peel waste from another company into new products, and (3) a multi-stakeholder project aimed at recovering resources from wastewater. We propose a framework for a Minimum Viable Ecosystem for Circularity (MVEC) that includes a set of key activities to perform when building ecosystems for a circular economy. These activities provide a useful roadmap for scholars and practitioners for establishing and assessing ecosystems for circularity. We call for further research and practical applications to test and demonstrate the utility of this framework in different contexts.
... However, due to the liability of outsidership caused by the deficiency of relevant international network positions and insufficient marketspecific business knowledge (Johanson & Vahlne, 2009), it entails the additional coordination costs related to bundling service with products, and extra resources and capabilities to overcome the liabilities when new manufacturing exporters transform the traditional business to product-service integration. As a result of the intensive investment required to set up the service network and input ongoing resources to manage the partner-specific relationships, this kind of arrangement represents a significant burden for global manufacturers (Parida & Jovanovic, 2022;Williamson & De Meyer, 2012). In foreign markets with greater uncertainty, the costs can be even higher considering that international markets are characterized by greater turbulence and intensified competition (Bıçakcıoğlu-Peynirci & Morgan, 2023;Cavusgil et al., 1993). ...
The emergence of global competition and advances in technology have prompted manufacturing firms to reshape their competitive strategies in global markets. Servitization is an innovative strategy, which integrates services into traditional products to offer both domestic and international customers greater value added. In the context of international entrepreneurship and drawing on the resource-based view and internationalization perspectives, this study investigates the relationship between servitization and the survival of new manufacturing ventures that are engaging in global markets. In addition, it further explores whether the pre-internationalization preparation and post-internationalization experience can moderate the servitization-survival relationship from the perspectives of costs, resources, and capabilities developed in different stages. Our findings support the view that, in the context of international markets, new manufacturing ventures are more vulnerable to risk and the additional costs of servitization coupled with the uncertainty of international markets. Later entry into foreign markets and greater international experience enable manufacturing ventures to resist the hazards associated with servitization and the process of internationalization. In doing so, we contribute to an understanding of the service paradox by adopting a dynamic and processual view of internationalization.
... During the upgrading period, organizational operations are primarily driven by intelligence and involve deep collaboration with affiliated organizations through digital synergies. Digital collaboration weakens traditional corporate boundaries, promotes data sharing among enterprises, forms cross-boundary integration, and, ultimately, achieves a digital ecological environment [50]. Within this ecosystem, numerous associated organizations continuously explore the multilevel value of products and services, satisfying diverse users' potential green demands and forming dynamic green innovation [51]. ...
Digital transformation has emerged as a pivotal catalyst for corporate green innovation, specifically in the context of the green development of the manufacturing industry. Nevertheless, it is evident that there are significant disparities in the various stages of corporate digital transformation. Furthermore, the precise dynamic capabilities required to propel corporate green innovation at distinct stages of this transformation, along with their underlying influencing mechanisms, remain ambiguous. Drawing on dynamic capabilities, this paper delves into the inherent mechanism of corporate green innovation based on the data of listed companies in the Chinese manufacturing industry. The study reaches the following conclusions: (1) The driving process of digital transformation in green innovation exhibits distinct stage characteristics. Digital transformation significantly enhances the quantity of green innovation in the steering period and has a significant impact on both the quantity and quality of green innovation in the shaping and upgrading periods. Moreover, the shaping period has a stronger impact on quantity, while the upgrading period has a stronger impact on quality. (2) There is an evident evolution and upgrading of dynamic capabilities as digital transformation progresses. Among these capabilities, adaptive capability plays a mediating role in the steering period, and innovative capability plays a mediating role in the upgrading period. (3) Top management teams’ environmental attention plays a positive moderating role in digital-transformation-driven green innovation by strengthening absorptive and innovative capabilities. This study reveals the cascading evolution of dynamic capabilities in the digital transformation stage, explores the synergistic effect of top management teams’ environmental attention and specific dynamic capabilities, and provides management strategies for the “quantitative growth and qualitative enhancement” of corporate green innovation.
... Business ecosystem theory already gives a first insight on how certain agents act in collaborative relationships (Williamson and DeMeyer, 2012;Heikkilä and Kuivaniemi, 2012;Wulf, 2017;Wulf, 2019;Wulf, 2021;Rong and Shi, 2015) and try to influence their environment (Rong et al., 2010;Adner, Oxley and Silverman, 2013). They are single components in a bigger system (Butel, 2014). ...
In this work, Keystones and Niche players in collaborative relationships are investigated to get a deeper understanding of their characteristics and strategic actions. Business ecosystem theory is used to outline first characteristic encountered in research. Building on that, further characteristics as well as actions leading to strategic action in the network or business ecosystem are researched and outlined. Keystones and Niche players are investigated by a qualitative case study approach in order to further explore their characteristics and actions. Besides having used a multiple case study analysis a multilevel analysis of different agents in the system has been conducted. This ensures a triangulation of the extracted findings. Results show that Keystone and Niche player characteristics and actions can are very complex and aligned to each other and other agents of the system. Research outcome highlights that Keystones and Niche player not only align their strategic action to the environment and use their specific characteristics to do so, they also influence their environment. This is possible due to the alignment of action between the company and the individual acting in the collaborative relationship by following an open or collaborative strategy.
... Thus, orchestration involves a series of deliberate, purposeful actions implemented by the orchestrating firm to generate value for the enterprise (Dhanaraj & Parkhe, 2006;Nambisan & Sawhney, 2017). There is, indeed, a necessity for a central firm that acts as an "orchestrator" and organizes platforms for communication between participating companies and customers, maintains collaboration, defines the roles and responsibilities of different actors, and facilitates innovation within the ecosystem (Dhanaraj & Parkhe, 2006;Williamson & De Meyer, 2012). It is therefore an essential part of orchestration to enforce the rules of the game and ensure that other partners adhere to them as well Wareham et al., 2014). ...
The purpose of this study is to investigate how large manufacturing firms can orchestrate their ecosystem for the successful co‐creation of data‐driven digital services and solutions as a way to achieve sustainable industry benefits. An exploratory single‐case study approach has been adopted for this study, which included 23 in‐depth interviews conducted with informants from seven Swedish and international companies involved in a transportation ecosystem. Based on the analysis, this study has developed a multi‐level framework for ecosystem orchestration that contains three main operational levels: individual, organization, and ecosystem, with an integrated sustainable industry benefits section as the outcome of this process. By providing a detailed account of ecosystem orchestration, this study contributes to the successful co‐creation of digital services and solutions. In addition, insights from this research can be used as a continuous evaluation and improvement tool for managers to orchestrate their ecosystem for digital servitization.
... Esse crescimento colaborativo consiste na evolução da plataforma central queé o centro do ECOS. Segundo [Williamson and De Meyer 2012], embora os ECOS possam evoluir por meio de auto-organização, como em ecossistemas criados por comunidades de código aberto, frequentemente, uma empresa líder catalisa o surgimento e o desenvolvimento subsequente da rede. Boucharas et al. (2009) propuseram em seu estudo o uso da notação SSN -Rede de Produção de Software, uma notação já utilizada pela comunidade de ECOS para a modelagem. ...
Ecossistemas de Software (ECOS) são conjuntos de atores e componentes que colaboram para fornecer soluções na indústria de software. A notação Software Supply Network (SSN) é uma rede de software, hardware e organizações de serviços que cooperam para atender às demandas do mercado. Estudos recentes propõem a modelagem da rede de ECOS, mas não há um padrão formalizado para essa área. A evolução de um ECOS ocorre quando ele cresce em relação a si mesmo e aos seus atores e relacionamentos, internos e externos, e expande seus relacionamentos com outros ECOS. Este trabalho propõe uma abordagem para estudar a evolução de um ECOS por meio da modelagem SSN, utilizando a ferramenta de modelagem ECOS Modeling, visando fornecer uma visão ampla da evolução com base em dados estatísticos, permitindo uma compreensão quantitativa, qualitativa e percentual sobre a evolução.
... Therefore, firms and governments have emphasized building an entrepreneurial ecosystem to support enterprises . Entrepreneurial ecosystems imply collaboration where the individual firm partners with other group actors to develop the products or services (Adner and Kapoor, 2010;Iansiti and Levien, 2004;Williamson and De Meyer, 2012). Entrepreneurial ecosystem denotes the stakeholders that require an alignment for a product or service to operationalize in a market (Adner, 2017). ...
In emerging economies, firms, especially Small and Medium Enterprises (SMEs), have attempted to bolster their competitive positions by incorporating digital technologies, which sees them operate in a broader Digital Entrepreneurial Ecosystem (DEE). The DEE includes varied actors and technologies facilitating digital infrastructure, the Internet, broadband communications, operating systems, and the cloud. However, when it comes to developing economies, knowledge on the nature and components of DEE is limited. Therefore, to fill this research gap, this chapter seeks to accomplish two objectives: (1) identify the different parameters of DEE and (2) determine how these parameters perform according to the perceptions among the ecosystem actors/stakeholders. For this, Bangladesh has been chosen as the empirical ground. Based on the DEE frameworks provided by Sussan and Acs (2017) and Song (2019), data were collected through case studies and face-to-face personal interviews with the entrepreneurs of 10 information and communication technology firms. By delineating the components of the DEE from a developing country, this chapter contributes to the extant literature on digital entrepreneurship and the digital entrepreneurial ecosystem. In addition, this chapter bears practical implications for the ecosystem partners and digital entrepreneurs to leverage the DEE components in improving firm performance.
... Esse crescimento colaborativo consiste na evolução da plataforma central que é o centro do ECOS. Embora os ECOS possam evoluir por meio de auto-organização, como em ecossistemas criados por comunidades de código aberto, frequentemente, uma empresa líder catalisa o surgimento e o desenvolvimento subsequente da rede [40]. ...
... Technologies that are the biggest enablers of servitization are for example: IoT, predictive analytics; remote communications; consumption monitoring [44,45]. Since the first appearance of term servitization in 1988 in [6] depending on context and technology that relies behind the PSS, different servitization concepts have been defined as presented in It is extremely difficult for an enterprise to possess all relevant capabilities and resources for servitization due to its capacity's limitations [51]. This implies that companies need to collaborate with partners and open their business models so as to deliver those services effectively and efficiently [20] and to capture value from it [52]. ...
There is a growing interest in the subject of product-service system (PSS) and collaborative servitization in academia and practice. However, the focus is on exploring the growth of manufacturing companies without specifically analyzing the growth of service companies in applying PSS. There are companies, especially in the telco industry, that expand their service business to complex bundles of products and services. The paper investigates PSS in the service company and the role of collaboration in different PSS development phases: idea generation, development and go to market phase. The study adopted case-based research conducted in international Telco organization. The research demonstrates how a company creates and commercializes integrated packets of products and services, it identifies partners company works with and the benefits and challenges of their cooperation. The study addresses collaboration with customers and identifies five different customer profiles according to their openness to participate in the development of PSS. The study highlights the importance of (1) collaboration models, (2) customer involvement, and (3) strategic focus in successful application of collaborative servitization. The findings complement the literature for collaborative servitization and offer concrete input for companies in terms of how to better organize business, profit from collaboration models and gain market advantage.
... For example, some of these studies discuss the platform performance trade-offs when pursuing growth-oriented versus differentiation-oriented orchestration strategies (Cennamo & Santalo, 2013) or when employing different strategies for complements' development and commercialisation (Cenamor & Frishammar, 2021). Other scholars have identified the key orchestration activities required to build ecosystem competitive advantages (Williamson & De Meyer, 2012) and how these change in different platform configurations (Liang et al., 2022;Zeng et al., 2021). Given the challenges in aligning and securing complementors' ...
This thesis investigates power in a new organisational form: the digital platform. Platforms have disrupted our societies by creating and coordinating novel, flexible, and shifting forms of social interaction, changing how we trade, work, and communicate. The profound and abrupt economic transformation brought by platform companies like Amazon, Google, and Meta, while carrying initial expectations of increased freedom of choice, higher social cohesion, and power distribution, was soon shadowed by the growing evidence of platform power concentration and abuse. This research critically examines the characteristics and dynamics of power within digital platforms, specifically focusing on platforms’ organising structures and influence. This problem is approached from three different dimensions. The first dimension pertains to the structure of social interactions, recognising the mechanisms through which platforms shape power relations and autonomy by influencing agents’ interactions and modulating participatory practices. The subsequent dimension is centred on the platform's governance, contrasting the principles guiding the governance and how it is enacted, and how this shapes power dynamics within the platform. Lastly, the third dimension focuses on the interplay between firms, assessing the extent of influence wielded by the platform's owner in directing shifts in the value creation and capture strategies of other participant firms. Each dimension of the research problem is addressed in one study in a dedicated chapter, after charting the foundational concepts that characterise digital platforms and summarising extant research on platform power. The first study is based exclusively on conceptual development, while the second and third are a qualitative case study of the Amazon Marketplace, focused on Amazon’s and the sellers’ practices and how these affect each other. Overall, this thesis contributes to advancing our knowledge of how we understand platforms and provides new ways to characterise platform power, its dynamics, and its consequences.
... Clarysse et al. (2014Clarysse et al. ( , p. 1166 suggest that the "keystone firms create platforms such as services, tools, or technologies, which are open for other players in an ecosystem to enhance their own performance." Moreover, a keystone firm is responsible for the ecosystem's overall 'health' and ensures that value is shared amongst the ecosystem participants (Adner, 2017;Clarysse et al., 2014;Corvello et al., 2023;Iansiti & Levien, 2004;Jacobides et al., 2018;Williamson & De Meyer, 2012). Finally, the Incubator's role confirms that in an innovation ecosystem, the entry and exit of actors is coordinated by a keystone organisation, which decides what actors can enter the network (Pushpananthan & Elmquist, 2022) to sustain the value creation process. ...
... Digital technology application in a firms' value chain opens avenues for integrating supplier knowledge and user experiences, while also incorporating new capabilities after the initial design and research of new products or services [13,32,34]. Organizations seeking to leverage digital encapsulation, convergence, and generativity find they must align their innovation processes with multiple value chain participants, including suppliers, complementors, and users [7,35]. Given suppliers and client firms are primary participants in value chains, this study focuses on collaborative innovation with suppliers and client firms as distributed innovation in value chains. ...
How does a firm’s value chain digitalization contribute to its innovation in value chains? This study investigates innovation activities in value chains from a combination of distributed innovation perspective and technology affordance theory. We posit that a digital value chain (DVC) plays a pivotal role in driving distributed innovation in value chains. Our focus is specifically directed toward exploring the interconnected dynamics of the DVC, global value chain (GVC), and diversification strategy, elucidating the influence of their interactions on a firm’s distributed innovation in value chains. Leveraging the data of 862 manufacturing firms from the World Bank Enterprise Survey (WBES) in China, our empirical analysis reveals several key findings: (1) value chain digitalization positively influences distributed innovation in value chains and GVC embeddedness, (2) GVC embeddedness enhances distributed innovation in value chains, and (3) product diversification serves as a positive moderator, strengthening the effects of both value chain digitalization and GVC embeddedness on distributed innovation in value chains. In summary, this paper deepens our understanding of the relationships between DVC, GVC, diversification strategy, and distributed innovation in value chains. Our research provides theoretical and policy implications for digitalization and innovation strategies which are significant sources of sustainable development for firms and GVCs.
... Embracing emerging technologies like AI, IoT, and machine learning enhances competitiveness and transforms business operations [23]. Creating ecosystem partnerships with other organizations provides access to technology and expertise, driving innovation and customer value [24]. ...
This article introduces a new metric for evaluating digital innovation in enterprise transformation using textual analysis of annual reports from U.S.-listed companies. Through network analysis and topic modeling, we identified 12 topics categorized into three main areas: digital technology innovation, customer-oriented digital strategy, and digital transformation in traditional business operations. Our research indicates that digital innovation strategies are critical for maintaining competitiveness and have shifted to a more innovation management-oriented approach. We also found differences in digital innovation strategies between companies and industries. Our study contributes to the theoretical significance of enterprise management and sustainable development.
... SaaS ecosystems can be understood as service systems, defined as "configurations of resources (including people, information, and technology) connected to other systems by value propositions" (Vargo et al., 2008, p. 145). Williamson and De Meyer (2012) stress that the ecosystem roles need to be carefully defined to establish where in the ecosystem value is created. A unique feature of ecosystems is that the collective investment of participating companies cannot be used outside the ecosystem (Jacobides et al., 2018). ...
... An ecosystem orchestrator, often referred to as the hub or leader firm in ecosystems (Dhanaraj & Parkhe, 2006), leverages the benefits of a central position, sometimes termed as "smart power" (Williamson & De Meyer, 2012). This role enables orchestrators to act as brokers, influencing, mediating, or modifying relationships within the ecosystem (Halevy et al., 2019;. ...
This study ventures into the dynamic realm of ecosystem orchestration for industrial firms, emphasizing its significance in maintaining competitive advantage in the digital era. The fragmented research on this important subject poses challenges for firms aiming to navigate and capitalize on ecosystem orchestration. To bridge this knowledge gap, we conducted a comprehensive qualitative meta-analysis of 31 case studies and identified multifaceted orchestration practices employed by industrial firms. The core contribution of this research is the illumination of five interdependent but interrelated orchestration practices: strategic design, relational, resource integration, technological, and innovation. Together, these practices are synthesized into an integrative framework termed the "Stirring Model," which serves as a practical guide to the orchestration practices. Furthermore, the conceptual framework clarifies the synergy between the identified practices and highlights their collective impact. This study proposes theoretical and practical implications for ecosystem orchestration literature and suggests avenues for further research.
... Finally, while an ecosystem has advantages over a vertically integrated organization, hierarchical supply chain, or an open market model in that it enables actions to be coordinated without a disproportionate increase in transaction costs, it is not always suitable. Some firms may be better served by tight integration or outsourcing, while others (e.g., Apple) may develop hybrid forms such as combining vertically integrated organizing (hardware and software) with ecosystem organizing (software apps) (Williamson & Meyer, 2012). ...
While scholars have explored how focal firms harness demand-side value through ecosystem development, less emphasis has been placed on understanding how peripheral complementors become competitive. Unlike focal firms, complementors can seldom set value extraction rules. How can complementors lacking critical supply-side resources establish themselves as ecosystem leaders? We conducted a longitudinal analysis of Xiaomi, which began life as a smartphone software complementor within the Android ecosystem but ultimately gained architectural control by orchestrating the creation of a derivative ecosystem. We elucidate how these resource-disadvantaged firms may begin with fueling an “identity movement” among underserved users centered around a pivotal “foothold resource.” This movement serves as their entry point into an ecosystem and enables them to build a demand-side community. They then employ “demand pull” as concrete evidence to substantiate their vision, coalesce supply-side resources and ultimately become an orchestrator. While conventional strategy research emphasizes supply side resources as drivers of value creation, we explore the synergy between demand-side mobilization and supply-side orchestration. Finally, we illustrate how firms lacking resources craft compelling visions in conjunction with substantive actions to engage evolving target audiences. This approach allows them to secure more advantageous positions within the ecosystem, thereby transforming its structure over time.
... Both types of platforms are relevant for multi-life products, because partners can collaborate on innovation platforms to develop products that may have several applications, and transaction platforms that can be helpful to an offering via various life cycles ( Figure 5). 1. modularization [71] taken from the transaction cost theory [72][73][74] and 2. complementarity [35,75] via (supply-side) economies of scope [58] by the transfer of human capital or knowledge as quasi-public goods [76] which generate transaction costs in every reutilization [17,77] for the two types of platforms). ...
The growth of the electric vehicle market is increasing the demand for batteries. The production of vehicle batteries has a high environmental impact and at the same time represents a high cost factor in the production of electric vehicles. Both the raw materials and the production capacity required for vehicle batteries are very limited. Driven by the increasing scarcity of resources and the rising internalization of external environmental costs, as well as by policy regulations, this paper shows a possibility of life cycle extension that goes beyond the circular economy approach and opens up additional economic and ecological potentials. In contrast to the current end-of-life strategies and the circular economy approach, a new innovation philosophy and business models for sustainable multi-life products are developed. To this end, we first conducted an economic analysis in three steps and developed a multi-life indicator in the process. Based on this, we integrated the influence of political regulations in a fourth step and elaborated on their effects in five scenarios. Our results show a savings potential of 5–30% (multi-life indicator M 0.95–0.70) compared to single-life batteries. This savings potential shows the importance of the new strategic multi-life approach and justifies the need for further research in this field.
... An Actor BES is defined by the affiliation to a business network or an association of associated actors, 20 which is formed around an innovation or technological platform. 14,21 The focus is usually on a focal actor responsible for the core innovation and who defines the rules of cooperation, e.g. ...
This publication describes why Structural Business Ecosystems (Structural BES) will become significantly more important in the future and why they are a strategic option for an efficient value creation system for the realization of unique, exceptional, customer-centric (cross-industry) system solutions. The summary of a study, expert interviews and the author's PhD thesis also shows the special features of Structural BES and outlines a design framework for successful implementation within a collaborative business model with those partners who make a significant, complementary and non-generic contribution to the specific, visionary, joint value proposition. The necessary multilateral cooperation on an equal footing between the partners is based on openness, trust and reciprocity. Accordingly, it is a closed Business Ecosystem with a small number of partners. -
Further Key Words: Modular Ecosystem, ecosystem-as-affiliation approach, ecosystem-as-structure approach, innovation ecosystem, actor business ecosystem
... The concept of ecosystem has developed separately in the management literature, with scholars focusing on communities or aggregations of economic actors whose activities need to be coordinated in order to achieve a collective outcome that creates value for the final consumer (e.g., Iansiti and Levien, 2004;Moore, 1993). The term "ecosystem" has been used to describe a business ecosystem-that is, a community affecting a firm's ability to adapt to its environment (e.g., Moore, 1993;Pierce, 2009;Williamson and De Meyer, 2012;Teece, 2007;Zahra and Nambisan, 2012); an innovation ecosystem, aggregating all actors whose contributions are essential to delivering a valuable innovation to the final customer (Adner, 2012(Adner, , 2021Kapoor, 2010, 2016;Alexy et al., 2013;Frankort, 2013;Iyer et al., 2006;Kapoor and Lee, 2013;Leten et al., 2013;West and Wood, 2013); or a platform ecosystem, aggregating developers of complementary products required to extend the value of a core platform technology (Ceccagnoli et al., 2012;Santaló, 2013, 2019;Cusumano, 2002, 2008;Parker et al., 2017;Wareham et al., 2014;Jacobides et al., 2019). 3 Finally, another distinction has recently appeared in the managerial literature, reflecting the use of the term "ecosystem" in practice. ...
... Esse crescimento colaborativo consiste na evolução da plataforma central que é o centro do ECOS. Embora os ECOS possam evoluir por meio de auto-organização, como em ecossistemas criados por comunidades de código aberto, frequentemente, uma empresa líder catalisa o surgimento e o desenvolvimento subsequente da rede [11]. ...
Software Ecosystems (SECO) are a set of actors and components that work as a unit, relating to each other based on the common interest of providing solutions or services to the software industry. For a better visualization and understanding of a SECO, recent studies propose the modeling of the formed network. However, there is still no formalized modeling standard for this area. The Software Supply Network (SSN) notation is a series of connected software, hardware, and services organizations that cooperate to meet market demands. In this context, this work aims to present an analysis approach and a study of the SECO evolution based on SSN models. This approach was implemented in a SECO modeling tool.
... In most innovation ecosystems, an orchestrator takes the lead role in coordinating complementors around an envisioned blueprint of the ecosystem's value proposition and structure (Adner, 2017;Dattée et al., 2018). This is done to enable and facilitate the alignment of all participants (Williamson and De Meyer, 2012). Therefore, orchestrators must decide on the right governance approach regarding the organizational form along the market-hierarchy continuum (Kapoor and Lee, 2013) and the mix of formal and informal coordination mechanisms (Kapoor, 2018). ...
We study how orchestrators of innovation ecosystems govern their relationships with multiple heterogeneous complementors that differ in their positions and activities that contribute to an integrated value proposition. Prior research has focused on ecosystem-wide and complementor-specific governance, each not suited to adequately address the challenges of this context. Building on a multiple-case study in the financial services sector, our findings demonstrate that orchestrators create distinctly governed tiers of complementors based on the domains of uncertainty underlying their ecosystem blueprint. The organizational form and coordination mechanisms of these tiers reflect the convergent or explorative role of complementors in the core or the periphery of the blueprint. We contribute to ecosystem governance by introducing complementor tiers as a governance approach that blends elements of ecosystem-wide and complementor-specific governance and by linking governance choices to uncertainty and complementor roles. Furthermore, we discuss the potential for future research at the intersection of ecosystem and open innovation governance.
This chapter begins by outlining the roles that independent partner organizations can play in the ecosystem. This part discusses both the role of the orchestrator and the crucial role of complementors in ecosystems. Furthermore, it outlines the additional roles of customers, connectors, regulators, and suppliers. The chapter then dives into three sections: building ecosystems, finding complementors, and levers of ecosystem growth. The section on building ecosystems explains the rationale behind the long-term journey of launching an ecosystem, emphasizing the importance of having a strong “why” as the ecosystem’s purpose from the outset. This chapter also introduces the concept of a minimum viable ecosystem and presents the complementor fit analysis, which assists in identifying potential complementors. Finally, this chapter provides an overview of the challenges of scaling in ecosystems as well as of the specific levers of ecosystem growth. These include (among others) building on network effects and modularity and the deliberate management of strategic bottlenecks.
Ecosystems are a way to understand the process of value co-creation in a sport context. There are many ways to conceptualise an ecosystem depending on how it is perceived in the sport marketplace. The main types of ecosystems relevant in sport are business, innovation and entrepreneurial, which are explained in this chapter. Newer forms of entrepreneurial specific ecosystems are discussed that include a focus on sustainable and digital entrepreneurship.
Traditional industries that have dominated the market for decades are now facing new competitors that are changing the boundaries of industries and business models. These competitors are taking leadership positions due to the growth of digital technologies. One of the possible ways of successful functioning in the digital world can be the use of the concept of business ecosystems (BES), namely the introduction of a business ecosystem approach (BEA) to the formation of a new strategy for managing traditional business models. The article aims to reveal the relevance of the development of the BES concept and the use of BEA as a transitional element to the modern transformation of traditional industries. In this article, the author presents key conclusions on the refinement and use of criteria characterizing the functioning of business ecosystems for the organization of transformational processes, considering digitalization and intercompany integration. The author examines the example of the transformation of the light industry (textile and clothing) in the Republic of Belarus.
Digital transformation enables novel opportunities for incumbents and new entries to collaborate and jointly create value in ecosystems. Ecosystems can be considered as aligned and integrated business models along the customer journey. Using two illustrative examples from financial services, we explain what ecosystems are and which factors must be considered for success. We highlight three use cases that underline the significance of ecosystems for the financial service industry today and explain why ecosystems are game changers for future research on business model innovation.
In the rapidly evolving digital landscape, E-Business 5.0 represents the latest stage of technology-driven commerce, emphasizing the integration of smart technologies to enhance business processes, customer experiences, and operational efficiencies. This chapter explores the key elements and strategies that define E-Business 5.0, focusing on how artificial intelligence, the internet of things (IoT), blockchain, and advanced data analytics are transforming traditional e-business paradigms. The chapter examine the implications of these technologies on business models, highlighting the shift toward more personalized, automated, and data-driven interactions between businesses and customers. Additionally, it addresses the challenges and opportunities presented by E-Business 5.0, including ethical considerations, cyber security risks, and the need for continuous innovation and adaptation.
We present a typology in which commonly encountered project types and widely used project management process types are matched. This generates four propositions: (1) Process types match project types but do not cover all encountered project types; (2) a formal project management change process should be articulated; (3) the project management processes represent a portfolio that can help managers address project types (or other nonroutine challenges for the organization) in productive ways; and (4), while array and wicked projects cannot be fully addressed by any one of the project management processes, combinations of the processes may be able to deliver such projects.
With the emergence of the Fourth Industrial Revolution (4IR) technological innovations, new macro and micro-environmental dynamics are introduced which will directly affect the success of the focal companies. The growing complexity, agility, and interconnectedness of 4IR technological innovations bring new technological innovation ecosystems to the fore, which require characterization and understanding. Moreover, it is important for focal industries to understand 4IR technological ecosystem as it directly influences the adoption and implementation strategies of 4IR technological innovations. Due the novelty of the 4IR phenomenon, the 4IR ecosystem (factors, actors, complementaries and environment) are not yet well understood, hence the need for a study on the 4IR technological innovation ecosystem. The main objective of this paper is to conduct a combination of exploratory, qualitative, and integrative literature studies to establish a conceptually and operationally meaningful relationship amongst 4IR technological innovation ecosystem factors, conditions, and actors by proposing a 4IR innovation ecosystem model. The findings of the study outline the criticality of a 4IR technological innovation ecosystem as an input into 4IR innovation and transformation strategies.
At work, the results of research by foreign scholars in the field of business ecosystems and digital platforms have been summarized. The evolution of the construction of business structures/ecosystems has been systematized. Strategic models of digital society transformation have been analyzed, specifically: the model of an economy "driven by technology" and the model of an economy "driven by the market." The main drivers of business ecosystem development in the context of digital transformation have been considered. The forms of functioning of business ecosystems in centralized and adaptive ecosystem conditions have been analyzed, highlighting differences based on criteria such as structure, partners, goals, conditions of use, strategic focus, relationship management, and impact on the central company. Distinctions between digital ecosystems and traditional business alliances, particularly clusters, have been outlined. The most relevant risks associated with ecosystem functioning have been discussed, including tax risk, strategic risk, business risk, compliance risk, technological risk, cyber risk, and reputational risk. The significance of customer experience in the functioning of a business ecosystem has been substantiated.
Exceptional developments in digital technologies have made some of the old theories outdated; hence, there is a need to explore digital transformation through a holistic lens and within various industries and countries. Consequently, we introduced the case of digital transformation of business models as it takes shape in the Israeli HealthTech. We conducted 10 semi-structured expert interviews and complemented these with digital archival data for triangulation. External (e.g. shortage of workforce) and internal (e.g. low digital capabilities) challenges have highlighted the need for digital transformation of business models in healthcare. Thus, we introduce these challenges and the potential value creation in the industry. We also present how Israeli HealthTech start-ups solve challenges and create value in the process. In this way, we contribute to the business model innovation and digital transformation literature. Specifically, in healthcare, we show how value-based healthcare takes place in practice.
To remain vital, a digital platform ecosystem requires governance. In the extant literature a platform ecosystem typically has a single focal actor who is responsible for the governance. We conducted a case study in heavy industry to understand how the responsibilities of a focal actor in governing a business-to-business platform ecosystem are shared and how they change. We observe the division of responsibilities and their changes as configurations. We conclude that the focal actor’s responsibilities in a platform ecosystem are more multifaceted than the established view where a single actor has a stable set of responsibilities. The division of responsibilities in an ecosystem is subject to actor strategies and their positions in the supply chain. Thus, the strategic moves in an ecosystem are not made by a single actor but by multiple focal actors with multiple strategies.
This study investigates factors that constrain the development of rural startups in the Ugandan rural entrepreneurial ecosystem in light of the importance of entrepreneurship in reducing poverty worldwide. Based on a review of the literature on entrepreneurial ecosystems, necessity, and opportunity entrepreneurship plus a range of theoretical approaches, the study demonstrates that the characteristics of the rural population, the social cultural context, and the lack of physical infrastructure greatly constrain the start and growth of rural startups. Recommendations as to what should be done to promote rural startups are proposed.
Recognizing the dearth of attention afforded to global cities in the international business and management journals, Goerzen et al. (J Int Bus Stud 44(5):427–450, 2013) chanced their hand at becoming pioneers. Their gamble paid off. Taking geographic scale down to the city level, questioning why multinationals choose to locate subsidiaries inside or outside of global cities, they jump-started their own conversation, sugaring the pill with the IB staple—liability of foreignness. So well was their inquiry crafted and executed that their insights into the way global connectedness attracts investment into these cities remains instructive. Since then, global cities and firms have undergone a transition. We visualize increasingly multifaceted cities interacting with firms accelerating towards adopting an “ecosystem approach”—characterized by extensive non-equity collaborations and partnerships. We explain why investigation à la Goerzen et al. (J Int Bus Stud 44(5):427–450, 2013) today must grasp multinationals’ diverse relationships to revivify theoretical insights from economic geography for a world of tensions heightened by geopolitics, but above all grappling with the sustainability agenda. We conclude that within an ecosystem of feedback effects, multinationals’ agency can be part of the solution. To deliver, IB must harness emerging novel geographic—“big”—data and techniques to match, in the spirit of the imaginative fusion a decade earlier.
Research Summary
Coordination challenges generate uncertainties in ecosystems. Past research suggests that standardization mitigates these challenges, reducing ecosystem‐level uncertainty. But how does it affect firm‐level uncertainty over value‐appropriation? We examine heterogeneity in the latter effect. Using 1996–2010 data on standard‐setting in Information and Communications Technology (ICT) ecosystems and a firm‐level uncertainty measure based on stock option implied volatility, we demonstrate that while standardization reduces uncertainty for firms that own part of the standardized components, it heightens uncertainty for firms that do not, especially when they face strong rivals in complementary technologies or have fewer complementary technologies or production assets themselves. Findings stress that coordination tools enhancing ecosystem‐level value‐creation can end up hurting firm‐level value‐appropriation and worsen uncertainty for some firms in the ecosystem that the tools are meant to help.
Managerial Summary
In an ecosystem, a firm faces two types of uncertainty—ecosystem‐level uncertainty over how to coordinate with others on developing interoperable parts, and firm‐level uncertainty over whether it can occupy a viable position to capture value. Standardization, a commonly touted solution, reduces the former but not necessarily the latter. Using 1996–2010 data on standard setting in ICT ecosystems and stock option implied volatility, we show that for non‐standard‐owner firms, standardization in fact worsens the latter, especially when they face strong rivals or lack complementary technologies or production assets in areas complementary to the standard. Thus, tools like standardization meant to solve ecosystem‐level coordination problems can end up raising more doubts on firms' ability to capture value and discouraging firms from participating instead of promoting ecosystem growth.
Diese Publikation beschreibt, warum Struktur Business Ecosysteme (Structural BES) in Zukunft deutlich an Bedeutung gewinnen werden und warum sie eine strategische Option für ein effizientes Wertschöpfungssystem zur Realisierung einzigartiger, herausragender, kundenzentrierter (branchenübergreifender) Systemlösungen sind. Die Zusammenfassung einer Studie, von Experteninterviews und der Dissertation des Autors zeigt darüber hinaus die Besonderheiten von Structural BES auf und skizziert einen Gestaltungsrahmen für die erfolgreiche Umsetzung innerhalb eines kollaborativen Geschäftsmodells mit den Partnern, die einen signifikanten, komplementären und nicht-generischen Beitrag zum spezifischen, visionären, gemeinsamen Wertangebot leisten. Die notwendige multilaterale Zusammenarbeit auf Augenhöhe zwischen den Partnern basiert auf Offenheit, Vertrauen und Gegenseitigkeit. Dementsprechend handelt es sich um ein geschlossenes Business Ecosystem mit einer kleinen Anzahl von Partnern.
- Publication is also available in English with the following title: Structural Business Ecosystems: By Partnering on an Equal Footing to unique, exceptional, customer-centric (cross-industry) system solutions. (Capture More Value by joint Value Creation within a specific Collaborative Business Model). DOI: 10.5281/zenodo.10161001 -
Weitere Schlüsselbegriffe: Struktur-BES, Struktur BES, Struktur-BES, Modular Ecosystem, ecosystem-as-affiliation approach, ecosystem-as-structure approach, Innovation Ecosystem, Akteur Business Ecosystem, actor business ecosystem
This article explores the stability of the topological structure of the network of alliances between firms in the software sector during considerable shifts in the underlying technology architecture during 1990-2001. The software sector exhibits "small world" characteristics and its structure has been remarkably stable during this period. This article also offers lessons for managers to effectively master the challenges of navigating in dynamic networks.
To stimulate revenue growth and market response, Boeing decided to develop the 787 Dreamliner. The 787 Dreamliner is not only a revolutionary aircraft, but it also utilizes an unconventional supply chain intended to drastically reduce development cost and time. However, despite significant management efforts and capital investment, Boeing is currently facing a series of delays in its schedule for the maiden flight and plane delivery to customers. This paper analyzes Boeing's rationale for the 787's unconventional supply chain, describes Boeing's challenges for managing this supply chain, and highlights some key lessons for other manufacturers to consider when designing their supply chains for new product development.
Reflections on the early days of computing, the importance of standards, and The Old Man.
A firm often must ensure that products or services it produces match customer expectations. We define variability as any deviation in a production process yielding products or services whose attributes differ from the firm's stated target specifications. Firms pursuing products marked by low variability are more subject to maladaptation costs if production processes are not adjusted to avoid nonconformities. Furthermore, such adjustments often require idiosyncratic investments (e.g., dedicated information technology systems), thereby creating contractual hazards and potential underinvestment. We hypothesize that ownership of sequential activities in the value chain helps mitigate problems associated with maladaptation as well as suboptimalities in transaction-specific investment, thereby resulting in lower variability. Using data on delivery times from the Japanese international courier and small package services industry, we assess the variability-reducing role of ownership in two complementary ways. The first approach is parametric, allowing us to assess the impact of ownership on the variance associated with delivery time; here we focus on shipments that frequently fail to arrive precisely within the time period initially expected by customers. The second approach is more consistent with the notion of reliability, or the likelihood that shipments will not arrive later than expected: we nonparametrically estimate the distribution of deviations between actual and expected delivery time, and verify how distinct organizational choices change the distribution. Ownership of multiple segments yields a particularly pronounced effect on both variance and reliability. Ownership bestows variability-reducing benefits of ownership, especially when ownership is observed in multiple stages of the value chain.
The significant reforms being implemented in governance systems around the world reflect a broader transition of society from the modern to a new emerging era. This transition is framed in terms of a shift from a mechanistic to an ecological worldview, stimulated by a number of developments during the twentieth century and the last decade. In contrast to the mechanistic orientation toward reductionism, prediction and control, and competition, an ecological worldview emphasizes the interconnectedness, self-organizing capacity, and coevolutionary dynamics of all natural systems. This emergent worldview yields useful insights regarding the purpose, design, process, and relationships characteristic of organizational systems that strive to play an effective role in the future governance of society. The discussion outlines specific organizing principles pertinent to these four areas, identifying some compatible practices that are already being adopted by public and private organizations. The authors address the possibility that the continued transition to ecological governance may not reflect just a long, slow process of incremental change, but also could entail a sudden, systemic reorientation that results in a faster transformation of the extant institutions of public administration.
Earlier studies of business clusters have been carried out at the level of companies and industries as units of analysis. This paper explores the Cambridge high-technology cluster with individuals as the principal focus as they help to shed light on entrepreneurial processes, particularly on how their prior work experience together has shaped many of the start-ups and spin-outs from the University of Cambridge, local consulting organizations and other companies.This research explores serial entrepreneurship in the Cambridge high-technology cluster using a family tree and interlocking directorships approach. It reveals a mini-cluster of Cambridge entrepreneurs as the key influence on the success of the growth process and their links between the companies as the structural and relational social capital of the cluster.Copyright © 2005 John Wiley & Sons, Ltd.
Much has been written about networks, strategic alliances, and virtual organizations. Yet these currently popular frameworks provide little systematic assistance when it comes to out-innovating the competition. That's because most managers still view the problem in the old way: companies go head-to-head in an industry, battling for market share. James Moore sets up a new metaphor for competition drawn from the study of biology and social systems. He suggests that a company be viewed not as a member of a single industry but as a part of a business ecosystem that crosses a variety of industries. In a business ecosystem, companies "co-evolve" around a new innovation, working cooperatively and competitively to support new products and satisfy customer needs. Apple Computer, for example, leads an ecosystem that covers personal computers, consumer electronics, information, and communications. In any larger business environment, several ecosystems may vie for survival and dominance, such as the IBM and Apple ecosystems in personal computers or Wal-Mart and K mart in discount retailing. In fact, it's largely competition among business ecosystems, not individual companies, that's fueling today's industrial transformation. Managers can't afford to ignore the birth of new ecosystems or the competition among those that already exist. Whether that means investing in the right new technology, signing on suppliers to expand a growing business, developing crucial elements of value to maintain leadership, or incorporating new innovations to fend off obsolescence, executives must understand the evolutionary stages all business ecosystems go through and, more important, how to direct those changes.
Managing the Unknown offers a new way of looking at the problem of managing projects in novel and unknown environments. From Europe's leading business school, this book shows how to manage two fundamental approaches that, in combination, offer the possibility of coping with unforeseen influences that inevitably arise in novel projects: Trial-and-Error Learning allows for redefining the plan and the project as the project unfolds Selectionism pursues multiple, independent trials in order to pick the best one at the end Managing the Unknown offers expert guidelines to the specific project mindsets, infrastructures, and management methods required to use these project management approaches and achieve success in spite of unforeseen obstacles. This book equips readers with: Causal explanations of why unforeseeable factors in novel projects make traditional project planning and project risk management insufficient Directly applicable management tools that help managers to guide novel and high-uncertainty projects Real-world case studies of both successful and unsuccessful approaches to managing high uncertainty in novel projects.
Existing studies, largely based in transaction cost economics, approach the issue of vertical scope as the decision of the individual firm about whether to make or buy, given the set of existing markets and well defined vertical segments. However, recent research has shown that the ability to make or buy should not be taken for granted. We argue that this applies not only to dis-integration, but also to re-integration, which often demands new 'all-in-one' markets. Drawing on the British building industry, we develop an inductive framework to explain why, after long periods of vertical specialization, industries shift to vertical reintegration. We observe that various groups, including professionals, play an active role in shaping the nature and the boundaries of the industry, facilitating the onset of vertical specialization, which, in turn, shapes a number of increasingly distinct knowledge bases in the industry, defining the trajectories along which capabilities evolve over time. As specialization in scope begets specialization in knowledge, difficulties in managing technical and organizational interdependencies arise, especially in the face of changing environmental conditions. The gap between what the vertically specialized system can produce, and what a changing environment demands, sets in motion a process of experimentation with integrated service provision, which is strengthened by broader social forces such as the deinstitutionalization of professions, or changes in demand structure. Reintegration is advanced by firms seeking to protect their position; enter new, related markets; or find new ways of leveraging their capabilities: Firms strategize to change their institutional environment, helping to create new all-in-one, integrated markets.
When is open innovation superior to closed innovation? Through a formal simulation model we show that an open approach to innovation allows the firm to discover combinations of product features that would be hard to envision under integration. However, when partners have divergent goals, open innovation restricts the firm's ability to establish the product's technological trajectory. The resolution of the trade-off between benefits of discovery and costs of divergence determines the best approach to innovation.
Even among internet companies, Google stands out as an enterprise designed with the explicit goal of succeeding at rapid, profuse innovation. Much of what the company does is rooted in its legendary IT infrastructure, but technology and strategy at Google are inseparable and mutually permeable - making it hard to say whether technology is the DNA of its strategy or the other way around. Whichever it is, Iyer and Davenport, of Babson College, believe Google may well be the internet-era heir to such companies as General Electric and IBM as an exemplar of management practice. Google has spent billions of dollars creating its internet-based operating platform and developing proprietary technology that allows the company to rapidly develop and roll out new services of its own or its partners' devising. As owner and operator of its innovation "ecosystem," Google can control the platform's evolution and claim a disproportionate percentage of the value created within it. Because every transaction is performed through the platform, the company has perfect, continuous awareness of, and access to, the by-product information and is the hub of all germinal revenue streams. In addition to technology explicitly designed and built for innovation, Google has a well-considered organizational and cultural strategy that helps the company attract the most talented people in the land - and keep them working hard. For instance, Google budgets innovation into job descriptions, eliminates friction from development processes, and cultivates a taste for failure and chaos. While some elements of Google's success as an innovator would be very hard and very costly to emulate, others can be profitably adopted by almost any business.
A growing body of research suggests that an organization's ties to other organizations furnish resources that bestow various benefits. Scholars have proposed different perspectives on how such networks of ties shape organizational behavior and performance outcomes, but they have paid little attention to the underlying mechanisms driving these effects. We propose reach, richness, and receptivity as three fundamental mechanisms that jointly constitute a parsimonious model for explaining how network resources contribute to organizational performance. Reach is the extent to which an organization's network connects it to diverse and distant partners. Richness represents the potential value of the resources available to the organization through its ties to partners. Receptivity denotes the extent to which the organization can access and channel network resources across interorganizational boundaries. Whereas reach specifies how wide-ranging and heterogeneous the organization's network connections are, richness characterizes the value of the combinations of resources furnished by its partners. Receptivity in turn portrays how organizational capabilities and the quality of ties to partners facilitate flows of network resources. We propose that the interplay of these three mechanisms determines the benefits that the organization obtains from its network: reach and richness jointly determine the potential value of the network, while receptivity is crucial in realizing that potential.
In this paper a preliminary theoretical frame- work for the study of business ecosystems is con- structed. It is based on theories from the fields of complexity and evolutionary economics. Impor- tant concepts include the following: coevolution, self-organization, emergence, conscious choice, limited knowledge, interconnectedness, feedback and the interaction of variation, selection and development.
This article examines how firms find pathways to high performance with a simultaneous focus on their top and bottom lines by aggressively developing and managing their relationships with key stakeholders. Top-performing firms are shrinking their core while at once expanding their periphery. At the same time that they are contracting their organizational centers and outsourcing increasing portions of their activities, these firms are extending their organizational borders by trying to provide customers with greater sets of products and services. As companies refocus, they have become increasingly dependent on reinforcing mutually beneficial ties to four sets of critical stakeholders: customers, suppliers, alliance partners, and intra-organizational business units. In each of these relationship dimensions, successful firms work their way up a ladder in which they intensify their collaborative efforts with that particular constituent. This phenomenon, which is evident across an array of industries, is one of the hallmarks of a new operating model—the relationship-centered organization.
Existing studies, largely based in the transaction cost economics tradition, approach the issue of vertical scope from the point of view of the decision faced by the individual firm about whether to make or buy, given a set of existing markets and well-defined vertical segments. However, recent research has shown that the very ability to make or buy should not be taken for granted. We argue that this is not only the case for dis-integration, but also for re-integration, which often implies the need for new "all-in-one" markets. Drawing on the analysis of the recent trend toward re-integration in the British building industry, we develop an inductive framework that explains why industries, after going through long periods of vertical specialization, shift to vertical re-integration. First, we observe that various industry groups, including professionals, play an active role in shaping the nature and the boundaries of the industry, facilitating the onset of vertical specialization. This vertical division of labour, in turn, shapes a number of increasingly distinct knowledge bases in the industry; it also defines the trajectories along which capabilities evolve over time. Over time, specialization in scope begets specialization in knowledge, and may inadvertently lead to excessive compartmentalization. The gap between what the vertically specialized system can produce and what the market demands sets in motion a process of experimentation with integrated service provision. The emergence of re-integration may be facilitated by broader social forces such as the de-institutionalization of professions, or changes in demand structure. It is also driven by the agency of firms which through re-integration seek to protect their position; enter new, related markets; or find new ways of leveraging their capabilities. We thus show how and why firms strategize to change their institutional environment and help create new markets.
In light of the increasing popularity of interfirm alliances, the resource-based view is revisited and extended in order to allow for the consideration of network resources in evaluating the competitive advantage of interconnected firms. The proposed model distinguishes shared resources from non-shared resources, identifies new types of rent, and illustrates how firm-specific, relation-specific, and partner-specific factors determine the contribution of network resources to the rents that firms extract from their alliance networks. The resource-based conditions of heterogeneity, imperfect mobility, imitability and substitutability are reassessed, concluding that the nature of relationships may matter more than the nature of resources in creating and sustaining competitive advantage in networked environments.
In this study, we extend the analysis of adaptation in theories of economic organization beyond traditional considerations of incentive conflict (hold-up). We conceptualize adaptation as coordinated and cooperative response to change, and define the adaptive capacity of a vertical relationship as the ability to generate coordinated and cooperative responses across procurer and supplier to changes in procurement conditions. We draw on the concepts of differentiation and integration to dimensionalize the adaptive capacity of different modes of procurement. Using data on all component classes procured internally and externally by Ford and Chrysler, we show that different procurement modes differ in terms of their adaptive capacity and performance. We also show that performance differences across modes of procurement arise as a function of the match between adaptive capacity and adaptation requirements associated with the exchange, and not only the match between governance form and transaction hazards. Copyright © 2005 John Wiley & Sons, Ltd.
Instead of the currently prevailing competitive model, a more collaborative strategy is needed to address the concerns related to the unsustainability of today’s business. This article aims to explore collaborative
approaches where enterprises seek to build long-term, mutually beneficial relationships with all stakeholders and want to
produce sustainable values for their whole business ecosystem. Cases here analyzed demonstrate that alternative ways of doing
business are possible. These enterprises share more democratic ownership structures, more balanced and broader governance
systems, and a more comprehensive view of organizational goals and performance – which goes beyond the narrow concept of financial
bottom line and into a stronger and systematic care of the needs and requirements of the different stakeholder groups. Thanks
to this evidence and different theoretical and empirical contributions, we suggest that the strength and sustainability of
enterprises come from their ability to fit into the environmental, social, and cultural context in which they operate. By
creating values for all stakeholders, enterprises can involve them and gain deep support based on their commitment. This may
lead to superior performance from a multiple-bottom-line perspective.
The purpose of this paper is to propose a new, empirically derived typology of plants in the international manufacturing network of multinational companies. This typology is based on the knowledge flows between the plants. In our research, network analysis has been used as a methodology for understanding the position of plants in international manufacturing networks. The focus has been primarily on the intangible knowledge network, and secondarily on the physical, logistic network. Our analysis leads to four types of plants with different network roles: the isolated plants, the receivers, the hosting network players, and the active network players. Our analysis shows that the different types of plants play a different strategic role in the company, have a different focus, and differ in age, autonomy, and level of resources and investments. Also, the analysis suggests that the evolution of the plant depends to some extent on the network role of the plant. Finally, two scenarios for the development of a strong network role are identified. The research is useful for the scholar studying the architecture of knowledge networks, as well as for the practitioner who is in charge of an international network of manufacturing units.
Acquirers who buy small technology based firms for their technological capabilities often discover that post merger integration can destroy the very innovative capabilities that made the acquired organization attractive in the first place. Viewing structural integration as a mechanism to achieve coordination between acquirer and target organizations helps explain why structural integration may be necessary in technology acquisitions despite the costs of disruption this imposes, as well as the conditions under which it becomes less (or un-) necessary. We show that interdependence motivates structural integration, but pre-existing common ground offers acquirers an alternate path to achieving coordination, which may be less disruptive than structural integration.
Our understanding of how markets and businesses operate was passed down to us more than a century ago by English economist Alfred Marshall. It is based on the assumption of diminishing returns: products or companies that get ahead in a market eventually run into limitations so that a predictable equilibrium of prices and market shares is reached. The theory was valid for the bulk-processing, smokestack economy of Marshall's day. But in this century, Western economies have gone from processing resources to processing information, from the application of raw energy to the application of ideas. The mechanisms that determine economic behavior have also shifted--from diminishing returns to increasing returns. Increasing returns are the tendency for that which is ahead to get further ahead and for that which is losing advantage to lose further advantage. If a product gets ahead, increasing returns can magnify the advantage, and the product can go on to lock in the market. Mechanisms of increasing returns exist alongside those of diminishing returns in all industries. But, in general, diminishing returns hold sway in the traditional, resource-processing industries. Increasing returns reign in the newer, knowledge-based industries. Modern economies have split into two interrelated worlds of business corresponding to the two types of returns. The two worlds have different economics. They differ in behavior, style, and culture. They call for different management techniques, strategies, and codes of government regulation. The author illuminates those differences by explaining how increasing returns operate in high tech and in service industries. He also offers advice to managers in knowledge-based markets.
High-definition televisions should, by now, be a huge success. Philips, Sony, and Thompson invested billions of dollars to develop TV sets with astonishing picture quality. From a technology perspective, they've succeeded: Console manufacturers have been ready for the mass market since the early 1990s. Yet the category has been an unmitigated failure, not because of deficiencies, but because critical complements such as studio production equipment were not developed or adopted in time. Under-performing complements have left console producers in the position of offering a Ferrari in a world without gasoline or highways--an admirable engineering feat, but not one that creates value for customers. The HDTV story exemplifies the promise and peril of innovation ecosystems--the collaborative arrangements through which firms combine their individual offers into a coherent, customer-facing solution. When they work, innovation ecosystems allow companies to create value that no one firm could have created alone. The benefits of these systems are real. But for many organizations the attempt at ecosystem innovation has been a costly failure. This is because, along with new opportunities, innovation ecosystems also present a new set of risks that can brutally derail a firm's best efforts. Innovation ecosystems are characterized by three fundamental types of risk: initiative risks--the familiar uncertainties of managing a project; interdependence risks--the uncertainties of coordinating with complementary innovators; and integration risks--the uncertainties presented by the adoption process across the value chain. Firms that assess ecosystem risks holistically and systematically will be able to establish more realistic expectations, develop a more refined set of environmental contingencies, and arrive at a more robust innovation strategy. Collectively, these actions will lead to more effective implementation and more profitable innovation.
Intel and Microsoft neither buy from nor sell to each other directly, but they are undeniably in business together. They are probably the world's most widely known pair of complementors--companies that independently provide complementary products or services to mutual customers. Complementors increase the value of each other's offerings and the size of the total market. So it's not surprising that so many just assume that their interests are aligned. Nothing could be further from the truth. Discord can develop in many areas, such as pricing, technology, standards, and control of the market--both in terms of which company has the most influence over customers and which one gets the biggest slice of the pie. The issue of pricing perfectly captures this tension. Ideally, you'd like to price your goods high while your complementors price theirs low. Airlines, for instance, would be happy to see vacation lodgings go for a song, while destination resorts could raise rates and still fill their rooms if customers could fly there for free. The first step in managing relationships with complementors is to develop a deep understanding of their economics, their strategies and goals, their existing capabilities, their incentives for cooperation, and any potential areas of conflict. Then, to gain the upper hand, companies can use a variety of tools that fall into two main categories: hard power (inducements or coercion to get what you want) and soft power (persuasion through indirect means to get others to want what you want). The authors explain how to build both hard power and soft, illustrate the strengths and limits of each, and offer guidelines for choosing one over the other. Conflict among complementors is inevitable, but together, hard and soft power can help companies manage the dark side of complementor relationships and take full advantage of the opportunities that cooperation should create.
"This paper explores Intel's strategy with respect to complements. We find that, as the literature predicts, Intel's entry decisions are shaped by the belief that it does not have the capabilities to enter all possible markets, and thus that it must encourage widespread entry despite the fact that potential entrants (rationally) fear Intel's ability to "squeeze" them ex post. We explore the ways in which Intel addresses this issue, highlighting in particular the firm's use of organizational structure and processes as commitment mechanisms. Our results have implications for our understanding of the dynamics of competition in complements and of the role of organizational form in shaping competition." Copyright 2007, The Author(s) Journal Compilation (c) 2007 Blackwell Publishing.
The Competitive Advantage of Interconnected Firms: An Extension of the Resource- Based View Academy of Management Review Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel
- D Lavie
- A Gawer
- R Henderson
D. Lavie, " The Competitive Advantage of Interconnected Firms: An Extension of the Resource-
Based View, " Academy of Management Review, 31/3 (July 2006): 638-358; A. Gawer and
R. Henderson, " Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel, " Journal of Economics & Management Strategy, 16/1 (Spring 2007): 1-34.
ARM Holdings PLC.: Ecosystem Advantage
- P Williamson
- A. De Meyer
P. Williamson and A. De Meyer, "ARM Holdings PLC.: Ecosystem Advantage," Judge Business
School case collection and ECCH, Case No. 310-127-1, 2009.
Lessons From IBM: Smart Energy Systems Need a Lot of Friends
- J Gathwaite
J. Gathwaite, "Lessons From IBM: Smart Energy Systems Need a Lot of Friends," Big Green,
June 23, 2009.
- A D Chandler
A.D. Chandler, Strategy and Structure (Cambridge, MA: M.I.T. Press, 1962), p. 31.
- T Friedman
T. Friedman, The World is Flat (London: Allen Lane, 2005), pp. 72-73.