Innovation ecosystems have become pivotal phenomena in a world of increasing specialization and complexity, in which single ventures cannot develop and commercialize technology-driven value propositions alone. In this setting, various firms and other actors need to work together in creating and building an innovation ecosystem around a shared value proposition. The Ecosystem Pie Model (EPM), published in Long Range Planning in 2020, is the first comprehensive tool for mapping and assessing the risk profile of a prospective innovation ecosystem. We describe, and reflect on, how the so-called design theory underlying the EPM was developed. This design theory includes its key constructs, design principles, visual instantiation, detailed application guidelines, and assessment of how mutable its applications are. The initial design theory was used to develop more than 240 ecosystem constellations to assess its applicability and mutability. We also outline various applications of EPM design theory by others. Overall, this paper contributes to the entrepreneurship and innovation literature by developing a complete design theory, one that covers the entire spectrum from theoretical underpinnings to detailed application guidelines and an initial body of applications.

Although digital disruption has become a buzzword, we still lack a comprehensive understanding of what digital disruption actually is and what strategies can be employed to make it happen. Therefore, this chapter starts off by explaining the notion of digital disruption and consecutively illustrating its pervasiveness using a number of detailed examples. It then offers a sneak peek of the processes happening behind the scenes of digital disruption. Specifically, it explains business model innovations, innovation ecosystems, and platforms and network effects as the core strategic concepts that are of paramount importance for understanding the digitalization dynamics. The chapter ends with the state-of-the-art insights towards future challenges and avenues for further research.

Research Summary The optimal distinctiveness literature highlights a fundamental trade-off in product positioning within market categories: Products should be distinct to minimize competition, but similar to build legitimacy. Most recently, this research has focused on understanding sources of variance in the distinctiveness-performance relationship. We extend this literature with an examination of digital products and argue that the relationship depends on products' revenue models: We theorize the relationship is inverted U-shaped for paid products but U-shaped for free products, owing to heightened privacy concerns of free product customers. We further argue that this latter relationship becomes flatter for free products that provide greater monetization transparency by publishing a privacy statement or adopting a freemium revenue approach. Hypotheses are tested using a sample of 250,000-plus Apple App Store apps. Managerial Summary How should firms in the digital space position their products for optimal performance? We study this question in the Apple App Store, and suggest that the optimal positioning of digital products depends on their revenue model. Paid products should be moderately differentiated from competing products. By contrast, free products benefit most from very low or very high levels of differentiation. We attribute the different performance effects of differentiation to customers' privacy concerns over free products. Firms can partially ameliorate those privacy concerns by providing greater monetization transparency by publishing a privacy statement or by adopting a freemium revenue approach, making moderate levels of differentiation more viable. Our findings help managers align choices of positioning and revenue model, two critical aspects of the firm's business model.

Protecting privacy and personal data is one of the fundamental rights of people, as is stipulated and regulated in many countries. This study zooms into mobile applications in Google Play, uses the advanced structural topic modeling technique to classify the necessity of the permissions, and analyze the relationship between unnecessary privacy-sensitive permissions and app acceptance. After a series of analyses, we consistently arrive at a surprising and disturbing finding: a positive relationship between unnecessary privacy-sensitive permissions and app acceptance. Such a finding goes beyond the privacy paradox, a phenomenon where the users claim to value privacy greatly yet give it up for a relatively small amount. We further explore three theoretical explanations for this finding: the following the crowd effect, the trading effect and the signaling effect, all of which are supported in our split-sample analyses, since the positive relationship goes away for the apps with a few installations, the paid apps, and the apps with bad reviews respectively. It is noteworthy that in these analyses the relationship never becomes negative as what we would have expected.

A critical strategic choice facing firms is how to position products within market categories. The optimal distinctiveness literature highlights a fundamental trade-off in this choice: products should be distinct from other products in order to minimize competition, but similar to other products in order to build legitimacy. In an attempt to resolve mixed evidence about the optimal level of distinctiveness, research has recently begun to investigate how the distinctiveness-performance relationship varies across different contexts. We add to this debate as we link this literature with the business model literature to argue that the shape of the distinctiveness-performance relationship depends on products’ revenue models. More specifically, we argue that differences in revenue models affect customer expectations, and this leads us to predict that the distinctiveness-performance relationship varies fundamentally for paid versus free products. Within the class of free products, we further contend that the shape of the distinctiveness-performance relationship depends on whether the free product adopts a freemium revenue model. Hypotheses are tested in a sample of over 250,000 mobile apps from the Apple iOS App Store. We find an inverted U-shaped relationship for paid products and a U-shaped relationship for free products, which becomes flatter for free products using a freemium revenue model.

Within platform markets, research is dominated by the platform owner’s perspective. This study takes the complementor perspective and investigates how complementors can decrease the timeframe needed to sell their products on the platform. Products could have various degrees of fit with different platforms, ranging from bad to excellent. Therefore, we introduce a new concept, namely fit between a product and platform, and develop two district measures for it: the number of subcategories and the number of details in product presentation on the platforms. Based on survival analyses and Rubin’s potential outcomes framework, we observe a negative relationship of fit with the timeframe needed to sell a product. More specific, complementors will be able to sell 10% faster when aligning their products to the more appropriate platforms. Another element that is researched in this study is the competition among products. We identify an inverted U-shaped relationship, signaling that the benefits of indirect network externalities only hold up to a certain extent for complementors, after which the disadvantages of crowdedness dominate. This contradicts current literature from the platform owner’s perspective, which mentions that the benefits of indirect network externalities take place without boundaries.

The concept of interdependence has been widely theorized in organization theory and strategy using NK model, yet rarely has it been empirically explored. In this research we develop a novel way, building upon the advancements in Artificial Intelligence, to measure the interdependencies (K) among the firm activities (N). The method enables reconstructing the NK configurations of individual firms and represent them as graphs providing detailed insights into the whole structure of interdependencies. We use a sample of 2298 SMEs, 6 months of financial transactions per firm. In the obtained NK graphs, the bilateral relationships, i.e. interdependencies, and the unilateral relationships, i.e. dependencies, can exist simultaneously. We find that while interdependencies (compared to dependencies) are less prevalent than previously assumed, they have a more positive relationship with firm performance. We further observe that the centralization of the (inter)dependency pattern, instead of the bilateral or unilateral relationships, drives the firm performance differences. Finally, we observe substantial heterogeneity in terms of how firms in the same industry enact the K, and find that firm-level rather than industry-level interdependence variation drives the firm performance differential. We find that while interdependencies (compared to dependencies) are less prevalent than previously assumed, they have a more positive relationship with firm performance. We further observe that the centralization of the (inter)dependency pattern, instead of the bilateral or unilateral relationships, drives the firm performance differences. Finally, we observe substantial heterogeneity in terms of how firms in the same industry enact the K, and find that firm-level rather than industry-level interdependence variation drives the firm performance differences.

We investigate how Salesforce’s key people used analogies and metaphors during the deployment of their (then) radical business model innovation. Our analysis shows how Salesforce’s entrepreneurial team skillfully used a mix of analogies and metaphors to communicate its innovations and differentiate the company from its competitors. We also show how business model innovators can weave together analogies and metaphors to create distinct meta-narratives that elicited strong emotions and helped construct a memorable organizational identity that galvanized stakeholders around the firm’s ecosystem appeal. We conclude by discussing the implications of our findings for business model and cognition research.

To achieve a complex value proposition, innovating firms often need to rely on other actors in their innovation ecosystem. This raises many new challenges for the managers of these firms. However, there is not yet a comprehensive approach that would support managers in the process of analysis and decision making on ecosystem strategy. In this paper, we develop a strategy tool to map, analyze and design (i.e., model) innovation ecosystems. From the scholarly literature, we distill the constructs and relationships that capture how actors in an ecosystem interact in creating and capturing value. We embed these elements in a visual strategy tool coined the Ecosystem Pie Model (EPM) that is accompanied by extensive application guidelines. We then illustrate how the EPM can be used, and conclude by exploring the multiple affordances of the EPM tool as a boundary object between research and practice.

Digital innovations often follow a more fluid innovation process and, therefore, require different ways of managing the front end of innovation. Agile as alternative to established front end management practices is often suggested, potentially combined with Stage‐Gate, in what is called a hybrid Agile‐Stage‐Gate model, to reap the benefits from both. Implementing the hybrid model in the front end is however not sufficient for firms with separate Research and Development departments to succeed. In such organizations digital innovations still need to be transferred from Research, where the front end work on digital innovations takes place, to the Development department, where formal development actually starts. Yet, such front end transfers have been described as inefficient and ineffective. Realizing digital innovation front end transfers is likely even more challenging because of their fluid definition. In the absence of extant theory on front end transfers in such a setting, this research uses a case study approach to analyze the front end transfer experiences of the Research department of a firm in the lighting industry that is undergoing a transformation from traditional to digital lighting. The in‐depth analysis of triangulated data on eight front end projects shows that Research struggles to transfer digital innovations to Development, because transfer practices in terms of management, scope, and synchronization, turn out to be inherently challenging in a hybrid Agile‐Stage‐Gate setting. Specifically, the results reveal that each transfer practice plays an intricate role in either facilitating (i.e., transfer management) or inhibiting (i.e., transfer scope and synchronization) front end transfers of digital innovations. The discovery of these opposing forces has important implications for novel theorizing on the use of Agile in the front end of digital innovation, transfer practices from Research to Development in a hybrid setting, as well as for theorizing about digital innovation management.

This online text outlines the Ecosystem Pie Model (EPM), a tool for analyzing, mapping and designing innovation ecosystems.

Smart cities are one of the dominant manifestations of digitization with a multimillion dollar potential, where cities and companies alike are looking for ways to create and capture value. Technology-driven companies are key to making smart cities a reality, but their current product-centric business models do not meet the changing needs anymore. Based on an in-depth study at Philips Lighting of four smart city cases across a period of five years, our article illustrates four distinct business models that enable incumbent organizations to enter this smart city market. We develop and contrast the four types of business models on individual and joint value creation and value capture dimensions and show how each business model can be of value to an incumbent, depending on the project and ecosystem. We illustrate these business models with insights from Philips Lighting's transition from public lighting to smart cities and provide specific implementation suggestions for incumbent companies.

Various theoretical perspectives suggest that a means-oriented approach to new venture development can be a viable alternative to the conventional approach, which emphasizes predetermined goals, and that the former is favored by expert entrepreneurs. However, it is still unclear whether, and under which conditions, means-based action positively affects entrepreneurial performance and whether it would also be effective for novices. This study demonstrates the new venture performance impact of means orientation. We further contribute to various strands of entrepreneurship research by highlighting two moderating factors that are salient in the early-stage entrepreneurial process: opportunity recognition beliefs and process control practices.

Although values and motivations of entrepreneurs are thought to impact key decisions and performance during business venturing, research in this field is still scarce. Organizational psychology and entrepreneurship literature has suggested that social value orientation (SVO) might affect entrepreneurial behavior. In this article, we hypothesized about the relationship between social value orientation and entrepreneurial performance in the context of entrepreneurial teams. We have developed preliminary insights through an entrepreneurial educational field experiment with students being sampled in teams based on proself and proother orientations. As hypothesized, prosocial teams performed better, yet surprisingly altruism in teams was related to worse performance. Our preliminary findings further indicate that team relationship conflict played a positive role in prosocial teams’ performance. Although preliminary, these findings may offer promising insights to the entrepreneurial team and entrepreneurship education literature.

Sustainable innovation requires collaboration across organizational boundaries, hence in this research, we take a boundary-spanning perspective on the business model. This perspective focuses on how value is created and captured across organizational boundaries, by investigating the value transfers between the focal organization and the external network of business model actors. We analyze the business models of 64 innovative sustainable organizations from The Netherlands in terms of how environmental and social sustainability is manifested in the content, structure, and governance of their business models. We find that environmental sustainability is mainly represented in value creation content, whereas social sustainability is achieved by serving underprivileged user groups and mainly is reflected in value capture content. We observe that social sustainability in both for-profit and non-profit organizations is often achieved by having an imbalance in value exchanges that is compensated elsewhere in the business model. In terms of business model structure we show that sustainable organizations use the same underlying business model structures as can be found in conventional firms. All in all, we demonstrate that analyzing the environmental and social sustainability of organizations using the boundary-spanning perspective on business models provides complementary insights to the traditional component-based view of the business model.

The search for partners in open innovation settings often consumes substantial time and managerial attention. Yet, organizations tend to get trapped in local search, which typically leads to collaboration with partners already known to them. To improve the search for partners, this article develops a tool that exploits the power of state-of-the-art information technology. In a sample of 33 search queries conducted in six innovation intermediaries, it studies differences between search with and without the use of our tool. The tests confirm the tool’s effectiveness and efficiency, and highlight the importance of searching with keywords that represent the core roles and activities of a firm, next to keywords referring to market and technology characteristics. Network visualization and semantic algorithms thus appear to facilitate the effort to identify distant partners. The article also finds that local partners are not that easy to find as commonly assumed.

The study contributes to innovation ecosystem research and managerial practice by developing design theory for mapping, designing and analyzing (i.e., modeling) innovation ecosystems. In doing so, ...

Incumbents facing a digital transformation are confronted with digital trends, such as Internet of Things, smart cities, and big data, that open up new customer segments, but simultaneously demand more complex innovation solutions. This requires a more flexible and adaptive front end of innovation (FEI) with shorter product lifecycles and faster response time. Consequently, incumbents are increasingly adopting an Agile-Stage-Gate hybrid models, combining iterative project management with a formal gating process. While the applicability of a hybrid model to recognize and demonstrate the potential of a new opportunity as been proven, its effect on the transfer from the FEI to formal development has yet to be studied. This inter-organizational transfer is key to the dissemination of new innovations and competitive growth. We conducted an exploratory case study of eight FEI projects within an incumbent with smart city ambitions, collecting data through interviews, participants observations, workshops, and documents. We find that while agile has a positive effect on achieving front end transfers, in turn transfers have a negative effect on the effectiveness of working in agile.