The global deployment of new digital technologies, such as fifth-generation broadband, Internet of Things, smart objects, and AI, is paving the way for new high-performance digital platforms. These platforms are capable of connecting both people and “things” at high speeds and near-zero latency, taking on the nature of digital “ultra-platforms”. However, the increased reach (i.e., more agents interacting across the platform) and responsiveness (i.e., more opportunities for agents to respond and adapt to each, as they interact) of digital “ultra-platforms” create an unprecedented level of complexity. In this article, we use an agent-based simulation model to study the different types of risks that arise from this increased level of complexity. Three different risks are identified that can hinder a platform's ability to create value. We refer to these risks as the digital black swan, the stacked deck, and push back. Each risk is considered and analyzed from the perspective of specific stakeholders who may be affected by platform externalities. These include the platform owner, platform users, and others who may have no direct interest in the platform. In this way, the article aims to contribute to the literature on digital platform management by focusing on challenges that are emerging from new digital technologies yet have thus far received little attention from either scholars or managers.

The paper aims to provide a conceptual framework to analyze the effect of digitalization on innovation decisions. In terms of methodology, by developing an envisioning contribution with the specific conceptual goal of identifying, the research proposes an analysis of innovation decisions within the S-D logic theoretical framework, highlighting that digitalization exacerbates the strategic dilemma of specialization versus diversification, bringing to a paradox. The findings show that digitalization's vastly increased reach and responsiveness push actors towards two opposing innovation orientations that can increase the value co-creation potential. One direction is solution bundling, which can be considered as developing a flexible service based on the weakly coupled available resources, the other is solution unbundling, which we define as developing specialized service by tightly coupling resources, "freezing" the further service potential. The consequent two opposing processes (i.e., solution bundling and unbundling) are each inherently self-reinforcing and that digitalization intensifies such amplifying feedback loops. We discuss why these dynamics are paradoxical and what this implies for actors by adopting an institutional approach to consider market dynamics and leveraging resource-based view and service-dominant logic.

Purpose Based on two dominant perspectives, team climate and knowledge integration, on team innovation, this study aims to propose a moderated mediation model to examine the interactive effect of inter-team trust and goal clarity on team innovation through knowledge inflows into a team. Considering the two perspectives at the same time will provide a more complete picture on our understanding on team innovation. Design/methodology/approach The research model is tested on 150 retail teams of a large apparel firm. Data are collected from two separate surveys, one to store managers and one to store staff members. Moderation mediation regression analysis is conducted on the survey data. Findings The regression analysis identified both a positive direct effect of goal clarity on innovation, and a negative moderating effect of goal clarity on the mediation of knowledge inflows between inter-team trust and innovation. In other words, inter-team trust is positively related to team innovation through knowledge inflows when goal clarity is low. Originality/value In this study, the authors identify an indirect and negative role of goal clarity on team innovation, and examine the mechanism and boundary of inter-team trust on team innovation. Managers are advised to foster a trusting environment and be aware of cognitive bias in their teams so that their teams can be more innovative.

This article investigates how managers of firms awarded for their design excellence build organizational-level design-related dynamic capabilities by selecting designers with specific individual capabilities and managing how and the extent to which users of the firms' products are actively involved in design activities. The following two types of dynamic capabilities were studied: user-centered design (UCD) and meaning innovation (MI). Data from a survey of managers of 106 Italian firms recognized for their products' "design excellence" during the 2011-2016 period were analyzed using a structural equation model (PLS-SEM). The results suggest that managers seeking to build dynamic UCD capabilities prefer designers with holistic thinking capabilities over those with ideation and envisioning capabilities and value user involvement throughout the design process. In contrast, managers seeking to build dynamic MI capabilities search for designers with holistic thinking and envisioning capabilities and avoid ideation capabilities. They also consider the value of involving users in the design process to be limited. This study is among the first to present the results of an empirical investigation of the microfoundations of dynamic design capabilities. Limitations of the research and prospects for future work are discussed. In particular, our findings point to the need for additional studies that further specify the routines and associated competencies that managers responsible for design employ to attract, nurture, integrate and exploit the micro-level capabilities required for UCD and MI. Given that some of these microfoundations were found to be differentially important, unimportant, or even detrimental to the development of either UCD or MI, an important remaining question is the extent to which, and how, a single firm can accommodate and effectively exploit both of these dynamic design capabilities.

Market forces greatly impact our world. Such forces and the world they help forge are constantly changing, albeit blindly. This paper suggests that market forces can be shaped so that the help of many can be harnessed to address prevailing social problems on a large scale. Coaxing the market to allocate resources to more solutions will enable us to create a better world together. But this requires changes in what the market signals as valuable so resources can be allocated to new uses. The argument introduces the concept of guided effectuation – i.e., a process by which firms play an active role in shaping the market, and thereby change what it values. Through this process, firms render new services that both influence the perceptions of market actors regarding what the market should value and establish new conditions for the market efficiency of those services that are consistent with their shaping purpose. Our argument contributes to the effectuation literature by highlighting how effectuation can be leveraged to shape the market. It also contributes to the literatures on performativity and those theories of the firm that cast the firm in a more agentic role than one of merely adapting to a given market.

The contributions to society of market-based economic systems are undeniable and impressive. Markets have mobilized knowledge to deliver significant advances in prosperity, in terms of greater economic wealth. For decades prosperity had been accompanied by equally impressive gains in progress in terms of improved social well-being. However, while prosperity continues to advance, particularly where markets are most efficient, progress seems to have stalled. Today, scholars are again questioning whether prosperity can adequately deliver progress. We answer, in this paper, that it can—but only if guided by a purpose that is not determined by the blind pursuit of market efficiency and profit maximization. We explain how a relentless pursuit of efficiency allocates resources towards ever greater prosperity but often away from progress. Closing the prosperity–progress gap, we argue, will require a broader role for firms that includes market-shaping. We define market-shaping as the paradoxical process of persistently pursuing a purpose by allocating resources in a way that, on the one hand, shelters them from the market’s forces of efficiency, and on the other hand, redefines what the market indicates is efficient. In this way, markets and firms can reinstate themselves as engines of both prosperity and progress.

Learning outcomes Following are the learning outcomes: to understand how the tools and frameworks of strategic analysis can be applied to understand the evolution of value creation and capture in the FMCG industry; to analyze the core competencies of a company and understand their relevance in this fast-changing industry; to understand how to evaluate the pros and cons of a certain strategy and business model; and to develop strategic recommendations. Case overview/synopsis The case series traces the developments in China’s FMCG industry from the early 2010s to 2017, in general, and the efforts of Beijing WinChannel Software Technology Co., Ltd. (WinChannel) and its affiliated company, Huixiadan, in their attempt to apply new digital technologies to transform the traditional trade channel, in particular. The decision point of Case A, in early 2015, is how WinChannel can help improve the reach and efficiency of the traditional trade channel and wonders if the emerging online/mobile B2B FMCG platforms are the right solution for the increasingly digitized FMCG retail industry in China. The decision point of Case B, at the end of 2017, is how could Huixiadan’s business model be sustainable and what it should do to withstand the competitive threats even as it tries to exploit opportunities in the traditional FMCG industry in China. Complexity academic level It can be used with MBAs, EMBAs and senior executives. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS: 11: Strategy.

Organizational theorists are interested in the flow of resources within social networks, especially difficult-to-transfer resources like tacit knowledge and influence. For such resources, research has emphasized the role of direct relational ties and neglected the role of structurally embedded indirect ties. Given the heavy investments needed to build and sustain direct ties, a better understanding of how indirect ties can affect the acquisition of difficult-to-transfer resources is essential. In this study, we elaborate on distinct structural and relational characteristics of an individual’s indirect ties to show how they can facilitate the acquisition of tacit knowledge and influence. We argue that more indirect ties, especially those that favor the resource provider, and closer ties between resource provider and mutual acquaintances than between resource acquirer and acquaintances will increase the acquisition of tacit knowledge and influence. We test our model using survey data from marketing and sales managers in a global pharmaceutical company. Our study offers unique insights into how directivity, the directional property, of structurally embedded ties can shape collective understanding, mutual trust, social reciprocity, and sanction to stimulate the flow of difficult-to-transfer resources.

Research has identified the positive effects of goal clarity and inter-team trust on team innovation separately. Departing from extant research, we examine the potential moderating effect of goal clarity on the relationship between inter-team trust and team innovation in this paper. Consistent with what we already know, we first argue that a team’s innovation increases when the team has a clear and specific goal, or when the team trusts its organizational peers. We specifical argue that trust facilitates knowledge acquisition from peer teams and the focal team uses this external knowledge to innovate. Relying on goal setting theory and organizational learning theory, we further argue that a clear goal makes this mediating mechanism of knowledge inflows less effective; the clearer the goal of a team, the lower the mediating effect of knowledge inflows. We tested the arguments on 150 sales teams of a large apparel firm based on surveys sent to both the sales team managers and members. The regression analysis of the survey data identified a negative moderating effect of goal clarity on the mediation of knowledge inflows between inter-team trust and innovation. This paper contributes to advancing theories of trust and goal setting on team innovation.

This paper proposes a framework to examine the value creation process in the light of what is possible at any given time, based on what is known or knowable; and explores the impact of interdependencies on the continually changing frontier of what can be known. The model suggests that while market signals can usefully guide efforts to create value within limits defined by existing information and known interdependencies, they are not good indicators of the potential for new future value. The argument implies that managers seeking to create new value may need to allocate some resources in defiance of market forces, rather than in alignment with them. This in turn means that their objective should be a purpose decoupled from efficiency, rather than profit maximization.

This paper explores the nature and origins of an inherent, but often overlooked limitation of even well-functioning markets. While it is widely acknowledged that markets can fail and that economic surpluses are not always maximized; these realities are commonly ascribed to institutional or human shortcomings. This attribution misses a fundamental point. In order to make possible or valuable what otherwise would not be; resources often need to be sheltered from market pressures and allocated to uses that cannot be justified economically. If new economic value ultimately results from such sheltering it will at the margin shape the market, shifting its equilibrium. Paradoxically, this shift will be due more to defiance of market forces than to alignment with them. We argue that markets can usefully guide efforts to create value when it involves producing more of what already exists, or some improved substitutes; but that markets are not good arbiters for new sources of future value. The argument has important implications for corporate governance and public policy. Inter alia it underscores the importance of purpose and suggests that although husbanding resources carefully in the pursuit of an objective is rational, aiming to maximize economic surplus or profit is generally not.

Organizational adaptation is typically analyzed in simulation settings where organizations strive to improve their own past performance, without regard to the relative performance, fitness or capabilities of others. In this paper, we introduce the notion of interactive search, which we define as an intentional process of adaptation that is guided by the outcomes of the efforts of both the organization itself and those of others. Using an agent-based simulation model we consider how less successful organizations benefit from observing and considering the adaptive trajectories already established by more successful organizations. Our findings show not only that taking into account the behavior of others, accrues benefits in adaptive fitness, but also that the strongest benefit comes from observing and following others in ways that are much more subtle than pure emulation. Organizations that use others’ behavior merely as a preferential direction for their own adaptive choices fare even better. This result stems from the more general finding that the impediments to an organization’s ability or inclination to observe or follow others do not necessarily affect adaptation negatively. In many cases their impact is even beneficial.

Firms create value by making more of what already exists (or has existed previously), or by making something new. This paper argues that market signals can usefully guide the former but may be unhelpful for the latter, which can often require resource deployments that are not justifiable on efficiency grounds. Although there is broad consensus among theorists that markets fail and that firms routinely fall short of maximizing profits, these observations are typically construed as institutional shortcomings that economists and managers should strive to overcome. In contrast, we argue that in order to make possible or valuable what otherwise would not be, managers need at times to defy market induced pressures to be efficient. This dual role -- of sheltering resources and shaping future markets -- is crucial to the process of value creation but has thus far been neglected in theories of the firm. Our argument suggests that striving for sufficient profits to secure the firm’s continuity is an appropriate management objective, but maximizing profits is not.

This paper explores how the rules that guide search affect organizational adaptation in complex and turbulent environments. Our consideration of such rules extends beyond search scope—i.e., exploitation of current technologies vs. exploration of new technologies—to include focus on competition. We consider two types of competitive focus—i.e., external, where the choice of focal technology to be improved is influenced by information about other organizations and internal, where it is not influenced by others. We refer to this expanded set of rules as managerial selection and vary it to explore how it affects organizational adaptation. Employing an agent based simulation model, built on the framework of NKC fitness landscapes, we consider multiple types of interdependencies within and between technologies and across competitors. We show that in the presence of these multiple interdependencies, the ability of organizations to adapt is conditioned as much or more by the focus of search than by its scope. In particular, we observe that in simple and stable environments, organizational adaptation is enhanced by an external focus but in complex and turbulent environments, such external focus is counterproductive.

Extant strategy theory focuses largely on the appropriation of value as the basis for explaining and predicting firm performance. We argue that this focus is inappropriate. Drawing on the ideas of Schumpeter, we advance a theory that seeks to explain both the creation and the realization of value by firms.