Entrepreneurship in Innovation Ecosystems: Entrepreneurs' Self-Regulatory Processes and Their Implications for New Venture Success

By Nambisan, Satish; Baron, Robert A. | Entrepreneurship: Theory and Practice, September 2013 | Go to article overview

Entrepreneurship in Innovation Ecosystems: Entrepreneurs' Self-Regulatory Processes and Their Implications for New Venture Success


Nambisan, Satish, Baron, Robert A., Entrepreneurship: Theory and Practice


Innovation ecosystems have emerged as an important context for entrepreneurship. Ecosystem entrepreneurs, however, face a unique set of challenges associated with the need to balance the goals and priorities set by the ecosystem leader with the goals and priorities of the new venture. We focus on ecosystem entrepreneurs' self-regulatory processes and the potential role of these processes in entrepreneurs' efforts to successfully balance requirements set by the ecosystem leader with the goals of their own ventures.

Introduction

In the last several years, large companies in many different industries have established global networks of partners or ecosystems to enhance the reach and range of their products, services and technologies (Chesbrough, 2003; Nambisan & Sawhney, 2007). A business ecosystem has been defined as "an economic community supported by a foundation of interacting organizations--the organisms of the business world" (Moore, 1996, p. 26). More specifically, an innovation ecosystem refers to a loosely interconnected network of companies and other entities that coevolve capabilities around a shared set of technologies, knowledge, or skills, and work cooperatively and competitively to develop new products and services (Moore, 1993). The three defining characteristics of an innovation ecosystem then are the dependencies established among the members (members' performance and survival are closely linked to those of the ecosystem itself), a common set of goals and objectives (shaped by the ecosystem-level focus on a unique customer value proposition), and a shared set of knowledge and skills (complementary set of technologies and capabilities) (Adner & Kapoor, 2010; Iansiti & Levien, 2004; Teece, 2009). Examples of such innovation ecosystems include Apple's iPhone ecosystem, Google's Android ecosystem, Salesforce.com's AppExchange network, and the Linux open source community.

In this study, we focus on one type of such innovation ecosystems, a hub-based innovation ecosystem that involves a single firm assuming the ecosystem leadership (setting the goals and defining the innovation platform) and exercising considerable influence over the strategies and fortunes of all other members. Such innovation ecosystems have emerged as an important context for entrepreneurship. For example, Apple's iPhone ecosystem has spawned hundreds of startups seeking to develop and market complementary applications (apps) to consumers. (1) The niche nature of the expertise called for and the relatively small size of the value appropriation opportunities presented by these innovation ecosystems (Iansiti & Levien, 2004) tend to attract mainly new ventures and small companies. Further, the gradual infusion of digital content into a wide range of products and services and the consequent increase in the number of digital innovations (Yoo, Henfridsson, & Lyytinen, 2010) have led to innovation ecosystems in consumer goods and other such sectors (e.g., electronic toys, automotive, household appliances, publishing, etc.), thereby opening up a much broader set of opportunities for entrepreneurs. (2) All of these have enhanced the significance of innovation ecosystems as a context for entrepreneurship.

In contrast to entrepreneurs in other market settings, these ecosystem entrepreneurs are faced with special challenges. Specifically, they must manage their new ventures while simultaneously keeping in view different sets of potentially conflicting forces emanating from the ecosystem. On the one hand, they must work within the vision, goals, and structures set forth by the ecosystem leader or the hub firm (e.g., Apple). As such, they have to ensure that their company's business objectives and strategies align well with those of the hub firm and the other partners. On the other hand, they must also ensure sufficient differentiation and independence for their companies and pursue a unique value proposition that would sustain the new venture even if the particular innovation platform declines (or fails). …

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