Gouthanan Pushpananthan

Driving innovation in the digital economy – Why "ecosystems" matter

​In today's digital economy, the boundaries between the physical and digital are disappearing and innovation is no longer a firm or industry specific activity. Therefore, the future of industrial production involves leveraging digital technologies and exploiting data to foster continuous innovation and generating complementarities, that is, assets that are productive when used together. In this context, the concept of an ecosystem has become a powerful analogy to explain joint value creation where actors from multiple industries, including competitors, co-create value. However, there is a gap in scholarly understanding of the process of ecosystem emergence. Gouthanan Pushpananthan's doctoral thesis eliminates some of the inconsistencies regarding the emergence process of an ecosystem by studying the activities of an incumbent firm during a discontinuous technological change (DTC).

What challenges do you focus on in your research?

"Exponential advances in Internet of Things (IoT) technologies are dismantling firm- and industry-specific value creation processes. Today, value creation is becoming much larger than an individual firm or even an industry. Several scholars describe value creation and capture in an ecosystem, but few explore the process of ecosystem emergence.  Also, ecosystem scholars do not explain the capabilities needed to orchestrate value creation in an emerging ecosystem. Further, ecosystem research recognizes the significance of the keystone position in ecosystems. However, it is unclear how a keystone firm orchestrates activities in an emerging ecosystem. My thesis explores the emergence of an ecosystem, during a period of DTC, by studying the developing a new technology platform by an incumbent automotive manufacturer."

How do you address the problem with your research?

"Extant research acknowledges that modularisation (i.e., breaking down a complex product or system into independent modules) and non-generic complementarities (i.e., assets that complement one another in a confined way) are important underpinnings of an ecosystem. For instance, Nespresso transformed the generic complementarity between coffee and coffee machines and transformed it into a ‘non-generic complementarity’ by designing capsules (or pods) and specialized machines for the capsules.  Thus, firms that develop modular products with non-generic complements can create ecosystems."
"However, not all modular products (or platforms) develop into successful ecosystems. Further, incumbent firms in traditional industries are accustomed to operating in linear value chains with hierarchical organizing logic. With advancements in Information and Communications Technology, ICT, the organizing logic is moving away from integrated architecture, with one-to-one coupling between components, towards modular architecture with standardised interfaces. My thesis contributes to scholarly discourse on innovation ecosystems by explaining the transition of an incumbent firm’s internal platform onto an ‘external’ modular platform. The resulting modularization highlights an important distinction between modularity as understood in the traditional product development literature and modularity needed for the emergence of an ecosystem."

"By studying various activities, undertaken by an incumbent firm during a DTC, the thesis describes the process of ecosystem emergence. Further, the thesis presents the concept of “layered modularity” as a mechanism to support development of digital technologies for industrial products. It also shows how layered modularity facilitates generativity, which means that value is continuously created through unexpected combinations and unpredictable innovations. Further, the thesis makes contributions associated with the capabilities needed to orchestrate an innovation ecosystems."
"The research was designed as an ethnographic in-depth case study of Volvo Car Group, an incumbent in the automotive industry. In particular, my thesis examines the developments related to autonomous driving (AD) technology, a DTC for the automotive industry."

What are the main findings?

"This thesis makes three main contributions to literature on innovation ecosystems: (1) it describes ‘layered modularity’ as a design mechanism that facilitates joint value creation leading to the emergence of an innovation ecosystem, (2) it shows how developing physical products (such as devices or hardware platforms) and digital systems (such as IoT technologies or software) in distinct layers allows intertwining of divergent innovation activities and development methods, (3) it distinguishes between three distinct activities – cooperation, coordination and competition – that incumbents firms need to manage in order to become a keystone actor and orchestrate the ecosystem."

What do you hope your research will lead to?

"The findings presented in this thesis have important implications for manufacturing firms looking to leverage a DTC to create new ecosystems. The findings in my thesis will be useful for managers and executives, in industries facing a DTC, to better organize innovation activities in an ecosystem. The concept of layered modularity can help manufacturing firms integrate software and digital technologies with their product platforms, thereby intertwining a range of innovation trajectories. Also, my thesis addresses how manufacturing firms can balance between cooperation and competition amongst heterogonous actors in an innovation ecosystem."

Text compilation: Daniel Karlsson

The author will defend the thesis on 22 March 2022 at 13:15, see link on the thesis' page


Page manager Published: Thu 17 Mar 2022.