Innovation beyond the boundaries of the firm : essays on the performance implications of interorganizational innovation strategies

Abstract

Innovation constitutes one of the essential means by which firms outperform their competitors and contribute to economic welfare. As a result, substantial research has been conducted on how innovation can be managed. Thereby, in essence the purpose of innovation research is to enhance our understanding of the determinants, nature, locus, outcomes and sources of innovation and the particular environment in which it occurs. However, as a field that is significantly influenced by research observing past practices, it is often the case that research on innovation lags behind in explaining recent phenomena in today’s organizations. Advances in communication technologies, for instance, led more and more organizations to experiment with new business model designs that span the boundaries of the firm, outsource R&D activities to loosely structured innovation communities via the web, or tap in to new technologies through direct equity investments in entrepreneurial ventures. Yet while these topics of business model innovation, corporate venture capital, and collaboration with innovation communities in the world of practice have great momentum, academic understanding of these phenomena is quite limited. The impact of these means of innovation on firm performance, and how organizations can effectively incorporate them into their innovation strategies, have only scarcely been investigated. Against this background, the purpose of this dissertation is to provide a more detailed analysis of these three fields and to deliver a deeper understanding of three of the most popular concepts within corporate innovation practice today. In this context, the first article investigates the performance implications of business model designs. While the business model has long been conceptualized as a way to commercialize new products, it is increasingly perceived as a source of innovation and value creation in itself. Thereby, the seminal work of Amit & Zott from 2001 who suggest four interdependent value drivers on the business model level of analysis constitutes one pillar of this paradigm shift. However, the interdependencies between these drivers neither have been fully understood nor been tested empirically. Results from a qualitative comparative analysis of all e-businesses that went public on the NASDAQ or NYSE between 2009 and 2012 demonstrate that performance benefits hinge among the configuration of various value drivers. With these findings, we enhance the understanding of value creation on the business model level of analysis by proving the interrelatedness suggested by Amit & Zott and by showing distinct configurations of business model elements that form successful business models. Additionally, we further establish business model innovations as a promising alternative to product-, process- and service innovation. In line with the observation that many of today’s thriving business models incorporate an increasing number of partners, suppliers and other institutions outside the boundaries of the firm, the firms’ innovation funnel is also characterized by increased permeability and engagement with external parties. While these collaborations in the past largely centered on collaborations with universities and think tanks, or the engagement in interorganizational R&D labs, organizations increasingly incorporate end-user input into the innovation process. To do so, they actively engage in innovation communities where users center around certain products or technologies. Thereby, the engagement in crowdfunding platforms especially as one type of an innovation community is currently gaining a lot of attention. Despite the ever-increasing number of members and transaction volumes the question of how innovations that have been co-developed within these communities perform in terms of product success has not been previously been answered. Thus, the second article provides first insights into this question. Investigating the whole population of video games of the most popular crowdfunding platform – Kickstarter – I demonstrate that products developed within innovation communities, indeed achieve above market performance. This performance increase is partly attributed to complementary product extensions provided by innovative users. With these results, I not only provide legitimacy to the emerging body of literature around innovation communities but also sound guidance to practitioners on how to benefit from these emerging communities. While in the previous example of innovation communities the firm relies on the end-user to stimulate innovation, large industrial organizations across industries increasingly get in touch with startups to get access to new technologies. As one manifestation of this trend recent years saw a sharp incline of equity investments by established firms in entrepreneurial ventures. Research on these corporate venture capital investments has been conducted since the 1980’s, whereat the existing studies rarely build on each other. Drawing on a comprehensive literature review on the most important articles and books on the topic that were published between 1984 and 2016, the last chapter of this thesis aggregates the existing literature enhance a more all-encompassing understanding. The resulting frameworks should allow for more cumulative progress in the field and provide managers with a practical foundation for structuring their corporate venture capital endeavors.