ECOSYSTEM EMERGENCE: AN INVESTIGATION OF THE EMERGENCE PROCESSES OF SIX DIGITAL SERVICE ECOSYSTEMS Llewellyn D W Thomas Submitted to Imperial College in fulfilment of the requirements for the degree of Doctor of Philosophy. Innovation & Entrepreneurship Group Imperial College Business School South Kensington London SW7 2AZ United Kingdom 2 For Isabel, Hydra and Guillem. 3 4 DECLARATION This is to certify that: (i) The thesis comprises only my original work towards the PhD except where indicated; (ii) Due acknowledgement has been made in the text to all other material used; (iii) Due acknowledgement has been made in the text to my co-authors with whom I have worked on research manuscripts; (iv) The thesis is less than 100,000 words in length, exclusive of bibliography and appendices. I authorise the Dean of the Business School to make or have made a copy of this thesis to any person judged to have an acceptable reason for access to the information, i.e., for research, study or instruction. _________________________________________ Llewellyn D W Thomas 17th September 2013, London _________________________________________ Date, Place 5 6 ABSTRACT This thesis investigates processes of ecosystem emergence. Ecosystem research has thus far focused on understanding the structure and dynamics of already existing ecosystems. However much less attention has been devoted to the emergence of ecosystems. I first theoretically develop an institutional approach to ecosystems, arguing that the ecosystem is an organisational field which has value co-creation as its recognised area of institutional life. Synthesising the theories of dominant design, social movements, and institutional entrepreneurship, I identify four activities that drive the processes of ecosystem emergence: resource, technological, institutional and contextual activities. Empirically, I compare the emergence sequences of six digital service ecosystems – Amazon, eBay, Facebook, Google, Salesforce and Wikipedia – using a narrative explanation methodology, applying event colligation, optimal matching, direct inspection, frequency analysis and an innovative statistical bootstrapping technique. I find that emergence sequences of each case are significantly dissimilar and that there are three phases of emergence – Initiation, Momentum, Control. The first of these phases is similar across cases, but subsequent phases exhibit increasing dissimilarity as the ecosystem evolves and takes on idiosyncratic characteristics. To explain these findings, I develop an ecosystem perspective that explicitly integrates value co-creation processes as an important regulator of the evolution of ecosystems. I suggest that idiosyncratic logics of value co-creation result in differing value creation processes. I show that the three distinct phases of ecosystem emergence form a coherent, distinctive whole when considered from the perspective of value co-creation. Emphasising that value appropriated must first be co-created, I propose the ‘ecosystem model’ as an analytic tool to better conceptualise value co-creation and appropriation in ecosystems. I discuss the implications of these contributions for ecosystem research, institutional theory, and strategic management practice. 7 8 ACKNOWLEDGEMENTS Profound gratitude is due to both my supervisors, Professor David Gann and Professor Erkko Autio. Their guidance and forbearance has been peerless in my transition from a management consultant with an MBA to a future career in academia. David provided the mental bridge between industry and academia, suggested the first realistic formulations of the research question, and instilled the requirements for a doctorate. Erkko, more research focused, provided the patience and support in developing the theoretical, methodological and empirical contributions. Of particular note are the many casual chats in his office discussing various knotty conundrums; this thesis would not be what it is if not for Erkko’s efforts. I am also thankful for the conversations I have had with Markus Perkmann, who has provided a refreshing alternative view at difficult moments. I further thank David and Erkko for their confidence in me through the co-authorship of a paper (separate to this thesis) that has been conditionally accepted by the Academy of Management Perspectives, as well as a number of working papers (also separate to this thesis) that will hopefully go further. I also thank Erkko for our jointly authored chapter in The Oxford Handbook of Innovation Management. Virginia Harris, David’s PA, has been incredible in arranging supervisory meetings with such busy people. Without her efforts there would have been significantly less supervision. I also thank Julie Paranics, the former Doctoral Programme Manager at Imperial Business School, for all of her assistance and support during my time in the doctoral programme. I thank the EPSRC for providing the funding to undertake these studies. My fellow doctoral students have also provided for many interesting and varied conversations over the years. Attempting a PhD is challenging at the best of times, and being able to bounce ideas and difficulties of like-minded colleagues has been a boon. I particularly thank Matthew Cleeveley and Katherine Lovell for their patience. Last, but most certainly not least, heartfelt thanks must also go to my ever-patient wife, Isabel. As well as bringing into the world our two beautiful children – Hydra and Guillem – during these studies, she has kept the family operational, held down a demanding job, and handled a distracted husband. This thesis would not have happened if not for her. 9 10 TABLE OF CONTENTS DECLARATION .................................................................................................................................... 5 ABSTRACT ............................................................................................................................................ 7 ACKNOWLEDGEMENTS .................................................................................................................... 9 TABLE OF CONTENTS ...................................................................................................................... 11 LIST OF TABLES ................................................................................................................................ 14 LIST OF FIGURES .............................................................................................................................. 16 1 INTRODUCTION ...................................................................................................................... 17 1.1 Research questions and approach ..................................................................................... 21 1.2 Method and data ............................................................................................................... 21 1.3 Structure of the thesis ....................................................................................................... 23 2 THE ECOSYSTEM AS AN ORGANISATIONAL FIELD ...................................................... 25 2.1 Characteristics of an ecosystem ........................................................................................ 25 2.1.1 Value-creating networks ....................................................................................... 26 2.1.2 Governance system ............................................................................................... 28 2.1.3 A shared logic ....................................................................................................... 29 2.2 Models of organisational collectivities in organisation theory ......................................... 31 2.2.1 Resource dependence theory models .................................................................... 34 2.2.2 Organisational ecology models ............................................................................. 37 2.2.3 Institutional models ............................................................................................... 38 2.3 The ecosystem as a fifth facet .......................................................................................... 42 2.4 Conclusion ........................................................................................................................ 47 3 ACTIVITIES OF ECOSYSTEM EMERGENCE ...................................................................... 48 3.1 Dominant design theory ................................................................................................... 50 3.2 Social movement theory ................................................................................................... 54 3.3 Institutional entrepreneurship ........................................................................................... 59 3.4 Four activities of ecosystem emergence ........................................................................... 62 3.4.1 Resource activities ................................................................................................ 65 3.4.2 Technological activities ........................................................................................ 69 3.4.3 Institutional activities ............................................................................................ 70 3.4.4 Contextual activities .............................................................................................. 73 3.5 Conclusion .......................................................................................................................