Capabilities for coevolutionary contingency

Part of the Contributions to Management Science book series (MANAGEMENT SC.)


As elaborated in the previous chapter, the convergence phenomenon implies changing characteristics on innovation trajectories, both on industry and firm-level. In response to these temporal dynamics, the development and measurement of managerial approaches needs to take place under the evolutionary premise. Whereas the previous chapter primarily focused on the perspective of economic selection, i.e., the evolutionary perspective, which is mainly characterized by innovation dynamics, and exogeneous effects, this chapter will further emphasize on firm-level activities, i.e., search (defition 1). Based on the previously identified challenges related to respective phases and competitive constellations within the convergence process, this chapter will identify inherent firm-level capabilities for managing the dynamics of convergence. These capabilities are based on analyzing how firms from previously introduced case set responded to their respective challenges and changing conditions. Based on a classification of these capabilities, it is further attempted to develop guidelines for managing innovation through evolutionary convergence cycles, which serve as a basis for an induced framework for capability development.


Business Model Path Dependency Growth Path Dynamic Capability Convergence Process 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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  1. 1.
    Kauffman (1993) argues that all evolution is really coevolution: “The true and stunning success of biology reflects the fact that organisms do not merely evolve, they coevolve both with other organisms and with a changing abiotic environment.” (Kauffman, 1993, p. 237)Google Scholar
  2. 2.
    Hofer (1975) positions the development of contingency theories as a feasible approach for business and corporate strategy, “unless one is willing to admit the possibility that there exists some strategy or set of strategies which are optimal for all businesses (corporations) no matter what their resources and no matter what environmental circumstances they face—an assumption that is inconsistent with all research studies on business (corporate) strategy conducted to date—any theory of business (corporate) strategy must be a contingency theory.” (p. 785–786)Google Scholar
  3. 4.
    If other firms invest specific assets to preserve compatibility with a given firm’s product, even as that product evolves, then that product can be called a platform (Gawer, 2000).Google Scholar
  4. 6.
    From the perspective of early stages of the convergence process, where a firm’s explorative efforts strive towards developing platform concept for gaining horizontal foothold, the approach of letting users drive innovation may yield beneficial results, as they generally tend to apply higher levels of technological diversification (but lower levels of specialization) than manufacturer-driven innovation (Lettl, Rost, and von Wartburg, 2006).Google Scholar
  5. 7.
    In a way, one could regard this strategy as the incumbent firm trying to take the role of the ‘dilemma’ in entrant firms’ ‘innovator’s dilemma’, i.e., outperforming entrants based on their own innovations (cf Christensen, 1997).Google Scholar
  6. 8.
    Based on a study on the typesetter industry, Tripsas (1997) similarly suggests that specialized complementary assets play a crucial role in buffering incumbents from the effects of competence destruction, whereas further commitments onto isolated technical capabilities has a tendency to lead to misleading results. Taking the argument one step further, Rothaermel (2001) finds that from an incumbent’s perspective within the biopharmaceutical industry, firms who focus their collaborative innovation strategy on exploiting complementary assets outperform those who focus on exploring new technologies. This suggests an approach of leveraging complementary assets to be more favourable than building new technological competencies.Google Scholar
  7. 10.
    Sticking to traditional and established rules of the industry structure and lapsing into a self-reinforcing direct competition might in fact lead to drastic consequences, which can be described as the “red queen effect” of competition. When an industry is about to change, a strategy of “trying harder” might lead to failure, and it is in such situations important for firms to be alert to respond to the new competitive constellations by fundamentally changing existing business models (Voelpel, Leibold, Tekie, and von Krogh, 2005).Google Scholar
  8. 11.
    Similar observations have been made in the pharmaceutical industry sector (Erat, 2004). Furthermore, this can be regarded as a special form of private-collective innovation incentives, which takes place at the firm level, and where the emerging ecosystem community shares an open, collective, and distributed business model (cf. von Hippel, 2005; von Hippel and von Krogh, 2003, 2006).Google Scholar
  9. 14.
    A similar behavior, i.e., getting “a man inside” in order to gain access into open communities where one is not present, has been observed on a user-level, where some firms sponsor people to act strategically in open communities, aiming at secretively exploiting freely available complementary assets (cf. Dahlander and Wallin, 2006).Google Scholar
  10. 15.
    The strategic positioning of being “stuck in the middle” was introduced by Porter (1985, p. 12), and can be characterized by below average performance and low profitability.Google Scholar
  11. 17.
    In literature, the term “organizational convergence” appears in a variety of meanings. However, when comparing different facets of this generic construct, there appears to be a rather thin line between the isomorphic notion, i.e., converging with the environment, as well as the aspect of internal adaptation, i.e., converging for the environment (cf. Bauer et al., 2003; Greenwood and Hinings, 1996; Lant and Mezias, 1992; Lind and Zmud, 1991; Tushman and Romanelli, 1985; van de Ven and Poole, 1989, 1995).Google Scholar
  12. 18.
    Taking a strictly evolutionary perspective, it can be argued that selection tends to favor higher-performing organizations. Hence, if second-order adaptation generates any gains in performance, it can be assumed that organizations that do engage in second-order adaptation will have an evolutionary edge over organizations that do not (Ethiraj and Levinthal, 2004).Google Scholar
  13. 19.
    These observations complement earlier contributions in literature which argue that platform success needs organizational adaptation (cf. Dürmüller, 2006; Gawer, 2000). Further motivation for the described isomorphic adaptation can be found in the work by Cusumano (2003a,b), who argues that firms need to balance between being product organizations, striving towards leading or complementing platforms, versus service organizations, where the scope is about vertical structures and working close to the customer. “Regardless of the balance of products and services they choose, managers of software companies must understand what their primary business is, and recognize how the two differ—for selling products requires very different organizational capabilities than selling services.” (Cusumano, 2003b, p. 16)Google Scholar
  14. 22.
    Tushman and Rosenkopf (1992) note that in earlier stages of a technology’s evolutionary cycle, organizational and interorganizational processes emerge with the goal of closing industry standards. In more mature stages of an evolutionary cycle, technological uncertainty will decrease, leaving less room for organizational dynamics. On the other hand, they also observed that the more complex the technology, the greater the amount of subsystems and corresponding interfaces, the greater the technical and contextual uncertainty, allowing room for sociopolitical and organizational dynamics to influence the technological evolution (Tushman and Rosenkopf, 1992). Based on the observations made in this study, the phenomenon of convergence with its entropic deconstruction of vertical structures, the modularization based on horizontal platforms, and the succeeding new form of vertical reorientation, may represent a case where such organizational dynamics still matter.Google Scholar
  15. 23.
    Similar observations were made by Edelmann et al. (2006).Google Scholar
  16. 24.
    In this context, the work by Jansen (2005) presents empirical evidence for firm ambidexterity being more positively related to firm performance when exploratory and exploitative innovations are separated in different organizational units, than when these are combined in organizational units.Google Scholar
  17. 25.
    In fact, Cohen and Levinthal (1990) indicate that investment into in-house R&D activities increases the absorptive capacity of a firm, i.e., the ability to gain innovation from outside the company.Google Scholar

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© Physica-Verlag Heidelberg 2008

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