The coordination mechanism of value co-creation between developers and users in digital innovation ecosystems

Abstract

The interactions between developers and users are a vital driver of complementary innovation and further facilitate the emergence and evolution of digital innovation ecosystems. However, these interactions are somewhat overlooked in research on digital innovation ecosystems. To increase the understanding of their interrelationship, firstly, we explain the foundation of value co-creation between developers and users by introducing service-dominant logic (S-D logic). Then, we analyze the coordination mechanism of their value co-creation using an evolutionary game approach. There are three key findings obtained: First, the underlying logic behind their value co-creation is mutual benefit, and the coordination mechanism elaborates how they select participation strategies by carefully weighing benefits against costs. Second, their engagement behavior is influenced by each other, and their initial choices also determine the evolution outcome of the behavior under certain circumstance. Third, the involvement of developers and users is impacted by similar benefits and costs, such as additional benefits of adopting the active strategy unilaterally, free-riding benefits, additional costs of positive participation, and benefits of ecosystem synergy. However, factors related to platform owners, the loss caused by punishment due to passive participation and the benefits from being featured due to active participation, only affect developers’ strategy choices directly. Finally, we discuss managerial implications of our findings.