Innovation around Boundaries: Theory and Applications

Abstract

In the complex business world, innovation is often subject to various boundaries. Only companies that can innovate under boundary constraints can achieve higher returns than the market average. This article first studies the characteristics and changing patterns of industry boundaries. The first characteristic is that crossing boundaries causes severe consequences. The second characteristic is their ambiguity, which is particularly prominent in emerging industries. The third characteristic is that business boundaries are changing over time. Industry boundaries also present different features depending on the development stage of the industry. In disorder stages, business boundaries are usually loose and ambiguous. In order stages, business boundaries are usually strict and clear. Each industry goes through cycles between disorder and order stages. This article then proposes suggestions for entrepreneurs in different stages to adapt to industry boundaries and respond to boundary changes. When the industry is in disorder stages, companies should focus on rapid growth; when the industry is in order stages, companies should focus on product innovation and differentiated competition.