{"title":"Introduction to the Strategy Science Special Issue on Evolutionary Approaches to Innovation, the Firm, and the Dynamics of Industries","authors":"G. Cattani, F. Malerba","doi":"10.1287/stsc.2021.0140","DOIUrl":"https://doi.org/10.1287/stsc.2021.0140","url":null,"abstract":"","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45179380","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article discusses the role of agency in discovering strategic opportunities by comparing two perspectives: the evolutionary and the cognitive view of strategy. The conceptions put forth by evolutionary scholars and cognitivists reflect different sensibilities, make different assumptions, and end up delineating different roles for the strategist. We recognize the fact that each view focuses on relevant facets of a multifaceted phenomenon and propose a “Neo-Carnegie” path to integrate these views.
{"title":"A Neo-Carnegie Approach to the Agency Question: Bridging the Evolutionary and Cognitive Views of Strategy","authors":"Giovanni Gavetti, Jose Ramon Lecuona Torras","doi":"10.1287/stsc.2021.0149","DOIUrl":"https://doi.org/10.1287/stsc.2021.0149","url":null,"abstract":"This article discusses the role of agency in discovering strategic opportunities by comparing two perspectives: the evolutionary and the cognitive view of strategy. The conceptions put forth by evolutionary scholars and cognitivists reflect different sensibilities, make different assumptions, and end up delineating different roles for the strategist. We recognize the fact that each view focuses on relevant facets of a multifaceted phenomenon and propose a “Neo-Carnegie” path to integrate these views.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46921875","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyze the sectoral and national systems of firms and institutions that collectively engage in artificial intelligence (AI). Moving beyond the analysis of AI as a general-purpose technology or its particular areas of application, we draw on the evolutionary analysis of sectoral systems and ask, “Who does what?” in AI. We provide a granular view of the complex interdependency patterns that connect developers, manufacturers, and users of AI. We distinguish between AI enablement, AI production, and AI consumption and analyze the emerging patterns of cospecialization between firms and communities. We find that AI provision is characterized by the dominance of a small number of Big Tech firms, whose downstream use of AI (e.g., search, payments, social media) has underpinned much of the recent progress in AI and who also provide the necessary upstream computing power provision (Cloud and Edge). These firms dominate top academic institutions in AI research, further strengthening their position. We find that AI is adopted by and benefits the small percentage of firms that can both digitize and access high-quality data. We consider how the AI sector has evolved differently in the three key geographies—China, the United States, and the European Union—and note that a handful of firms are building global AI ecosystems. Our contribution is to showcase the evolution of evolutionary thinking with AI as a case study: we show the shift from national/sectoral systems to triple-helix/innovation ecosystems and digital platforms. We conclude with the implications of such a broad evolutionary account for theory and practice.
{"title":"The Evolutionary Dynamics of the Artificial Intelligence Ecosystem","authors":"M. Jacobides, S. Brusoni, F. Candelon","doi":"10.1287/stsc.2021.0148","DOIUrl":"https://doi.org/10.1287/stsc.2021.0148","url":null,"abstract":"We analyze the sectoral and national systems of firms and institutions that collectively engage in artificial intelligence (AI). Moving beyond the analysis of AI as a general-purpose technology or its particular areas of application, we draw on the evolutionary analysis of sectoral systems and ask, “Who does what?” in AI. We provide a granular view of the complex interdependency patterns that connect developers, manufacturers, and users of AI. We distinguish between AI enablement, AI production, and AI consumption and analyze the emerging patterns of cospecialization between firms and communities. We find that AI provision is characterized by the dominance of a small number of Big Tech firms, whose downstream use of AI (e.g., search, payments, social media) has underpinned much of the recent progress in AI and who also provide the necessary upstream computing power provision (Cloud and Edge). These firms dominate top academic institutions in AI research, further strengthening their position. We find that AI is adopted by and benefits the small percentage of firms that can both digitize and access high-quality data. We consider how the AI sector has evolved differently in the three key geographies—China, the United States, and the European Union—and note that a handful of firms are building global AI ecosystems. Our contribution is to showcase the evolution of evolutionary thinking with AI as a case study: we show the shift from national/sectoral systems to triple-helix/innovation ecosystems and digital platforms. We conclude with the implications of such a broad evolutionary account for theory and practice.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43718990","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine how entrepreneurs might build a viable, values-driven niche. Extant templates for niche creation typically employed in moral markets depend on instrumentally rational logics that privilege economic ends such as profitability and efficiency. Entrepreneurs seeking to construct a nascent niche whose purpose and objectives include the amelioration of social ills, however, may find such templates inadequate. Using the emergence of the U.S. bean-to-bar chocolate niche, through which entrepreneurs attempt to address the social and environmental shortcomings of conventional chocolate production, we demonstrate that constructing an alternative model for niche creation is feasible. Most bean-to-bar entrepreneurs deliberately opted out of extant private regulation initiatives, developing instead alternative encompassing, values-driven sourcing and cooperative relationships, which we term collaborative governance. This is enacted throughout the niche by promoting shared values, best practices, and transparency and is supported by strategic meaning-making work to cultivate customers. Together, these three values-driven strategies form a novel template of niche creation based not on cognitive repositioning or exploiting exogenous change within existing structures and institutions, but on a reconceptualization of how markets might work to support the implementation of nonmarket goals. Based on our mixed-methods analysis, we find that, instead of hoping to accomplish nonmarket goals through established market structures, entrepreneurs built a niche centered on the achievement of specific social goals. Our findings suggest that to understand the strategies supporting emergent socially oriented markets, researchers must explore the intersections of values, entrepreneurial motivations, and operational complexities.
{"title":"Raising the Bar: Values-Driven Niche Creation in U.S. Bean-to-Bar Chocolate","authors":"J. Woolley, Jo-Ellen Pozner, Michaela DeSoucey","doi":"10.1287/stsc.2021.0147","DOIUrl":"https://doi.org/10.1287/stsc.2021.0147","url":null,"abstract":"We examine how entrepreneurs might build a viable, values-driven niche. Extant templates for niche creation typically employed in moral markets depend on instrumentally rational logics that privilege economic ends such as profitability and efficiency. Entrepreneurs seeking to construct a nascent niche whose purpose and objectives include the amelioration of social ills, however, may find such templates inadequate. Using the emergence of the U.S. bean-to-bar chocolate niche, through which entrepreneurs attempt to address the social and environmental shortcomings of conventional chocolate production, we demonstrate that constructing an alternative model for niche creation is feasible. Most bean-to-bar entrepreneurs deliberately opted out of extant private regulation initiatives, developing instead alternative encompassing, values-driven sourcing and cooperative relationships, which we term collaborative governance. This is enacted throughout the niche by promoting shared values, best practices, and transparency and is supported by strategic meaning-making work to cultivate customers. Together, these three values-driven strategies form a novel template of niche creation based not on cognitive repositioning or exploiting exogenous change within existing structures and institutions, but on a reconceptualization of how markets might work to support the implementation of nonmarket goals. Based on our mixed-methods analysis, we find that, instead of hoping to accomplish nonmarket goals through established market structures, entrepreneurs built a niche centered on the achievement of specific social goals. Our findings suggest that to understand the strategies supporting emergent socially oriented markets, researchers must explore the intersections of values, entrepreneurial motivations, and operational complexities.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46895210","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Breakthrough innovation has been an important topic of study for generations of scholars. Previous research in this domain has focused on exploring the way breakthroughs emerge from cumulative combination and recombination of prior technologies and knowledge components across vast numbers of firms and inventors. However, far less understood are the internal firm-level processes that give rise to breakthrough inventions. How do firms search for and select technologies with which to innovate? Could the trajectory of this search process itself play a role in influencing the likelihood that a developed invention will be a breakthrough? We ask these questions in our research. Our analysis examines three decades of innovation histories of over two and a half thousand firms. Longitudinal firm-level data and a novel measure of search (technological focal proximity) enable us to characterize corporate activity at a detailed level and to examine search strategies that led to breakthrough innovations as well as those that did not. Contrary to the established consensus that breakthroughs are associated with explorative search and less impactful inventions emerge through exploitation, our firm-centric approach reveals that breakthroughs develop from a search process that evolves in phases and involves both exploration (initially) and exploitation (subsequently). In the early phases, firms that successfully develop breakthrough inventions explore unfamiliar terrain. However, as the process unfolds, they progressively shift their search strategies to exploitation of accumulated knowledge. Our findings call into question the strong dichotomy between exploration and exploitation that has played such a prominent role in theories about the origins of breakthrough innovation.
{"title":"The Evolutionary Nature of Breakthrough Innovation: An Empirical Investigation of Firm Search Strategies","authors":"Dominika Kinga Randle, G. Pisano","doi":"10.1287/stsc.2021.0134","DOIUrl":"https://doi.org/10.1287/stsc.2021.0134","url":null,"abstract":"Breakthrough innovation has been an important topic of study for generations of scholars. Previous research in this domain has focused on exploring the way breakthroughs emerge from cumulative combination and recombination of prior technologies and knowledge components across vast numbers of firms and inventors. However, far less understood are the internal firm-level processes that give rise to breakthrough inventions. How do firms search for and select technologies with which to innovate? Could the trajectory of this search process itself play a role in influencing the likelihood that a developed invention will be a breakthrough? We ask these questions in our research. Our analysis examines three decades of innovation histories of over two and a half thousand firms. Longitudinal firm-level data and a novel measure of search (technological focal proximity) enable us to characterize corporate activity at a detailed level and to examine search strategies that led to breakthrough innovations as well as those that did not. Contrary to the established consensus that breakthroughs are associated with explorative search and less impactful inventions emerge through exploitation, our firm-centric approach reveals that breakthroughs develop from a search process that evolves in phases and involves both exploration (initially) and exploitation (subsequently). In the early phases, firms that successfully develop breakthrough inventions explore unfamiliar terrain. However, as the process unfolds, they progressively shift their search strategies to exploitation of accumulated knowledge. Our findings call into question the strong dichotomy between exploration and exploitation that has played such a prominent role in theories about the origins of breakthrough innovation.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46560497","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The literature on the exploration-exploitation tradeoff has anchored on the n-armed bandit problem as its canonical formal representation. This structure, however, omits a fundamental property of evolutionary dynamics. Contrary to a bandit formulation, foregoing an opportunity may negate the possibility of engaging in that opportunity in the future, not just modifying the beliefs about the attractiveness of engaging in that opportunity. Thus, the bandit structure only incorporates path dependence with respect to beliefs and not with regard to capabilities as our usual conceptions of dynamics of learning and capabilities would suggest. Furthermore, the consideration of opportunity cost is rather static and does not address the dynamic unfolding of opportunity structures. The nature of path dependence and opportunity costs are used to frame many of our existing conceptualizations of search processes and firm dynamics, including bandit models, real options, pivoting, the “secretary problem,” and “island” models of firm diversification. The discussion points to the need to develop canonical models of what evolutionary biologists’ term phylogenetic trees and opens up a set of new questions, such as what is the degree of parallelism of trajectories that is possible within an organization, what is the fecundity of different trajectories in terms of likelihood of branching possibilities arising, and how are these latent branching opportunities accessed?
{"title":"From Arms to Trees: Opportunity Costs and Path Dependence and the Exploration-Exploitation Tradeoff","authors":"Daniel A. Levinthal","doi":"10.1287/stsc.2021.0143","DOIUrl":"https://doi.org/10.1287/stsc.2021.0143","url":null,"abstract":"The literature on the exploration-exploitation tradeoff has anchored on the n-armed bandit problem as its canonical formal representation. This structure, however, omits a fundamental property of evolutionary dynamics. Contrary to a bandit formulation, foregoing an opportunity may negate the possibility of engaging in that opportunity in the future, not just modifying the beliefs about the attractiveness of engaging in that opportunity. Thus, the bandit structure only incorporates path dependence with respect to beliefs and not with regard to capabilities as our usual conceptions of dynamics of learning and capabilities would suggest. Furthermore, the consideration of opportunity cost is rather static and does not address the dynamic unfolding of opportunity structures. The nature of path dependence and opportunity costs are used to frame many of our existing conceptualizations of search processes and firm dynamics, including bandit models, real options, pivoting, the “secretary problem,” and “island” models of firm diversification. The discussion points to the need to develop canonical models of what evolutionary biologists’ term phylogenetic trees and opens up a set of new questions, such as what is the degree of parallelism of trajectories that is possible within an organization, what is the fecundity of different trajectories in terms of likelihood of branching possibilities arising, and how are these latent branching opportunities accessed?","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46885467","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Chinese firms have been widely seen as imitative. This historical case study explores what organizational mechanisms allowed Tencent, a Chinese firm in the fast-changing instant messaging (IM) service sector, to achieve a new-to-the-world innovation with its WeChat smartphone app. Tracing the competitive dynamics in the Chinese IM sector from its inception, we found that Tencent was able to create the innovative WeChat product through a crisis-induced intrafirm coopetition dynamic that was embedded in variation-selection-retention evolutionary processes spanning the market, the firm, and the business unit levels. Building on the intrafirm coopetition and evolutionary literatures, the paper shows that three business units simultaneously competed and cooperated in developing alternative IM products while being exposed to market selection for survival. The coopetition dynamic took place in three key areas: technology, product promotion, and complementary assets of suppliers. The relative balance between competition and cooperation changed over time, and top management guidance and firm-level routines were essential in managing the challenges of coopetition within the firm.
{"title":"What Enables a Chinese Firm to Create New-to-the-World Innovations? A Historical Case Study of Intrafirm Coopetition in the Instant Messaging Service Sector","authors":"J. Murmann, Zhijing Zhu","doi":"10.1287/stsc.2021.0142","DOIUrl":"https://doi.org/10.1287/stsc.2021.0142","url":null,"abstract":"Chinese firms have been widely seen as imitative. This historical case study explores what organizational mechanisms allowed Tencent, a Chinese firm in the fast-changing instant messaging (IM) service sector, to achieve a new-to-the-world innovation with its WeChat smartphone app. Tracing the competitive dynamics in the Chinese IM sector from its inception, we found that Tencent was able to create the innovative WeChat product through a crisis-induced intrafirm coopetition dynamic that was embedded in variation-selection-retention evolutionary processes spanning the market, the firm, and the business unit levels. Building on the intrafirm coopetition and evolutionary literatures, the paper shows that three business units simultaneously competed and cooperated in developing alternative IM products while being exposed to market selection for survival. The coopetition dynamic took place in three key areas: technology, product promotion, and complementary assets of suppliers. The relative balance between competition and cooperation changed over time, and top management guidance and firm-level routines were essential in managing the challenges of coopetition within the firm.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47226863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper contributes to an old and still unresolved question in the theory of organizations, namely, what do bosses do? Whether and to what extent managerial functions are productive or not for the well functioning of an organization has to be understood with respect to the tension between knowledge and power. Here, we start addressing such a tension with reference to the very nature of organizations. Next, we discuss its historical unfolding in two archetypical organizational modes of production, Taylorism and Toyotism. Third, these two archetypical configurations are studied by means of a model of organizations populated by three sets of agents, workers, managers, and the principal, endowed by different attributes and functions. The fitness of alternative organizational setups is studied under diverse degrees of complexity of the landscape.
{"title":"Hierarchies, Knowledge, and Power Inside Organizations","authors":"G. Dosi, L. Marengo, M. Virgillito","doi":"10.1287/stsc.2021.0136","DOIUrl":"https://doi.org/10.1287/stsc.2021.0136","url":null,"abstract":"This paper contributes to an old and still unresolved question in the theory of organizations, namely, what do bosses do? Whether and to what extent managerial functions are productive or not for the well functioning of an organization has to be understood with respect to the tension between knowledge and power. Here, we start addressing such a tension with reference to the very nature of organizations. Next, we discuss its historical unfolding in two archetypical organizational modes of production, Taylorism and Toyotism. Third, these two archetypical configurations are studied by means of a model of organizations populated by three sets of agents, workers, managers, and the principal, endowed by different attributes and functions. The fitness of alternative organizational setups is studied under diverse degrees of complexity of the landscape.","PeriodicalId":45295,"journal":{"name":"Strategy Science","volume":" ","pages":""},"PeriodicalIF":3.9,"publicationDate":"2021-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44212809","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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