Capability Search and Redeem across Digital Ecosystems

Abstract

Prior research on digital ecosystems focuses on the focal firm (e.g., a platform owner) and its ecosystem governance. However, there is a dearth of literature examining the non-focal actor, that is, an ecosystem participant who is at the periphery of a digital ecosystem. This paper proposes a theoretical perspective of the non-focal firm's participation across digital ecosystems for cultivating its innovation habitat through capability search and redeem. Capability search involves the location of external capability deemed valuable for extending the firm's innovation habitat. Capability redeem refers to the firm's use of external capability to develop, distribute, and/or monetize its products and services. We generate and sensitize the proposed perspective in the context of Sony Ericsson's innovation habitat by interpreting the mobile device manufacturer's participation across four digital ecosystems (Visual Basic, Java, Digital Music, and Android). Our findings suggest that the non-focal actor cannot rely on a single ecosystem for addressing all relevant layers of innovation. It benefits from pursuing a pluralistic strategy, operating across digital ecosystems to avoid investing all efforts in the same ecosystem. The model of ecosystem capability search and redeem, which is a result of ideographic research explanation, extends current perspectives on digital ecosystems and contributes to the emerging literature in the digital age.