Creating Value to Address Urban Challenges in Nascent Ecosystems: A Study of Effectuation in Smart City Context

Abstract

The multidimensional nature of urban challenges requires firms to develop smart solutions with interdependent actors, often referred to as innovation ecosystems. However, firms might find it challenging to define a viable value proposition for a smart city offering at the outset, as value propositions depend on other actors' complementary technologies, an uncertain yet emerging demand, and the multifaceted nature of urban challenges. This article deploys effectuation theory from entrepreneurship research to enable focal firms to create value by managing uncertainties and available means at multiple levels of emerging ecosystems. We performed a case study within a large, incumbent corporation operating as the focal firm within a smart city context to gain insight into the value creation efforts and the challenges inherent in this process. We iteratively synthesized the case study insights with extant research on effectuation into a multilevel value creation framework in smart city ecosystems. The framework highlights how awareness of the range of alternative futures based on (potential) ecosystem-level means can enable a focal firm to develop actionable value propositions and identify relevant stakeholders within the emerging network of the focal firm. Our findings show that a holistic overview of dynamics in ecosystems can support firms in creating value in nascent ecosystems.