Do Alliance Networks Solve the Ecosystem Timing Dilemma? Evidence from the Mobile Telco Industry

Abstract

The locus of value creation is increasingly found in systems of complementary products that are jointly used by a customer. Firms in these innovation ecosystems face a strategic tension–the ecosystem timing dilemma–when deciding on when to enter a new technology generation. Moving early may allow the firm to pre-empt its direct competitors and gain a first-mover advantage. But if a firm enters ahead of the firms producing complementary goods, it incurs costs without generating additional value. This paper examines whether strategic alliances help firms overcome this dilemma by offering managers a vehicle for coordinating on the timing of technological entry. In an empirical study of the 970 mobile operators constituting the global mobile telecommunications industry, 2000-2015, the paper finds that having alliances with complementors is positively associated with a firm moving into new technologies ahead of its local competitors. Additionally, performance tends to increase for firms that form complementor alliances and also move early into new technologies. Counter to intuition, alliances with other types of ecosystem partners are associated with slower movement into new technology generations, suggesting there are limitations to the ability of alliance networks to coordinate ecosystem technology transitions.