From Product Platform Ecosystem to Innovation Platform Ecosystem: An Institutional Perspective on the Governance of Ecosystem Transformations

Abstract

Incumbent companies across industries such as banking, insurance, and enterprise software have begun transforming their existing product platform ecosystems into innovation platforms ecosystems to increase generativity in their ecosystems. Such ecosystem transformations not only entail technological challenges as the underlying platform technology changes but also organizational challenges in that ecosystem actors such as partners and customers need to become part of the transformed ecosystem. To study how incumbent companies can govern ecosystem transformations successfully, we interpret ecosystems as organizational fields and ecosystem transformations as changes to the fields’ institutional infrastructure. Based on a multiyear, grounded theory study of the transformation of SAP’s on-premises ERP system, we first identify institutionalization challenges that arise when institutional infrastructure is changed during an ecosystem transformation. We then show how field-level governance mechanisms address these challenges and how the new institutional infrastructure gains legitimacy among ecosystem actors, ultimately leading to the institutionalization of the transformed ecosystem. These findings contribute to the literature on ecosystem transformations and platform governance by highlighting the role that institutional forces play in ecosystem transformations. Furthermore, we add to the literature on institutional theory by providing insights into the dynamics of institutional infrastructure as it becomes infused with digital technologies.