How digital platform leaders can foster dynamic capabilities through innovation processes: the case of taobao

Abstract

ABSTRACT Although enterprises can promote dynamic capabilities by managing their innovation processes, the specific innovation processes and ways to encourage such capabilities have been under-researched. This exploratory research illuminates the relationship between dynamic capabilities and innovation processes through a case study of the largest Chinese e-commerce platform, Taobao, a vast and complex digital platform with various actors and interactions with numerous related platforms. Based on previous research, interviews with ten management personnel at Alibaba from April 2019 to August 2021, and secondary data, we found six innovation processes specific to this digital platform. Furthermore, we found that each of these innovation processes relates to specific dynamic capabilities and, therefore, a platform leader can improve its dynamic capabilities by organising its innovation processes in the digital platform ecosystem. The presented findings show important implications for strategic management and information systems by connecting dynamic capabilities and innovation management theories. In particular, our findings enable us to describe how the innovation processes management induces strong dynamic capabilities, such as environmental scanning and sensing capability, innovation capability, and integrative capability.