How Does an Established Firm Develop strategies for a New Platform-Ecosystem? A Study of Ericsson in IoT

Abstract

Prior research provides in-depth insights about strategies for new ventures to compete in existing platform ecosystems. However, we know relatively little about the process of creating new platform ecosystems by established firms that have a legacy of 'pipeline' business model. Our longitudinal study shows how Ericsson, a not digitally-born firm, develop strategies to create a platform in the emerging Internet of Things (IoT) ecosystem. While prior studies of platform strategy highlight specific choices of platform design and ecosystem governance at a certain point in time, this study offers a dynamic view of strategy emergence by describing how and why certain platform strategy evolves. Specifically, we identify three platform strategies that an established firm could deploy based on its strategic choice on platform architecture, capability reconfiguration approach, and relationship with core customers and complementors. Our empirical analysis suggests that such strategic decisions on platform strategy were results of managers’ estimations on capability fit and relevance of alignment with the firm’s existing ecosystem. This study contributes to the intersection between platform-based ecosystem and strategic management literature by incorporating capabilities perspectives on platform strategy development.