Exploring Innovation Ecosystem of Incumbents in the Face of Technological Discontinuities: Automobile Firms

Abstract

In recent years, the innovation ecosystem concept has received much attention in the strategy and innovation fields to address radical or discontinuous innovation. This study aims to explore the innovation ecosystem construct of incumbents in the face of technological discontinuities, focusing on the ecosystem actors (that is, incumbents, component providers, and complementors) and their activities for sustainable value creation. First, we conducted a literature review of 34 highly cited and relevant research documents discussing the innovation ecosystem concept to extract key phrases for the innovation ecosystem’s research framework. Then, through the lens of dynamic capabilities, the five core capabilities of incumbent focal firms—collaboration and networking, opportunity sensing, entrepreneurial orientation, knowledge management, and strategic flexibility—are derived as key elements of the research framework. In addition, the following case study conducted by the content analysis of two leading automobile incumbents, Volkswagen and Toyota, supports and concretizes the established research framework. We conclude that as the value chain in the industry is open to diverse emerging experts holding critical technologies in the era of discontinuous innovation, the ecosystem actors are extensively linked beyond existing industry boundaries. Next, incumbents’ proposed five core capabilities are essential for their successful navigation of the complex innovation ecosystem. Finally, the case study also indicates that the traditional automobile giants in the existing ecosystem are heading toward sustainable value creation via technology internalization and dominant platform building to transform themselves into leaders of a new innovation ecosystem in the era of Connected, Autonomous, Shared and Services, and Electric (C.A.S.E.) innovation in the automobile industry.