Unlocking Value from Emerging Technologies in Business Eco-Systems

Mette Praest Knudsen^1,, Eva Niesten^2,*, Ludmila Striukova^3
1University of Southern Denmark; ²Skema Business School; ³Skema Business School

*[email protected]

 Extended abstract

The literature on emerging technologies has attracted increasing attention in the past years (Rotolo et al., 2015). Agreement exists that an emerging technology is a kind of technology that shows high potential but hasn’t demonstrated its value or settled down into consensus (Cozzens et al., 2010). Especially, the question of innovation potential and value creation has sparked interest. Day and Shoemaker (2000) early on identified the potential for new markets to be tapped or created. Due to the immature state of the technology, any link to market potential is difficult to establish both theoretically and especially empirically. Hence, the link between emerging technologies and market creation has mainly been speculative.

The recent path-centric theory of emerging technologies (Pentland et al., 2022) presents promising new ideas on how emerging technologies change the form of organizing, particularly how they change the “patterns of action through which work gets done” which either leads to lock-in or transformation (Pentland et al., 2022, p. 194). Transformative change is most likely when both the degrees of freedom - the number of new actions afforded by the technology - and the flexibility - the lack of constraints that put a barrier or cost on exploiting the degrees of freedom - are high (Pentland et al., 2022, p. 200). Hence, applying the arguments of Archer (1982), “significant change is most likely when degrees of freedom are high and stringency of constraints is low” (Pentland et al., 2022, p. 200). While the theory provides compelling arguments for the organizing aspects of emerging technologies, the link from emerging technologies to value and market creation remains open for theorizing.

This paper contributes to the research on emerging technologies and breakthrough innovation by theoretically developing this missing link and connecting the path-centric theory to the literature on business ecosystems (Autio et al., 2020, Graca and Camarinha-Matos, 2017, Granstrand and Holgersson, 2020). Business ecosystems are “groups of firms that produce products or services that together comprise a coherent solution” (Hannah and Eisenhardt, 2018, p. 3164). These groups of “firms in ecosystems balance cooperation to create value and competition to capture value” (Hannah and Eisenhardt, 2018, p. 3164). The emergence of a coherent solution in an ecosystem necessitates the alignment of a multilateral set of partners that interact to materialise a focal value proposition (Adner, 2017, p. 40). We argue that greater levels of freedom enable greater value creation, while greater flexibility offers more options for value capture, because fewer factors constrain the exploitation of the degrees of freedom. The barriers to flexibility can take multiple forms and vary in their severity. They can go beyond the emerging technology to include institutional norms, regulation, routines, installed technology base, and market expectations. Other barriers can be user needs, public perception of the technology, infrastructure, ethics, privacy, and cybersecurity. The barriers will vary according to the specific technology, but it's evident that non-technological factors can be powerful in restricting the value capture potential. An ecosystem perspective can thus help us understand the conditions under which an emerging technology can transform patterns of action and when it does not. By focusing on value creation and value capture, the ecosystem perspective is able to analyse when firms and inter-firm relations in an ecosystem collectively overcome the barriers to flexibility and transform the ecosystem into one that incorporates the emerging technology in a value proposition.

The paper develops a first application of the theory in the empirical context of autonomous technology that evolves in the existing business ecosystem of electric vehicles (EVs). Autonomous technologies have the potential to fundamentally change mobility and logistics, both on the ground in electric vehicles, trucks, and in robots, in the air on drones and in aircrafts, and at sea on ships (Fisher et al., 2013). Autonomous driving with EVs is an emerging technology with potential to become a breakthrough innovation, which is likely to have a significant effect on the nature and use of transport (Sandvik et al., 2021, Tsvetkova et al., 2021) and ultimately on value creation and capture in business ecosystems (Rao et al., 2016, Vinogradov and Pollin, 2021). We operationalize the degrees of freedom of the technology as the different levels of autonomy, because higher levels of autonomy increase the number of new actions afforded by the technology. The extent of autonomy of any platform is typically described in a scale following the original definition by the Society of Automotive Engineers (SAE), which divides automation into distinct levels ranging from no automation to full automation:

Level 0: All driving tasks are performed by a human driver. 

Level 1: One aspect of the car is automatic.

Level 2: The car has the ability to control steering and speed.

Level 3: The car can take full control in decision-making.

Level 4: The car is automated enough to be self-driven in most situations, but the driver can take control.

Level 5: No driver is needed, and the car is driven robotically.

Analytically, we conduct a systematic literature review and investigate the existing literature on autonomous driving using electric vehicles. We search for relevant articles in the following innovation and transportation journals that are ranked 4 or 3 on the CABS journal list: R&D Management, Technological Forecasting and Social Change, Technovation, Journal of Product Innovation Management, Industry & Innovation, Research Policy, Journal of Technology Transfer, Transportation Research Series B: Methodological, Transportation Research Part E: Logistics and Transportation Review, Transportation Research Part A: Policy and Practice, Transportation Research Part D: Transport and Environment, and Transportation Science. We use the following search string to identify the relevant articles in these journals: “electric vehicle*” AND “autonomous tech*” AND “autonomy level*” OR “autonomous driv*” OR “electric car*” OR “level* of autonomy” OR “degree* of autonomy*”. We only include articles that specify the level of autonomous driving, and that offer empirical detail on the value proposition for the users of autonomous driving, as well as the factors that impact the potential for value capture.

Our results first show what attributes of autonomous technology are valued by different consumers of electric vehicles and for different levels of autonomy of the emerging technology. These insights illustrate what factors afford or restrict flexibility to the technology in capturing value in an ecosystem. Figure 1 plots the degrees of freedom on the x-axis illustrating that higher levels of autonomy enable greater value creation. On the y-axis is the level of flexibility: the lower levels identify factors that restrict value capture and lead to lock-in, while the higher levels afford a greater potential for value capture at the different levels of autonomy leading to transformation. Second, the results illustrate which ecosystem actors and which relations between the ecosystem actors enable a value proposition with the emerging technology (see Figure 2 for a visualization of the EV ecosystem). The paper concludes by discussing the potential for the technologies to lead to either lock-in or transformation and ultimately business ecosystem development and growth. Implications for theory and business ecosystem literature are derived.

The paper addresses the conference track’s question on the key success factors observed in well-functioning ecosystems. Since EVs are more climate-friendly transportation and autonomous technology has sustainability advantages, the paper also contributes to the conference track’s question on building more supportive ecosystems for sustainability.

Keywords 

Emerging technologies, business ecosystem, breakthrough innovation, autonomous technology, electric vehicles

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