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| The Fit Evolution of High Growth Firms' Dominant Logic and Value Co-creation：A Longitudinal Case of Xiaomi |
| Zhou Yifang,Wang Chang,Zhou Wenhui |
| (School of Business, Central South University, Changsha 410000, China) |
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Abstract Although a large number of high-growth firms have emerged with the development of mobile Internet and digital technology, research has suggested that only a small proportion of firms can maintain rapid growth over time, so they attract academic and practical attention by continuous expansion in scale and maintain rapid growth in a turbulent competitive environment. Since most studies have analyzed the high-growth firms from a static perspective, and fail to discuss the basic characteristics and stages of the high-growth firm from the perspective of process and ignores the dynamic variability and lack theoretical insights into the dynamic process of scaling-up. It is still unknown how the process of scaling-up is rooted in managerial and organizational actions that involve the interplay between both cognitive and behavioral processes. There is the urgent need to sort out the specific strategies and behaviors needed to successfully surmount the management challenges faced by high-growth firms. #br#In strategic research, dominant logic is considered to be the mindset in the process of achieving goals or strategic decision-making, as well as the management cognition of organization thinking and guiding strategic behaviors to cope with the changing environment opportunities, especially when firms need to maintain high-growth,they need to expand the scope of resource acquisition, break through resource constraints and promote the optimization of redundant resources. Timely adjustment of dominant logic largely reflects the resource bottleneck faced by firms in their high growth stage, and value co-creation, as an organizational behavior of interaction, cooperation and resource integration among value participants, is the most effective way to break through the bottlenecks of resource allocation and integration.#br#According to the three major factors in the growth process of high-growth firms,this paper selects Xiaomi as the research object, explores how high-growth firms realize the transformation of dominant logic based on the logic chain of environment-cognition-behavior-result and pursues a unique growth model driven by uncertain environment through interaction, cooperation and resource integration. Through the participatory observation and a semi-structured interview, the whole process data of the case enterprise is collected. According to the dynamic transformation of Xiaomi's dominant logic, the study divides its high growth process into three stages: initial, growth and expansion.#br#The analysis results show that in the initial stage, driven by technology window and survival pressure, Xiaomi realized interactive value co-creation with consumers through dominant logic of extreme cost performance, and managed to cope with the resource constraints of start-ups, and accumulated a large number of users through the unique fan culture, so as to spread and sell its explosive products more effectively and promote the scale-ups. In the growth stage, driven by institutional window and growth pressure, Xiaomi realized the enabling value co-creation with the ecological chain through the platform dominant logic of cross-edge network effect, supported start-ups and revitalizes its core redundant resources by giving them more autonomy to share common technical framework, user data and retail channels, so that Xiaomi had plenty of followersand achieve leap growth. In the expansion stage, driven by market window and profit pressure, Xiaomi realized open value co-creation with its partners through the ecological dominant logic of mutualism. It expanded offline channels with the help of partners, got rid of its dependence on original online resources and ecological chain enterprised, and establishes Xiaomi intelligent hardware IoT symbiotic ecosystem. #br#Different from existing literature on enterprise dominant logic with focus on single static dominant logic,this paper proposes the influence of opportunity window and growth pressure on dominant logic which breaks through the theoretical framework of traditional dominant logic research and elevates the research of dominant logic to the strategic level. Moreover,this study identifies the matching between firm cognition and behavior when high-growth firms face uncertainty in a dynamic changing environment. Firms need to timely transform their dominant logic according to the rapidly changing market environment and cooperate with multi-parties on value co-creation to achieve sustained and rapid growth.#br#
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Received: 15 September 2021
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