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| The Continuous Innovation Mechanism of Platform Ecosystem Based on the Interaction between Internal Governance and Dynamic Capabilities:A Longitudinal Case Study |
| Zhu Xiaohong,Sun Chun |
| (School of Economics and Management, Qilu University of Technology (Shandong Academy of Sciences), Jinan 250353, China) |
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Abstract The rise of digitization has spurred competition from firm-level to ecosystem-level, and the competition mainly occurs within and across ecosystems. Platform-based firms have to develop continuous innovation to maintain long-term competitive advantages in a rapidly changing environment. The existing research shows that organizational learning, knowledge flow and economic benefit acquisition are essential factors in the formation of continuous innovation;internal governance can ensure the efficiency of organizational learning, the goal of knowledge flow, and the sustainability of economic benefit acquisition to ensure the effective formation of continuous innovation. While dynamic capabilities are the basis of continuous innovation, they can reduce organizational learning costs, speed up knowledge flow and maximize economic benefits through the integration and reconstruction of resources and further promote the formation process of continuous innovation. Although valuable research results have been formed, the existing research has failed to solve the problems of behavioral traps and capacity rigidity, and ignored to systematically demonstrate the formation process of continuous innovation. The interactive integration of internal governance and dynamic capabilities can show the formation mechanism of continuous innovation in the platform ecosystem in a panoramic way, which can compensate for the insufficiency of analyzing the formation mechanism from the single perspective, and explain the reality from a systematic and process perspective. Therefore, this paper aims to answer (1) how to form the continuous innovation of a platform ecosystem, and (2) how internal governance and dynamic capabilities interact and promote the continuous innovation of the platform ecosystem.#br#A longitudinal exploratory single case study is made based on the principle of theoretical sampling. With Shandong Biobase Group as an example, the case data is divided into initial exploration stage, rapid development stage and renewal breakthrough stage. The differences of interaction between internal governance and dynamic capabilities in different stages are analyzed to explore the formation mechanism of continuous innovation of platform ecosystem. Through normative case data analysis, it is found that the transformation of platform ecological competition promotes the alternation of internal governance and dynamic capabilities. At different stages in the construction process of the platform ecosystem, it is faced with the entry competition of the platform ecosystem, competition within the platform ecosystem, and competition across the multi-platform ecosystems. In different competitive situations, internal governance will adjust the dominant direction of dynamic capabilities and guide the construction of dynamic capabilities, and dynamic capabilities will provide support for internal governance through resource integration and reconstruction. It is further suggested that the interaction between internal governance and dynamic capabilities promotes the formation process of platform ecosystem's continuous innovation. The interaction between internal governance and dynamic capabilities changes the organizational learning style, the direction of knowledge flow and the acquisition of economic benefits, thus promoting the formation of continuous innovation of platform ecosystem. Besides, it is proposed that the formation mechanism of platform ecosystem's continuous innovation is the process of continuous technological innovation, continuous model innovation, and continuous organizational innovation. The interaction results of the previous stage are the basis for the interaction of internal governance and dynamic capabilities to promote the formation of continuous innovation in the next stage. #br#This paper makes three theoretical contributions. Firstly, it extends the applicable boundary of continuous innovation from firm-level to ecosystem-level, and explores the influence of continuous innovation on the sustainable development of platform ecosystem from the perspective of platform leaders. Secondly, by integrating internal governance and dynamic capabilities into the same theoretical analysis framework, it responds to the call of existing research for risk prevention of continuous innovation, enriches and extends the panoramic analysis of internal governance of platform ecosystem. Thirdly, the dynamic evolution mechanism of continuous innovation of platform ecosystem is revealed in a panoramic way based on the research framework of "situation-behavior-result".#br#With respect to the operation and development of the platform ecosystem, this study suggests that the platform ecosystem needs to carry out targeted continuous innovation according to the competitive situation;moreover, attention needs to be paid to the adaptability of internal governance and dynamic capacities, as well as the selection of internal governance behavior and the building of dynamic capacities in the formation of continuous innovation of the platform ecosystem.#br#
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Received: 20 September 2022
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