Value Destruction in Information Technology Ecosystems : A Mixed-Method Investigation with Interpretive Case Study and Analytical Modeling
(2023) In Information Systems Research 34(2). p.508-531- Abstract
Many of today’s software systems are created by leveraging ecosystems consisting of heterogeneous “complementors” and “hub” firms. In fact, the reliance on ecosystems is prevalent in the enterprise resource planning (ERP) domain, where larger ERP vendors form collaborative relationships with smaller industry-specific vendors to co-create value for themselves and their customers. However, value creation and destruction processes are often intertwined. A key motivation for this study is to shed light on the behavioral contingencies and underlying mechanisms that might lead to value destruction over time instead of the initially intended value co-creation. Furthermore, although value co-creation in collaborative relationships associated... (More)
Many of today’s software systems are created by leveraging ecosystems consisting of heterogeneous “complementors” and “hub” firms. In fact, the reliance on ecosystems is prevalent in the enterprise resource planning (ERP) domain, where larger ERP vendors form collaborative relationships with smaller industry-specific vendors to co-create value for themselves and their customers. However, value creation and destruction processes are often intertwined. A key motivation for this study is to shed light on the behavioral contingencies and underlying mechanisms that might lead to value destruction over time instead of the initially intended value co-creation. Furthermore, although value co-creation in collaborative relationships associated with ecosystems is often highlighted, research has been scarce on offering an in-depth analysis of the challenges in these relationships that can destroy value. This study attempts to address this issue by uncovering the underlying mechanisms that lead a hub firm and its complementors toward value destruction. Our mixed-methods approach involves the use of a combination of interpretive case study and analytical modeling to highlight nuances and develop conceptual propositions about the conditions that can potentially lead to value destruction. Our context is a globally reputed information technology (IT) firm known for providing business solutions (SOFTCo, a pseudonym) and numerous relatively small, less powerful customer-facing service firms (PartnerCos, a pseudonym). Our findings show that opportunism, unjust appropriation of rents, shirking, exploitation of asymmetric power, and undue dependence can initiate a value destruction process. Furthermore, our study revealed an unexpected emergence of a “pack of wolves,” where resentful PartnerCos formed a collective to tackle the opportunistic behaviors of SOFTCo by starting to align with its competitor, further destroying value for SOFTCo’s ecosystem. Overall, this study contributes to the literature on value co-creation/destruction in IT ecosystems. It also offers an illustration of a mixed-methods study where seemingly incommensurable approaches are harnessed to develop a theoretical understanding.
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- author
- Sahaym, Arvin ; Vithayathil, Joseph ; Sarker, Suprateek ; Sarker, Saonee LU and Bjorn-Andersen, Niels
- organization
- publishing date
- 2023-06
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- agency, analytical modeling, business-to-business alliances, case study, economic game theory, ecosystem failure, ERP systems for SMEs, hermeneutic circle, information technology ecosystems, mixed-methods, opportunism, power, qualitative study, value co-creation, value destruction
- in
- Information Systems Research
- volume
- 34
- issue
- 2
- pages
- 24 pages
- publisher
- INFORMS Institute for Operations Research and the Management Sciences
- external identifiers
-
- scopus:85165422705
- DOI
- 10.1287/isre.2022.1119
- language
- English
- LU publication?
- yes
- id
- ba466cbd-bca2-4b5e-b392-0a62d5bf28c7
- date added to LUP
- 2022-01-17 16:35:15
- date last changed
- 2024-01-11 13:18:50
@article{ba466cbd-bca2-4b5e-b392-0a62d5bf28c7,
abstract = {{<p>Many of today’s software systems are created by leveraging ecosystems consisting of heterogeneous “complementors” and “hub” firms. In fact, the reliance on ecosystems is prevalent in the enterprise resource planning (ERP) domain, where larger ERP vendors form collaborative relationships with smaller industry-specific vendors to co-create value for themselves and their customers. However, value creation and destruction processes are often intertwined. A key motivation for this study is to shed light on the behavioral contingencies and underlying mechanisms that might lead to value destruction over time instead of the initially intended value co-creation. Furthermore, although value co-creation in collaborative relationships associated with ecosystems is often highlighted, research has been scarce on offering an in-depth analysis of the challenges in these relationships that can destroy value. This study attempts to address this issue by uncovering the underlying mechanisms that lead a hub firm and its complementors toward value destruction. Our mixed-methods approach involves the use of a combination of interpretive case study and analytical modeling to highlight nuances and develop conceptual propositions about the conditions that can potentially lead to value destruction. Our context is a globally reputed information technology (IT) firm known for providing business solutions (SOFTCo, a pseudonym) and numerous relatively small, less powerful customer-facing service firms (PartnerCos, a pseudonym). Our findings show that opportunism, unjust appropriation of rents, shirking, exploitation of asymmetric power, and undue dependence can initiate a value destruction process. Furthermore, our study revealed an unexpected emergence of a “pack of wolves,” where resentful PartnerCos formed a collective to tackle the opportunistic behaviors of SOFTCo by starting to align with its competitor, further destroying value for SOFTCo’s ecosystem. Overall, this study contributes to the literature on value co-creation/destruction in IT ecosystems. It also offers an illustration of a mixed-methods study where seemingly incommensurable approaches are harnessed to develop a theoretical understanding.</p>}},
author = {{Sahaym, Arvin and Vithayathil, Joseph and Sarker, Suprateek and Sarker, Saonee and Bjorn-Andersen, Niels}},
keywords = {{agency; analytical modeling; business-to-business alliances; case study; economic game theory; ecosystem failure; ERP systems for SMEs; hermeneutic circle; information technology ecosystems; mixed-methods; opportunism; power; qualitative study; value co-creation; value destruction}},
language = {{eng}},
number = {{2}},
pages = {{508--531}},
publisher = {{INFORMS Institute for Operations Research and the Management Sciences}},
series = {{Information Systems Research}},
title = {{Value Destruction in Information Technology Ecosystems : A Mixed-Method Investigation with Interpretive Case Study and Analytical Modeling}},
url = {{http://dx.doi.org/10.1287/isre.2022.1119}},
doi = {{10.1287/isre.2022.1119}},
volume = {{34}},
year = {{2023}},
}