Managed Ecosystems and Translucent Institutional Logics: Engaging Communities

46 Pages Posted: 1 Mar 2019

See all articles by Elizabeth J. Altman

Elizabeth J. Altman

University of Massachusetts Lowell

Frank Nagle

Harvard Business School

Michael Tushman

Harvard University - Organizational Behavior Unit

Date Written: February 2019

Abstract

When organizations need input into their innovation or production process, they have traditionally faced the decision to make the input themselves or buy it through the market. However, rapidly decreasing information costs allow firms to harness external communities that are neither employees of the firm hierarchy, nor traditional contracted market participants such as supply chain partners. We introduce the managed ecosystem governance form in which a central organization engages external communities and also manages these communities by maintaining some degree of control over their activities. This model is evident in various organizational approaches including multi-sided platforms, crowdsourcing, and the gig economy. Building upon the knowledge-based view of the firm, we argue that these increasingly common governance models offer a wealth of opportunities, but require organizations to adopt a translucent institutional logic that is in-between the traditional closed logic of the firm and the open logic of the market. To successfully employ this model, firms must learn to shepherd communities, leverage them without exploiting them, and share intellectual property rights.

Keywords: Managed Ecosystems, Open and User Innovation Strategy, Multi-sided Platforms, Knowledge-Based View, Institutional Logics, Capabilities, Communities, Information Costs

Suggested Citation

Altman, Elizabeth J. and Nagle, Frank and Tushman, Michael, Managed Ecosystems and Translucent Institutional Logics: Engaging Communities (February 2019). Harvard Business School Strategy Unit Working Paper No. 19-096; Harvard Business School Organizational Behavior Unit Working Paper No. 19-096. Available at SSRN: https://ssrn.com/abstract=3344435 or http://dx.doi.org/10.2139/ssrn.3344435

Elizabeth J. Altman

University of Massachusetts Lowell ( email )

1 University Ave
Lowell, MA 01854
United States

Frank Nagle (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Michael Tushman

Harvard University - Organizational Behavior Unit ( email )

Soldiers Field
Boston, MA 02163
United States

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