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 VALUE CO-CREATION IN ECOSYSTEMS: INSIGHTS AND RESEARCH

PROMISE FROM THREE DISCIPLINARY PERSPECTIVES

Erkko Autio
Imperial College Business School

Llewellyn D W Thomas
LaSalle Universitat Ramon Llull

ABSTRACT

We explore value co-creation in ecosystems from three broad disciplinary perspectives:

those of strategic management, service marketing, and information systems. These

perspectives offer complementary insights into what is a complex phenomenon. We consider

the premises, underlying theoretical considerations, insights, and contributions of each,

identify commonalities and complementarities, and suggest directions for future research

agenda.

Keywords:

value co-creation, platform ecosystem, generativity, digitalization

Version 27 May 2019 to be published in 2019 in Nambisan, S., Lyytinen, K. and Yoo, Y.
(Eds), Handbook of Digital Innovation, Edward Elgar, UK.
This is a limited pre-publication draft. Please do not duplicate or circulate without
permission.

1
 INTRODUCTION

As digital technologies and infrastructures have evolved from a set of task-specific tools

into a transformative contextual force that enables radical re-organization of economic and

societal value creation activities (Bharadwaj, El Sawy, Pavlou, & Venkatraman, 2013;

Nambisan, Siegel, & Kenney, 2018; Tilson, Lyytinen, & Sorensen, 2010) researchers from

many disciplinary backgrounds have started to explore how exactly digitalization shapes the

dynamic of value creation (Autio, Nambisan, Thomas, & Wright, 2018; Pagani, 2013; Vargo,

2008; Wieland, Polese, Vargo, & Lusch, 2012). The context for these explorations is usually

the ecosystem: a community of moderately co-specialized actors, often (but not always 1 )

organized around a digital platform, within which different actors interact to ‘co-create’ mutual

benefits, i.e., ‘value’ (Autio & Thomas, 2014; Constantinides, Henfridsson, & Parker, 2018;

Jacobides, Cennamo, & Gawer, 2018; Thomas, Autio, & Gann, 2014; Yoo, Boland, Lyytinen,

& Majchrzak, 2012). In ‘ecosystems’, economic and societal actors often co-opt advances in

digital technologies and infrastructures to boost the range, variety, intensity, and flexibility of

their interactions, and their collective ability, as an ‘ecosystem’, to ‘co-create’.

In recent years, three disciplinary perspectives have begun exploring the implications

of the ecosystem trend for ‘value co-creation’ by businesses: strategic management (including

innovation and entrepreneurship), service marketing (notably, the stream known as S-DL, or

service-dominant logic), and the information systems (IS) perspectives. While each consider

‘value co-creation’ in ecosystem contexts, each perspective also draws on different theories

and emphasizes different aspects of the broader phenomenon. Such diversity not only provides

a necessary match to the complexity of the phenomenon; it also creates rich opportunities for

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The bulk of the ecosystem literature either considers digital sectors or other sectors that are materially affected
by digitalisation. However, the ecosystem notion is not limited to digital contexts only, and especially the
’structural’ stream of the strategic management perspective (Adner, 2017) has considered many non-ICT
sectors, as we will highlight later in this chapter.

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cross-fertilization of insights across different perspectives. These opportunities are further

enhanced by the fact that the different perspectives have adopted similar terms, such as ‘value’,

‘co-creation’, and ‘ecosystem’, to describe the phenomenon.

However, standing in the way of cross-disciplinary fertilization of ideas is the very fact

that each disciplinary perspective draws on their own theories, makes different assumptions,

and emphasizes different aspects of the broader phenomenon. Because discipline-specific

assumptions and emphases tend to be so widely accepted within each discipline that they may

not necessarily be explicitly stated in disciplinary studies, the cross-disciplinary richness of

insights easily risks degenerating into cross-disciplinary confusion. We suggest that it is

therefore useful to take stock and consider the intellectual contributions of each disciplinary

perspective, explicate the theoretical and phenomenological orientations of each, identify

strengths and overlooked issues, and explore cross-fertilization opportunities. Such an

examination, we hope, should help pave way towards greater cross-fertilization of insights

while not deducting from the theoretical coherence of each disciplinary perspective.

In this chapter, we deliver such an examination. We first review each disciplinary

perspective and consider how they approach the concepts of value, co-creation, and ecosystem.

We also highlight the core issues that each perspective focuses on, illuminating key insights

and identifying possible gaps. We conclude by exploring cross-fertilization opportunities and

suggesting avenues for further research.

THREE PERSPECTIVES TO ECOSYSTEM VALUE CO-CREATION

Three disciplinary perspectives have explored value creation and value co-creation in

‘ecosystems’: the strategy perspective (Adner, 2017; Adner & Kapoor, 2010; Dattée, Alexy, &

Autio, 2018; Hannah & Eisenhardt, 2018; Jacobides et al., 2018; Ozalp, Cennamo, & Gawer,

2018), the service marketing perspective, notably, the ‘service-dominant logic’ (Barrett,

Davidson, Prabhu, & Vargo, 2015; Lusch & Nambisan, 2015; Vargo & Lusch, 2004; Vargo,

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Wieland, & Akaka, 2015), and the information systems (IS) perspective (El Sawy, Malhotra,

Park, & Pavlou, 2010; Um, Yoo, Wattal, Kulathinal, & Zhang, 2013; Zittrain, 2006, 2008).

[INSERT TABLE 1 AROUND HERE]

Each of these perspectives takes a slightly different, yet complementary view of value

co-creation in ‘ecosystems’ (see Table 1). The strategy perspective has explored structural

properties and governance mechanisms that enable ecosystems to support collaborative value

creation by multiple hierarchically independent constituents (Adner, 2017; Jacobides et al.,

2018; Thomas et al., 2014). The service-dominant logic has focused on value co-creating

interactions within individual resource provider-beneficiary dyads in the ecosystem and

explored how ecosystem constituents can extract desired benefits from such interactions

(Lusch & Nambisan, 2015). The IS perspective has explored what technical properties of the

digital platform enable and facilitate unprompted, unpredictable innovative contributions by

large, uncoordinated audiences (Yoo et al., 2012; Zittrain, 2006). We next review each,

focusing on how they conceptualize the ecosystem construct and associated constructs of value

and co-creation.

Strategy perspective to ecosystem value co-creation

The notion of an ‘ecosystem’ was introduced into the strategy literature quite early,

with Moore’s (1993) advocacy of an ‘ecological’ approach to understanding the contexts

within which businesses compete and collaborate. However, in his seminal paper, Moore never

provided a solid definition for the term, merely noting that an ‘ecosystem’ is a structure where

companies work ‘cooperatively and competitively’ across industries to satisfy customer needs.

As examples he gave Apple, IBM, and Tandy from the ICT sector, but also, companies such

as Ford, Walmart, and Merck – companies that were not characteristically ICT businesses. In

addition to leaving the notion of the ‘ecosystem’ vague, Moore also did not make it clear what

exactly he meant with the notion of an ‘ecological’ approach to strategy, beyond parallels to

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natural ecosystems and stating that this approach was ‘different’ from industry- or sector-

specific analysis. As far as one is able to discern, Moore probably was thinking about the focal,

large firm’s diverse set of suppliers as the ‘ecosystem’.

In spite of this vagueness (or perhaps because of it?), the ecosystem term nevertheless

stuck in the strategy literature. Interest in this phenomenon was slow to take off initially, but it

has taken off during recent years. Until 1999, in Google Scholar, Moore’s article had accumu-

lated 51 citations. Another 92 were added from 2000 to 2004, and 280 citations were added

from 2005 to 2009. From 2010 to 2014, the article was cited 741 times, and since 2015 (until

January 2019), the article was cited in 1350 papers. There has thus been a tremendous increase

in interest towards ‘ecosystems’ since 2010 onwards, although not all citing papers belong to

the strategic management literature.

Even with the increase in interest towards the ecosystem phenomenon, the vagueness

regarding the notion of an ‘ecosystem’ in the strategic management literature has persisted.

Only recently have there been explorations of the theoretical contours of the concept in the

strategic management perspective, explicating and weaving often implicit assumptions and

premises into coherent wholes (Adner, 2017; Autio & Thomas, 2014; Jacobides et al., 2018).

These reviews suggest a number of commonalities that characterize the ecosystem stream, as

viewed by the strategic management perspective. The most important of these are, first, the

treatment of ecosystems as supply-side value (co-) production systems; second, the emphasis

on more or less quantifiable instrumentality in the definition of ‘value’; and third, the emphasis

on complementarity and network externality in value co-creation.

Strategy perspective: Ecosystems as systems of value co-production

In the strategic management perspective, ecosystems are mostly treated as multi-

stakeholder venues for value (co-)production, and the conceptualizations of value and co-

creation reflect that emphasis (Adner, 2017). This supply-side emphasis on value co-

5
production reflects the roots of much of the strategic management literature in industrial

organization economics, where business firms are portrayed as operating in well-defined

industries, subject to competitive forces determined by industry structural properties, and com-

peting in an open market with their products and services (Porter, 1980; Porter, 1985). In the

industrial organization tradition, the value of products and services is determined by the

balance of supply and demand within markets composed of segments of homogeneous, pre-

defined user preferences that determine their willingness-to-pay. In such a situation, the act of

strategizing becomes one of identifying an attractive product-market niche and organizing a

production system that can profitably that is able to profitably address that niche. The firm’s

ability to ‘create value’ is similarly determined by the gap between market price and the cost

of production.

In much of the strategic management literature, the relevant competitive context of

firms is a (set of) industry(ies). An industry consists of a market (an aggregation of homo-

geneous user demands for products and services) and the productive apparatus servicing it.

This productive apparatus is conventionally the supply chain: a more or less linear chain where

suppliers are contracted for specific deliveries towards the final product, which is then

delivered as such for the customer. The governance challenge of a conventional supply chain

situation, therefore, consists of instituting a set of contractual relationships with suppliers to

mitigate agency problems and opportunistic behaviors (Williamson, 1991, 1999).

Ecosystems differ from conventional supply chains in that not all supplier relationships

are contractually governed, yet the ‘value’ of the focal firm’s offerings for the customer may

depend on the availability of complementary products and services (Adner, 2017; Adner &

Kapoor, 2010). Instead of modules and components contracted from value chain suppliers that

are closely integrated into the focal firm’s offering (say, as in the case of car manufacturers),

ecosystem offerings tend to be composed of modular offerings available from a set of

6
horizontally related suppliers, and the final choice of which components to integrate may be

left to the customer, as might the integration work itself (Jacobides et al., 2018; Reynolds et

al., 2005). In such a situation, supermodular complementarities in consumption may exist

across different components (e.g., the presence of complementary modules makes the modules

more valuable to the user, as is the case of, say, the Android platform and Android-compatible

applications) – also commonly referred to as indirect network externalities (Jacobides et al.,

2018). This mechanism also underpins the notion of value co-creation, as most commonly

referred to in the strategic management literature: value is said to be ‘co-created’ in ecosystem

contexts, when several hierarchically independent suppliers design and produce modular

offerings that are compatible with one another, thereby creating indirect network effects that

add instrumental utility to the user by giving the user greater choice, flexibility, and freedom

to assemble a combination that best meets the user’s individual requirements (Wareham, Fox,

& Cano Giner, 2014).

Reflecting this intellectual provenance, the key concern for the strategic management

perspective to ecosystems has been the co-ordination and governance of co-productive

activities, often around an underlying co-alignment device, or the ‘platform’, and employing

non-contractual governance mechanisms (Adner, 2017; Dattée et al., 2018; Gawer &

Cusumano, 2002; Wareham et al., 2014). The supply-push and value production emphasis are

most clearly manifest in the ‘structural’ stream of the strategic management perspective to

ecosystems (Adner, 2017; Adner & Kapoor, 2010; Hannah & Eisenhardt, 2018; Jacobides et

al., 2018). In his review of this stream, Adner (2017: 40) defined the ecosystem as: “…the

alignment structure of the multilateral set of partners that need to interact in order for a focal

value proposition to materialize.” Reflecting the notion of value as instrumental utility to a set

of users with homogeneous preferences, this implies a centralized definition of an overarching

blueprint of the ecosystem and its value proposition, and therefore, the existence of a (set of)

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focal firm(s) who define(s) it. With the notion of an overarching ecosystem blueprint, the

challenge for the focal firm becomes one of defining and controlling this blueprint, as well as

persuading others to contribute accordingly (Adner & Kapoor, 2010; Hannah & Eisenhardt,

2018). Because in ecosystems, not all inputs are centrally and contractually governed, yet the

realization and delivery of the overarching value offering depends on the ability of the focal

firm to orchestrate ecosystem offerings such that these are synchronously available for the user

to pick and choose from.

Several case studies have explored this governance challenge. In the context of

semiconductor lithography equipment industry, Adner and Kapoor (2010) showed that

technology leaders were less encumbered by technological challenges when these occurred

among their upstream suppliers (who were hierarchically governed) than when these occurred

among complements (over whom the leader had no hierarchical control). Focusing on the

residential solar panel industry, Hannah and Eisenhardt (2018) identified three non-contractual

strategies with which ecosystem leaders compete and collaborate with complements over time

to both drive complement development and retain leverage within the ecosystem. Adner (2017)

used the car tire value chain as an example to illustrate the challenge of introducing innovations

(i.e., the ‘run-flat’ tire) that require adjustments by complements (in this case, service garages)

over which the tire manufacturer does not have direct hierarchical control. In each case, the

focal firm faced the dilemma of the value of its offering being dependent on the availability of

complementary inputs by actors over which had no direct contractually-based control yet

required these to make co-specialized investments.

On this basis, Jacobides et al. (2018) suggested that ecosystems should be seen as a

distinctive solution to the distributed governance challenge within contexts characterized by

modularity, complementarity, and varying degrees and directionalities of complementarity

(and consequently, co-specialization) among ecosystem actors. In the case of simple or generic

8
complementarities that characterize, e.g., the tea bag and the tea cup, although both are required

for the customer to enjoy his or her tea, the governance challenge does not arise, since any tea

bag fits any tea cup, and no coordination among independent producers of each is therefore

required. In the case of smartphone operating systems (e.g., Android), compatibilities are both

unique and supermodular, meaning that applications cannot be migrated to alternative

platforms without adjustment, and the number of applications on a given OS affected the value

of the OS and vice versa.

A specific insight in Jacobides et al. (2018) is that the ecosystem governance challenge

arises only when the required complementarities are either unique or supermodular in both

production and consumption. Unique complementarities in production refer to a situation

where the complements need to adhere to a shared standard in order to work together (e.g.,

USB-compatible devices). Unique complementarities in consumption arise when two modules

are more valuable when consumed together (e.g., cars and tires). Supermodular

complementarities in production arise when increased production of one component increases

the quality or reduces the price of another (e.g., mobile networks and compatible terminals).

Supermodular complementarities in consumption arise when the increased presence of one

component increases the value of another (e.g., smartphone OS and compatible applications).

Jacobides et al. (2018) argued that the distinctive governance challenge that characterizes

ecosystems only arises in situations where the complementarities in both production and

consumption are either unique or supermodular, but not when one or both are generic. In such

situations, and when internalization or contracting is not feasible, non-contractual mechanisms

are required.

The strategy literature has explored numerous non-contractual mechanisms, ranging

from highly informal to more formal. In the context of mobile gaming industry, Ozcan and

Eisenhardt (2009) highlighted how early entrants can employ behavioral maneuvering

9
strategies to shape the emerging industry in such a way that barriers to entry are simultaneously

raised for subsequent entrants. In their study of the residential solar panel industry, Hannah and

Eisenhardt (2018) identified how strategic investment in component innovation, together with

collaboration and competition with complements, was used by firms to shape overarching

ecosystem offerings while jockeying for leverage and control. Dattée et al. (2018) showed how

under high uncertainty situations that often characterize the very earliest stages of ecosystem

emergence around generic technologies, ecosystem leaders can employ dynamic control

strategies to promote the emergence of a coherent shared vision of the ecosystem among

participants, thereby reducing uncertainty and lowering the threshold of complements to invest

in the emerging ecosystem. Whereas traditional, static control strategies involve the investment

in and control of specific resources within an established setting, dynamic control strategies

involve the more subtle facilitation and shaping of (a) shared (set of) ecosystem vision(s) that

helps co-align complementary inputs by hierarchically independent, yet mutually co-dependent

actors within the ecosystem (Autio & Thomas, 2018). For instance, Ansari, Garud, and

Kumaraswamy (2016) showed how, instead of designing and implementing an ecosystem

blueprint, ecosystem disruptors need to engage in iterative business model experimentation to

co-discover and legitimate a new blueprint that is accepted by other stakeholders. Similarly

Snihur, Thomas, and Burgelman (2018) show how ecosystem leaders can use value proposition

framing and business model adaptation to meet emerging stakeholder requirements, reducing

uncertainty and promoting a nascent ecosystem over that of incumbents.

It is notable that many of the purest examples of the ‘structural’ stream of the strategic

management perspective to ecosystems seem to relate to predominantly non-digital industries,

such as car tires, the aerospace industry, solar panels, and the semiconductor lithographic

industry. Value creation in all these sectors requires non-trivial, co-specialized investment in

physical assets. Unlike re-programmable digital assets such as digital technologies and

10
infrastructures, physical assets tend to be asset-specific: the asset cannot be easily reassigned

to an alternative use without non-trivial modification or significant loss of value (De Vita,

Tekaya, & Wang, 2011). This is, in fact, explicitly assumed in the structural stream (Jacobides

et al., 2018: 2665): “connecting to an ecosystem requires some investment that is not fully

fungible”. This aspect may help explain the generally (static) control–oriented emphasis

characteristic of the structural stream, as well as its emphasis on effecting co-alignment among

different actors’ contributions towards a more or less predetermined, overarching value

blueprint. As asset specificity reduces the flexibility with which resources can be re-assigned

to alternative purposes, the overarching value blueprint needs to be relatively stable in order

for the participating actors to be able to recoup their investment. This implies that ecosystems

with high levels of asset specificity in co-specialized investment may be constrained in their

ability to support ecosystem-level emergence through generative processes. This also likely

explains why the notion of ‘co-creation’ in the structural stream often appears closer to ‘co-

production’ of pre-defined value, rather than to the discovery and generation of novel sources

and forms of instrumental utility for the user. Accordingly, the structural perspective considers

actor roles in ecosystems to be more or less fixed and defined at the level of groups of actors.

This is different from supply chains, where the roles and expectations are defined contractually

and separately for each individual actor (Adner, 2017; Jacobides et al., 2018).

The other, less formalized stream of ecosystem research in strategy does not explicitly

make assumptions that characterize the structural stream (e.g., Ansari et al., 2016; Dattée et al.,

2018). Adner (2017) calls this the ‘ecosystem as affiliation’ stream, and he uses the label to

broadly denote a group of studies that consider communities of actors operating around a

shared underlying co-alignment structure, such as a shared set of standards, or a (usually

digital) platform. Because such communities tend to be particularly prevalent in digital

environments, such communities tend to exhibit lesser levels of asset specificity, and therefore,

11
greater levels of fluidity, emergence, and co-creation in the form of creating unpredictable

innovative outputs, as opposed to ‘co-production’ of modules towards a pre-defined value

blueprint. As actor roles in such communities often are less fixed than in the case of ecosystems

consisting of related vertical supply chains, there is also more scope for innovation that

potentially changes the roles and relationships among ecosystem actors.

Summarizing and recapping, within the strategic management tradition, the term

‘ecosystem’ predominantly refers to supply-side structures characterized at least in part by non-

contractual relationships among the focal firm and complementary suppliers, and where value

as instrumental utility to users is ‘co-produced’ through co-specialized and complementary

offerings by independent suppliers. This ontological position is important to keep in mind when

considering the insights this tradition has contributed. Those insights mainly concern the initial

conditions for the emergence of ecosystem-like structures, as well as ecosystem governance.

Strategy perspective: Key insights and ‘blind spots’

The strategic management perspective to ecosystems has supplied considerable insight

into the governance conditions that underpin the emergence of different kinds of ecosystems:

notably, asset co-specialization and the nature of complementarities across elements of the

product system. The typology created on this basis by Jacobides et al. (2018) is helpful in

identifying and characterizing different kinds of governance challenges in ecosystem situations

– another important contribution of the strategic management tradition. Similarly, the

identification of the paradoxical tensions between standardization—variation, collective—

individual, and exploration—exploitation has been an important contribution to the strategic

management tradition (Wareham et al., 2014). These governance challenges arise where there

is a relative absence of formal mechanisms and where the customer-perceived value of an

individual firm’s outputs depends on the simultaneous availability of complementary outputs

by other ecosystem stakeholders. These challenges capture the essence of the supply-side

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perspective to ecosystems as non-hierarchical collectives of value co-production, where

indirect and direct externalities occupy a central focus of attention.

Beyond these value insights, the strategic management perspective also exhibits some

blind spots, or topics that have been accorded less consideration. As this perspective is

influenced by the industrial organization tradition, ecosystems are typically viewed as

evolutions of more traditional, linear value chains (Adner & Kapoor, 2010, 2016; Jacobides et

al., 2018). This has implied a supply- and production-centric perspective to value creation,

where the role of the end user is generally reduced to that of a more or less passive recipient

buying the system-level orchestrated offering, with the additional ability to combine a

customized package from complementary modules. In the structural tradition in particular, this

generally implies a transactional relationship with other constituents of the ecosystem and sets

a limit to any generative inputs the user may make towards the ecosystem, instead of viewing

the user as co-creative participant in the ecosystem’s overarching value creation process.

The strategy literature’s largely hierarchical approach to the governance of transactions

is also echoed in the strategic management perspective to ecosystems, where there has been

relatively less exploration of non-contractual governance approaches. The relatively passive

role and transactional role assigned to the user has also limited the consideration of the different

mechanisms through which ecosystem stakeholders can generate and contribute resources

towards ecosystem value creation, and value itself is typically conceptualized as instrumental

utility with a willingness-to-pay figure attached to it, rather than as in terms of the various

benefits ecosystem participants can derive from their interactions with other ecosystem

constituents.

Finally, the emphasis on ecosystem governance and orchestration has resulted in an

‘ecosystem blueprint’ view, where ecosystem creation is considered a process under which a

specific (set of) ecosystem orchestrator(s) come up with a ‘blueprint’ that defines ecosystem

13
roles and relationships, and ecosystem creation is, at least implicitly, considered as one where

a given orchestrator implements this blueprint (c.f. Hannah & Eisenhardt, 2018). This view,

again, can easily overlook the roles of generativity and emergence in ecosystem creation and

evolution. There has not been much research into ecosystem emergence in the strategic

management tradition, nor has there been much research into the relationships between firm-

level business models and ecosystem-level interaction and resource generation dynamics.

Service-dominant logic perspective to ecosystem value co-creation

The appreciation of ecosystems in the service-dominant logic (S-DL) perspective

emerged from service marketing scholarship in their efforts to theoretically differentiate

between goods and services. Underpinning the S-DL perspective are two main perspectives on

economic exchange and value creation (Vargo & Lusch, 2004, 2008). The traditional view,

which underpins the strategy perspective above, assumes that goods—units of output—are the

basis for exchange. In this logic, the purpose of the firm is the production and distribution of

units of output (such as physical goods), which accrue value during the manufacturing process,

and which are then consumed by the customer (Normann, 2001). Here, ‘services’ are an output,

considered as either an ‘inferior’ good that poses challenges to productivity, or an add-on to

physical goods, such as after-sale service (Wieland et al., 2012).

In contrast, the S-DL defines a ‘service’ as the application of competences (knowledge

and skills) for the benefit of another party (Vargo & Lusch, 2004: 2). In contrast to the

traditional logic, the S-DL considers service creation and consumption as a collaborative

process, emphasizing the role of the user in value co-creation. For the S-DL, service is the

defining element of all economic and social exchange, and physical goods are merely vehicles

for service provision, and the value associated with the good is unlocked when the user engages

the good (Vargo, 2008). In the S-DL, thus, the focus moves from stand-alone products to “the

customers’ value-creating processes where value emerges for customers” (Knox & Gruar,

14
2007: 24-25). In S-DL, “the customer is the creator of value” (Vargo, Maglio, & Akaka, 2008:

7).

The S-DL conceptualizes ecosystems as resource integration systems, where ecosystem

constituents create benefits from their interactions with others through resource integration –

resources being defined as anything a given ecosystem constituent can draw on to obtain

desired benefits. More broadly, service ecosystems have been defined as “…relatively self-

contained, self-adjusting system[s] of mostly loosely coupled social and economic (resource-

integrating) actors connected by shared institutional logics and mutual value creation through

service exchange” (Lusch & Nambisan, 2015: 161; Lusch & Vargo, 2014). When organized

around digital platforms, service ecosystems can operate as important drivers of service

innovation, as they facilitate flexible combination of varied resources for mutual value creation

through service exchanges (Lusch & Nambisan, 2015).

While gaining momentum, the theoretical exploration of the concept of service

ecosystems is still very recent (Akaka, Vargo, & Lusch, 2012; Lusch & Nambisan, 2015; Lusch

& Vargo, 2014; Meynhardt, Chandler, & Strathoff, 2016; Peters, 2016; Vargo et al., 2015).

When it comes to fundamental concepts, the most important of these are: first, the treatment of

service ecosystems as demand-side consumption systems; second, an emphasis on

phenomenological experience as underpinning ‘value’ (Vargo & Lusch, 2008); and third, an

emphasis on user engagement with resources made available by the resource provider in user-

provider dyad. We now discuss each in turn.

S-DL perspective: Ecosystems as systems of value consumption

In S-DL, value co-creation occurs when the service provider and the service beneficiary

integrate resources (Barrett et al., 2015; Lusch & Nambisan, 2015). In S-DL, thus, the service

provider is not the sole value creator; rather, it makes resources available for the service

beneficiary for integration and value creation (Vargo & Lusch, 2004). The value is created ‘in

15
use’, as there is “no value until an offering is used” (Vargo & Lusch, 2004; 2006: 44). The

service beneficiary prompts potential value to materialize through the act of consuming a given

product or service (Macdonald, Wilson, Martinez, & Toossi, 2011). This is an entirely different

approach to conceptualizing value as compared to the strategy perspective’s emphasis on

production and transaction as the defining determinants of value, one that offers two key

benefits. One the one hand, it introduces the service beneficiary as an active resource integrator

into the ecosystem. One the other, it forces a focus on service beneficiary’s experience for

value considerations. On the downside, however, this conceptual approach tends to introduce

unwelcome ambiguity, as it is considerably more challenging to measure, or even conceptually

pin down a ‘phenomenological experience’ than it is to measure a market price or even

customer willingness-to-pay. We return to this point in our summary of S-DL.

As a key contribution, the S-DL literature recognizes more varied and nuanced roles

for the user than merely that of a resource integrator. Lusch and Nambisan (2015) highlight

three additional roles: first, as ideators that educate service providers on user needs and suggest

novel ways of adding value; second, as designers who actively help design new combinations;

and third, as intermediaries who facilitate non-obvious connections among diverse resources.

These roles resonate with those identified in the user innovation literature, which recognizes

service beneficiaries being active in innovation as buyers, users, co-producers, and even as

‘products’ (e.g., users of Google services become part of the user community that Google can

leverage to offer value for third parties, such as advertisers) (Autio, Dahlander, & Frederiksen,

2013; Baldwin & von Hippel, 2011; Kaulio, 1998). Although resource provision may be one-

directional, service exchanges related to resource integration are always mutual and have to

provide benefits for both parties. As those benefits do not necessarily need to be financially

transacted, the S-DL perspective offers potentially valuable conceptual tools to shed novel

insight into value and benefit co-creation dynamics in ecosystem contexts. Both parties being

16
both service providers and service beneficiaries, both also bring resources to any dyadic

interaction they might have in the ecosystem (Lusch & Nambisan, 2015; Lusch, Vargo, &

Tanniru, 2010). The S-DL conceptualization can thus potentially accommodate both

hierarchical and informal governance mechanisms and multi-faceted exchange relationships

where all exchanges need not be accompanied with financial transactions.

Consistent with the above, more recent work has begun to draw ideas from information

systems (IS) research to portray service ecosystems as actor-to-actor networks where service

innovation is facilitated by ‘resource liquefaction’ and ‘resource density’ (Lusch & Nambisan,

2015). Resource liquefaction refers to the decoupling of information from its related physical

form, echoing the notion of digitization in the IS literature. Resource density is defined as the

quality, or fitness for use of resource combinations that are mobilized for a particular situation

(Vargo & Lusch, 2010). Thus, this notion is not akin to ‘resource munificence’, as

conceptualized in the population ecological literature (Aldrich & Pfeffer, 1976), but rather,

echoes ideas regarding layered modular digital architectures, where loose couplings between

layers facilitate novel combinations and therefore the likelihood that an appropriate

combination can be mustered for a given use. A platform here provides an architecture of

participation for the ecosystem constituents, reducing cognitive distance among these and

strengthening a shared worldview among them.

However, the S-DL is yet to offer tangible tools to analyze dyad-level value co-creation

dynamics, especially in ecosystem situations where cross-dyad interactions may affect within-

dyad value co-creation. Traditionally, the focus of the SD-L literature has been almost
2
exclusively on the individual provider-beneficiary dyad. More recently, the wider

environment of value co-creation around the dyad has been acknowledged, mostly in the shape

2
Although some literature discusses triads (for instance, Chandler & Vargo, 2011), this is in the context
of indirect exchange between two actors, so in practice this is two (linked) dyads.

17
of culture, social norms, and institutional logics that impact how value is experienced by the

beneficiary. This notion is sometimes referred to as ‘value-in-context’ (Akaka, Vargo, &

Schau, 2015; Chandler & Vargo, 2011; Edvarsson, Tronvoll, & Gruber, 2011; Vargo & Lusch,

2008). Actors participating in multiple service exchanges in a confined cultural, social, or

geographic space can share institutional logics, which consist of norms, meaning, symbols, and

institutional arrangements (constellations of integrated institutions) that regulate cognitive and

behavioral activities. Edvarsson et al. (2011: 334) expanded this view of value-in-context and

proposed the notion of ‘value-in-social-context’, which “recognizes that an individual’s value

perceptions are, at least in part, dependent on the relative position of the individual within the

wider social context”. More recently, Akaka et al. (2015) has further extended this view to

include the notion of ‘value-in-cultural-context’, arguing that value co-creation is dependent

on multiple aspects of culture. This context does not only regulate perceived value, but also,

can facilitate productive exchanges on their own right, as shared institutional logics

homogenize business and cultural assumptions, evaluation methods and mental frameworks,

as well as rules of exchange within dyads. Thus, actors not only interact to co-create value for

themselves and others, but also, contribute to and shape the broader social context in which

value is co-created (Chandler & Vargo, 2011). However, while the role ‘institutionalizing

processes’ in service ecosystem communities as an important regulator of service beneficiaries’

‘phenomenological experience’ of ‘value-in-use’ is an important insight, these concepts are

challenging to pin down with sufficient tangibility for managerial insight. While this reasoning

enables S-DL to conclude that value is an emergent property of the ecosystem, it still begs the

question of what value tangibly is, how cross-dyad interactions affect within-dyad value co-

creation, and how ecosystems should be designed so as to maximize their value co-creation

potential.

18
 In summary, with its broader take on what can be exchanged than is characteristic of

much of the strategy perspective, where financial transactions tend to be emphasized, the S-

DL offers a potentially richer perspective to understanding ecosystem value co-creation

dynamics. The notion of each dyadic relationship within a given ecosystem being an arena of

mutual, yet not necessarily monetary exchanges of user-experienced benefits also provides a

potential way of defining the necessary condition for ecosystem sustainability: because many

mutual exchanges are non-contractual, all parties need to derive some form of benefit from

each of their exchange dyads. If a given exchange does not generate benefits for both parties,

the exchange relationship will break down. This idea, combined with the S-DL’s encompassing

view of value-in-use, could be leveraged for a broader view of what is being exchanged within

the ecosystem, thereby enhancing the understanding of the determinants of ecosystem

sustainability. Systematic explorations of this kind could also help evolve the S-DL beyond is

current notion of service ecosystems as resource integration systems, to also include processes

of resource generation. However, such a development would require a much more solid and

tangible articulation of tangibly value-in-use than is currently offered.

S-DL perspective: Key insights and blind spots

The SD-L perspective contributes several important insights for the study of

ecosystems. Instead of viewing ecosystems as systems of production, S-DL emphasizes the

triggering role of the user and views ecosystems as systems of consumption. This is valuable,

since it helps anchor the user as an active constituent of and contributor to the ecosystem.

Combined with the S-DL conceptualization of value as user-centric, phenomenological

experience, the S-DL helps understand ecosystems as interaction systems that are brought to

life by the active user. For the ecosystem to be sustainable, every dyadic exchange needs to

generate benefits for both parties within the dyad, making both parties simultaneously acting

in both the role of the service provider as well as service beneficiary. This consumption-centric

19
view of ecosystems is more comprehensive and mutual than is the production-centric view that

dominates in the strategy perspective and calls attention to the study of the emergence and

evaluation of value experiences as the driving force of ecosystems. At the ecosystem level,

thus, value becomes an emergent property arising from dyadic exchanges. This implies a more

dynamic approach to ecosystem governance, one that goes beyond implementing a pre-defined

blueprint.

While the above insights offer promise, the S-DL also exhibits many blind spots and

under-explored themes. Thus far, the overwhelming focus of the S-DL tradition has been on

the service provider-beneficiary dyad, and explicit ecosystem-level considerations have been

few. In the S-DL tradition, contextual considerations have overwhelmingly focused on the

cultural and social context that shapes value experiences rather than as the ecosystem context

which shapes value co-creation. There is significant untapped potential here, since although

the S-DL makes it easy to discern, say, the role of the user of Google’s service engine as an

important, contributing participant of the Google ecosystem (who nevertheless does not engage

in financial transactions with Google), the dearth of ecosystem-level value co-creation

considerations means that the resource-generating role of the user has not been fully recognized

(i.e., the data generated by the users creates monetization opportunities for Google in other

parts of its ecosystem). In order to fully understand ecosystem value co-creation dynamics,

such resource-generating roles should be studied more explicitly, as should the different ways

with which individual dyads connect and influence one another.

In the S-DL, system-level value co-creation dynamics are seen as shaped by processes

such as institutionalization, but its demand-side (as opposed to supply-side) focus has also

meant that there has been little attention to alternative mechanisms such as knowledge spill-

overs across dyads or direct and indirect complementarities across individual dyads. This has

also meant that many supply-side constituents of the ecosystem have been overlooked in the

20
S-DL tradition, leaving the interaction dynamics and value experiences of these in the dark,

including possible interactions across dyads.

Furthermore, although the broad conceptualization of value as an emergent

phenomenological characteristic of dyad-level interactions offers a potentially richer and more

inclusive approach to consider conditions for ecosystem sustainability, the subjective definition

of value is also quite vague, limiting the ability of this conceptualization to inform managerial

choice. More conceptual work appears necessary for S-DL to be better able to support such

insight.

Finally, the dominant focus on individual dyads has meant that thus far, S-DL has

contributed little insight into ecosystem-level governance processes and how these shape an

ecosystem’s value co-creation potential.

Information systems perspective to ecosystem value co-creation

In contrast with the strategy and S-DL perspectives, the IS perspective predominantly

considers ecosystems in the context of software artefacts and platforms, the architecture and

functionalities of which allow multiple constituents to connect and interact (see for instance

Adomavicius, Bockstedt, Gupta, & Kauffman, 2007). While there was initially little emphasis

on value co-creation, the appropriation of the term ‘generativity’ and its application to the

Internet by Jonathan Zittrain (2006), sparked increasing interest in value facilitating properties

of digital technologies and infrastructures. Zittrain (2006: 1980) used the notion of generativity

to describe the Internet’s: “…overall capacity to produce unprompted change driven by large,

varied, and uncoordinated audiences”. He drew attention to the seemingly unlimited capacity

of the Internet to connect diverse audiences and support open exchanges among these, thereby

facilitating innovative activity that would have been difficult to predict beforehand. This

emphasis on contributions made by large audiences remains central to the approach of the IS

perspective to ecosystem value co-creation.

21
 While the empirical context of Zittrain was the integration of the personal computer

and the Internet, IS scholars soon extended their considerations to cover ‘digital infrastructures’

more broadly (Henfridsson, Mathiassen, & Svahn, 2014; Tilson et al., 2010). Digital

infrastructures are the “basic information technologies and organizational structures, along

with the related services and facilities necessary for an enterprise or industry to function”

(Tilson et al., 2010: 748). These infrastructures are shared, unbounded, heterogeneous, open,

and evolving sociotechnical systems comprising an installed base of diverse information

technology capabilities and their user, operations, and design communities (Hanseth &

Lyytinen, 2010). These communities harness the power of generativity for value co-creation in

digital ecosystems (Henfridsson & Bygstad, 2013; Tilson et al., 2010). Value co-creation

through generativity consists of unprompted (re)combinant innovation that unprompted

(Zittrain, 2006). Thus a generative infrastructure allows ‘constrained serendipity’ (Faraj,

Jarvenpaa, & Majchrzak, 2011), or emergent and serendipitous interactions amongst

distributed organizations (Yoo et al., 2012).

With the increase in interest towards the ecosystem phenomenon, the functional

approach to ecosystems in the IS literature has persisted throughout much of the 2010s. Only

recently have there been attempts to explore the theoretical contours of the concept and its

applications (El Sawy et al., 2010; Thomas & Tee, 2019; Um et al., 2013; Zittrain, 2006, 2008).

These reviews suggest a number of commonalities that characterize value creation in the IS

literature. When it comes to fundamental concepts, the most important of these are: first, the

treatment of ecosystems as an affordance platform that enables (re)combinative innovation;

second, an emphasis on functionality in the definition of ‘value’; and third, an emphasis on the

generation of innovative inputs by large, uncoordinated audiences, expressed as generativity.

We next discuss each in turn.

22
Information systems perspective: The ecosystem as an affordance platform

In digital platform ecosystems, value co-creation is ultimately enabled by digital

affordances opened up by digital infrastructures (Majchrzak & Markus, 2013; Nambisan,

Lyytinen, Majchrzak, & Song, 2017; Zammuto, Griffith, Majchrzak, Dougherty, & Faraj,

2007). Derived from the verb ‘afford’, an affordance represents a potentiality to perform a new

function or perform existing functions more efficiently. An affordance offers the potential for

a subject (e.g., an individual) to perform desired actions and execute desired functions (Felin,

Kauffman, Mastrogiorgio, & Mastrogiorgio, 2016; Leonardi, 2013). What those actions are

may not be immediately obvious, however: it is this indeterminacy which ultimately underpins

ecosystem generativity.

IS research has identified three characteristics of digital platform ecosystems that

enable generativity: properties of digitized products and services (Kallinikos, Aaltonen, &

Marton, 2010; Tilson et al., 2010), properties of digital infrastructures (Hanseth & Lyytinen,

2010; Yoo et al., 2012; Yoo, Henfridsson, & Lyytinen, 2010), and the ecosystem’s governance

system (Eaton, Elaluf-Calderwood, & Sorensen, 2015; Tiwana, Konsynski, & Bush, 2010;

Wareham et al., 2014; Zittrain, 2006). These three affordances enable distributed recombinant

innovation processes (Nambisan et al., 2017; Yoo et al., 2012; Yoo et al., 2010), in that they

are not necessarily centered in a single locality or participants with a direct connection to the

innovation itself (Faraj et al., 2011; Von Hippel, 2005; Yoo et al., 2010; Zittrain, 2008).

Generativity-driven value co-creation is afforded by specific properties of digital

technologies and infrastructures. One such property is reprogrammability, which breaks the

tight coupling between form and function that characterizes physical products: unlike many

physical assets, digital devices can be flexibly re-programmed to perform different functions

(Tilson et al., 2010; Yoo et al., 2010). In the physical world, value is created by physically

manipulating the arrangement of atoms: in order to create a desired function (say, that of a

23
screwdriver) it is necessary to produce a physical shape that attaches to a screwcap. Here, the

form carries the function, which cannot be isolated from the form. Because of this tight

coupling, a screwdriver cannot be easily converted to perform the function of a shoe, for

example, and a shoe cannot comfortably replace a screwdriver. In contrast, digital devices can

be reprogrammed to perform multiple different functions with relative ease (Yoo et al., 2010):

a smartphone can be programmed to function, e.g., as a map, a music playback device, or as a

book. Because of the breakup of the tight coupling between form and function, digital ecos-

ystems are able to support a much more flexible combination of functions than do physical

manufacturing chains, thereby supporting greater capacity for unprompted and unpredictable

innovative inputs from large, uncoordinated audiences.

Value co-creation is also afforded by data homogeneity. Digitized information can be

easily accessed by virtually any digital device, and it can be harnessed by a wide range of

software for different purposes (Kallinikos et al., 2010). Because all digital devices and

applications can similarly access data, this enhances the creation of unexpected combinations

and endows digital ecosystems with greater capacity for facilitating unpredictable, unprompted

innovative inputs relative to physical manufacturing chains, where physical asset specificity

constrains the capacity for unprompted, unpredictable innovation.

The third property of digital technologies and infrastructures that enables value co-

creation is the layered modular architecture of digital infrastructures (Yoo et al., 2010). Digital

platforms exhibit layered modular architectures, as opposed to the product-specific modular

architectures that characterize physical product designs. The layers in digital ecosystems

correspond to layers of the digital infrastructure – i.e., a device layer consisting of computer

hardware and operating systems; a network layer consisting of physical transport layer and

logical transmission protocols; a service layer comprising application functionality; and a

content layer comprising various forms of data. This layered architecture exhibits both upward

24
and downward flexibility: upward flexibility in the sense that the lower levels of the

infrastructure support the creation of virtually any application that makes use of the lower level

capabilities (Tilson et al., 2010). Downward flexibility refers to the ability of any given

application to draw potentially on a wide range of physical networks to perform desired

functions. This combination of upward and downward flexibility differs from the often one-to-

one correspondence between physical assets in manufacturing value chains and the functions

those assets perform, as described above, and endows digital infrastructures with a greater

capacity for unprompted and unpredictable change.

A final important property enabling value co-creation consists of digital ecosystem

governance structures that support autonomy, individual action, and the generation of variety

(Kazan, Tan, Lim, Sorensen, & Damsgaard, 2018; Svahn, Mathiassen, & Lindgren, 2017;

Wareham et al., 2014). Digital ecosystems governance systems support generative value co-

creation if they simultaneously enable collective coordination and unconstrained individual-

level action and strike a balance between variety and standardization (Huber, Kude, & Dibbern,

2017; Wareham et al., 2014). While autonomous individual action supports the generation of

unpredictable innovative inputs, some degree of centralized control may be required so that the

digital infrastructure remains stable and attractive to participants (Tiwana et al., 2010;

Wareham et al., 2014). Thus, there is a tension between the logic of technological flexibility

and the logic of control (Eaton et al., 2015; Venters, Oborn, & Barrett, 2014). Indeed, Tilson

et al. (2010) and Huber et al. (2017) have both argued that it is how the tension between

flexibility and stability is resolved that determines the potential for value co-creation in a

platform ecosystem. Here, boundary resources are important (Ghazawneh & Henfridsson,

2013). Boundary resources are the tools and regulations that serve as the interface between the

core technology within a digital infrastructure and the complementary technologies that will

leverage its shared resources. On the one hand, they enable the “transfer [of] design capability

25
to users” (Von Hippel & Katz, 2002: 824) but also are designed for controlling the digital

infrastructure and the ecosystem that emerges from their use (Ghazawneh & Henfridsson,

2010). Thus, boundary resource design involves maintaining control and at the same time

stimulating third-parties to interact with the infrastructure (Ghazawneh & Henfridsson, 2013).

Taken together, these properties of digital ecosystems afford permeable product

boundaries, with loose relationships and flexible recombinability among digital modules.

There is usually no overarching product design architecture defining which modules should go

to which digital products, and how the different digital modules should relate to one another.

The loose couplings among digital modules and different layers of the digital infrastructure

support the flexible creation of new combinations across modules and layers, supporting

spontaneous, unpredictable change created by uncoordinated ecosystem constituents. One

important consequence of the loose couplings characterizing layered modular architectures of

digital ecosystems is recursivity: a given digital platform can be attached as a function to

another platform, which can, in turn, be attached to the focal platform to enhance its functions.

This kind of recursivity greatly enhances value co-creation through the possibility of

unpredictable combinations within digital ecosystems.

With such affordances, the IS perspective takes a very different view of the role of asset

specificity in ecosystems, as compared to the ecosystem-as-structure view in the strategic

management perspective. Rather than asset specificity regulating the value co-creation

dynamic, in digital ecosystems several types of asset specificity are broken: the specificity that

characterizes the link between form and function in physical products; the specificity that

characterizes the correspondence among product modules and between modules and their

design architecture; and the specificity that exists between physical products and the value

chain assets required for their manufacture, assembly, and distribution. Reduced asset

specificity at different levels increases combinatory flexibility, and therefore, value co-creation

26
driven by unprompted change brought about by varied and uncoordinated audiences. This is in

stark contrast with physical value creation, where asset specificity is the central regulator of

the shape of manufacturing value chains and how control over both value creation and value

appropriation is distributed among those who control different upstream, downstream, and

complementary assets (Porter, 1980; Teece, 1986; Teece, 2018). Indeed, it is the reduction of

asset specificity brought about by digitalization, combined with the open standards of the

Internet, that ultimately drives generativity in digital ecosystems, but which also leads to the

requirement for ecosystem governance. It is also largely due to low asset specificity that the

vertical, upstream-branching value chains characteristic of physical production are broken

down into horizontal, platform-centric value networks. This reorganization also gives rise to

distinctively different value creation dynamics – most notably, to value creation by bundling

in recursive value networks.

In summary, value co-creation in digital ecosystems from the IS perspective takes a

functional approach. This approach has considered how the specific affordances of digital

infrastructures, the properties of digital products and services and ecosystem governance

enable (Zittrain, 2006). As such, the insights of perspective mostly build on functional

understandings of digitalization and digital platforms themselves.

Information systems perspective: Key insights and blind spots

The IS perspective contributes several important insights for the study of ecosystems.

Rather than consider them as production or consumption systems, the IS literature instead has

a much more functional approach, and in particular actions (both individual and collective) that

digital platforms can enable in their surrounding ecosystems. This is expressed through

affordances enabled by digitalization, specifically by the properties of digitized products and

services, properties of digital infrastructures, and the ecosystem governance system. These

affordances are socio-material and enable productive change in production systems and the

27
flexible creation of new combinations across modules and layers, supporting spontaneous,

unpredictable change created by uncoordinated ecosystem constituents. Another important

insight for the IS literature has been their clear conceptualization of digital technologies and

infrastructures and their properties, particularly those of digital platforms and platform-centric

ecosystems (Nambisan et al., 2017; Yoo et al., 2012). Because of their focus on functional

enablers, IS scholars have specifically emphasized the importance of generativity to value

creation in digital ecosystems (Henfridsson & Bygstad, 2013; Tilson et al., 2010), and treated

generativity as an attribute of a platform ecosystem. For instance, Nambisan et al. (2017: 1033)

suggests that “generativity refers to the capability of digital platforms” and Yoo et al. (2012:

1400) clearly state that “digital technology platforms [are] a central focus of innovation”. As

a consequence of its focus on functionalities enabled by specific architectural features, the IS

perspective offers rich potential to tangibly inform how digital platforms and related

ecosystems should be designed and configured to maximize their value co-creation potential.

Combined with the strategic management or the S-DL perspective, or both, insights produced

by the IS perspective therefore offers rich potential to inform managerial choice.

While the above insights offer promise, the IS perspective also exhibits blind spots and

under-explored themes. One important blind spot is the fairly loose definition of generativity,

with little coherent examination of the underlying mechanisms and drivers. Indeed, in his

contribution, Zittrain (2006) vaguely referred to Internet’s ‘openness’, without going into

specifics. The IS perspective also exhibits a quite strong phenomenological focus on ecosystem

and platform developments, with less of a solid base of theory development. Although we are

aware of some scholars attempting to provide a more grounded analysis (see, for instance,

Karhu, Gustafsson, & Lyytinen, 2018; Thomas & Tee, 2019), much still needs to be done to

understand the various forms with which generativity can take, or a more broad theory of

generativity itself.

28
 With the emphasis of information strategy literature on functions and functionalities, in

particular what a platform or a technological affordance can ‘do’, there has been little

examination of the concept value itself in any substantive form: affordances create potentials

for any kind of new function that is perceived ‘valuable’ by someone. The IS literature that

does consider value creation in ecosystems has tended to follow an instrumental approach (c.f.

Ceccagnoli, Forman, Huang, & Wu, 2012).

Furthermore, a focus on the functions of the digital artefact has led to an over-

attribution of agency to the digital platform itself, with the platform itself sometimes treated as

an agent (see, e.g., Henfridsson & Bygstad, 2013). This leads to an insufficient appreciation of

agency by different stakeholders in the ecosystem and the drivers of value more broadly. As a

consequence, there has also been insufficient appreciation of the motives of different

stakeholders to participate in the ecosystem, although there has been some systematic analysis

of motivations in online communities (Faraj et al., 2011; Faraj, von Krogh, Monteiro, &

Lakhani, 2016). As a consequence, we believe there is an opportunity to apply social exchange

theory to understand community-level dynamics in ecosystems (Cropanzano & Mitchell,

2005).

There is also an over-emphasis on systemic attributes (notably the ill-defined notion of

affordances) which has given rise to insufficient appreciation of governance mechanisms and

how they regulate ecosystem dynamics. Although scholars such as Tiwana (2014) and

Wareham et al. (2014) have begun to illuminate the broad contours of how governance and

technological architecture interact, not much is known about the underlying mechanisms. More

specifically, there is very little research that considers how governance and other (non-

technical) aspects can drive generativity, and hence, value co-creation.

29
 OPPORTUNITIES AND FUTURE RESEARCH

Our review of these three disciplinary perspectives of value co-creation in ecosystems

has revealed distinctive differences in terms of how each define the concepts of ‘value’, ‘co-

creation’, and ‘ecosystem’. Ultimately, these all derive from their intellectual provenance. Our

review has highlighted important gaps and blind spots in each tradition which limit their ability

to comprehensively address the complexity of the ecosystem phenomenon. Finally, our review

also points to interesting complementarities across the three perspectives, the exploration of

which might contribute interesting insight. We now highlight the most important differences,

lacunas, and complementarities and end by exploring promising avenues for further research.

One way to characterize the three disciplinary perspectives is that whereas the strategy

perspective views ecosystems as value co-production systems and the S-DL perspective views

ecosystems as user-driven value realization systems, the IS perspective adds insight by

highlighting how both are enabled by digital platforms and technologies. More specifically, the

strategy perspective adds insight into how to coordinate value co-producing ecosystems; the

S-DL logic informs on the co-creation of value experiences by the user through resource

integration; and the IS perspective informs on how the properties of modular layered digital

architectures and technologies give rise to digital affordances that facilitate both value co-

production and value co-creation.

At the same time, each perspective suffers from blind spots. In particular, the strategy

perspective tends to exhibit insufficient attention to the varied roles users can play in ecosystem

value co-creation, as well as on the content and mutuality of within-dyad exchanges. The

‘blueprint’ approach of the ecosystem-as-structure stream also risks overlooking dynamic

aspects of ecosystem emergence and evolution. The S-DL perspective’s myopic focus on

within-dyad resource integration has given rise to insufficient attention to ecosystem-level and

cross-dyad influences on within-dyad value co-creation, and also, insufficient attention to

30
service ecosystem boundaries. The IS perspective has tended to focus on the functionalities

and affordances supported by digital infrastructures and technologies, at the cost of

overlooking the dynamics of the activity systems that surround digital platforms, as well as the

agency and motivations of ecosystem constituents. We see important cross-fertilization

opportunities that arise through the building of bridges that connect strengths and weaknesses

across disciplinary perspectives.

The key conceptual insights of the strategy perspective include the appreciation of

ecosystem governance (including the notion of ecosystem blueprint) (Adner, 2017; Wareham

et al., 2014), as well as the appreciation of cross-dyad effects in the form of direct and indirect

externality and associated complementarities (Jacobides et al., 2018). These insights offer great

potential to inform both the S-DL and IS perspectives. Drawing on this insight, the S-DL stands

to benefit through a better appreciation of the importance of direct and indirect externality in

regulating the generation of user benefits in individual dyads, thereby helping the S-DL move

beyond the vague notion of ‘institutionalization’ as the key ecosystem-level process regulating

how value is experienced by users. This outcome could be further enhanced by a better

appreciation of the various roles different ecosystem constituents play, as articulated in the

ecosystem blueprint, which should help distinguish among the different kinds of benefits

service provides may help service beneficiaries to achieve within individual dyads, thereby

bringing welcome tangibility to S-DL’s notion of ‘value-in-use’. Overall, the S-DL will likely

stand to benefit from the strategy perspective’s many insights into ecosystem-level governance

mechanisms, thereby rendering the S-DL perspective better able to inform managerial choice.

The strategy perspective’s key insights should also help advance the IS perspective to

ecosystems. A key area of potential synergy can be found in the area of ecosystem governance.

Here, the strengths and blind spots of the two disciplines directly complement one another.

Whereas the strategy perspective has emphasized formal, informal, and asset-based governance

31
forms such as the control of ‘bottleneck’ assets, regulation of ecosystem membership and

dynamic control (Dattée et al., 2018; Teece, 2018; Wareham et al., 2014), the IS perspective

has emphasized the properties of digital platforms such as boundary resources in shaping

ecosystem access and constituent roles (Ghazawneh & Henfridsson, 2013; Tiwana et al., 2010).

Drawing on the strategy perspective will help IS researchers to appreciate governance

challenges in different situations and ground the discussion of platform characteristics on

governance theory. The development of frameworks to better understand digitally enabled

diversification (both vertical and horizontal, both related and unrelated) appears a particularly

promising area. Applying the notion of ecosystem blueprints will support the identification of

different configurations of ecosystem constituent roles and link these to platform properties,

informing how platform owners may proactively drive evolution in ecosystem blueprints

towards desired configurations. Conversely, advances in IS research will help strategy

researchers better appreciate emerging forms of governance and platform competition such as

forking (Karhu et al., 2018). Finally, strategy literature’s fine-grained conceptualization of

different forms of externality and the forms of complementarity that underpin them (Jacobides

et al., 2018) should help inform IS research on architectural choices in digital platforms.

The key insights from the S-DL perspective to ecosystems include the active role of the

user in value co-creation, the conceptualization of value, and the emphasis on mutuality in

dyadic exchanges (Lusch & Nambisan, 2015; Vargo & Lusch, 2006). These insights offer great

potential to inform the strategy perspective. The emphasis of mutuality in service exchanges,

the duality inherent in service provider-beneficiary roles, and the encompassing

conceptualization of value-in-use offer good potential to expand the strategy perspective’s

predominantly ecosystem-as-structure view of ecosystems and help set a more coherent

theoretical underpinning for the ecosystem-as-affiliation view, as identified by Adner (2017).

A more expansive, mutual, and dualistic account of dyadic exchanges should help the strategy

32
perspective to better address the emergence and evolution of and within ecosystems, and also,

begin shedding light on conditions that underpin ecosystem longevity. In addition to analyzing

steady-state ecosystems as structures for value co-production, the adaptation of insights from

the S-DL perspective should help develop a strategy account of ecosystems as complex

interaction systems, composed mostly of principal-principal dyads between hierarchically

independent constituents, that are brought to life by dyadic benefit extraction on the part of

these. A benefit exchange view of ecosystems should help inform not only the sustainability

conditions for dyad- and ecosystem-level exchanges, but also, provide a helpful lens for

exploring processes of resource generation at both dyad and ecosystem levels of analysis. An

important precondition for achieving this outcome seems to be to develop a sufficiently robust

approach to conceptualizing the content of dyadic exchanges, as well as trade-offs between

alternative types of benefits exchanged by service provider-beneficiaries, so as to address the

vagueness that currently characterizes the concept of value-in-use.

The insights from the S-DL perspective should also help inform the IS perspective to

ecosystems. While contributing interesting insight and concepts, both perspectives also carry

concepts that are challenging to pin down conceptually and empirically – notably, the value-

in-use concept of the S-DL and the notion of digital affordances in IS. These two concepts

mirror one another, as digital affordances are about digital platforms enabling functionalities,

whereas value-in-use is about users experiencing benefits through the engagement with such

functionalities. When a given user engages a digital platform, it is the digital affordances that

ultimately enable user’s value experiences. This way, the S-DL perspective should help inform

the IS perspective when exploring the translation of digital affordances to value-in-use, thereby

enabling a more complete exploration and understanding of user motivations and the digitally

enhanced resource integration process. Understanding the user perspective should also help

alleviate the tendency of some IS studies to assign agency to digital platforms themselves,

33
thereby overlooking the important role users play in converting such platforms into hubs of

value co-creation. There appears to be an important research agenda in exploring how digital

affordances enhance, extend, and enrich value co-creation processes within service provider-

beneficiary dyads, and also, how they facilitate spillovers across dyads. A nuanced exploration

of digital affordances and value co-creation dynamics should also help identify different types

of generativity within platform contexts and how these relate to service provider-beneficiary

interactions. Finally, the IS perspective should stand to benefit from a better appreciation of

the mutuality of within-dyad interactions and how this can be enhanced by digital affordances.

In addition, the many insights from the IS perspective should help inform both strategy

and S-DL researchers. Among the most important conceptual insights from the IS perspective

concern the intrinsic characteristics of digital technologies and infrastructures; the notion of

digital affordances; and the generative properties of digital infrastructures (Majchrzak &

Markus, 2013; Tilson et al., 2010; Yoo et al., 2012). The important insights concerning intrinsic

characteristics of things digital concern their reprogrammability (which tends to reduce asset

specificity); the dissociation of flows of materials from flows of related information; and the

layered modular architecture of digital infrastructures. The strategy perspective stands to

benefit from these insights through a better appreciation of the enabling role of digital platforms

in ecosystems, as well as through a better recognition of the importance of digital platforms in

facilitating generative processes and resource generation by ecosystem constituents. The

strategy research should also benefit through a more nuanced understanding of asset specificity

and how this can be substituted for, e.g., contractual and licensing mechanisms in digital

contexts. The properties of digital technologies, notably, reprogrammability and

recombinability, also offer the potential to inform determinants and consequences of vertical

and horizontal diversification, as discussed in the strategy literature. Finally, the burgeoning

area of business model design research should benefit from a systematic consideration of the

34
properties of digital technologies and infrastructures, as well as those of digital affordances,

for business model design and ecosystem momentum building.

IS research also has important potential insight to offer for S-DL perspective on

ecosystems research. The first important opportunity is the exploration of how digital

affordances can enhance, extend, and enrich dyadic interactions and resource integration

processes through the exploration of linkages between functionalities enabled and user value

experienced. A better appreciation of the properties of digital infrastructures would also

support an extension of S-DL’s focus on service ecosystem processes beyond ‘institutionali-

zation’ to cover also cross-dyad effects mediated by digital platforms. The insights of the IS

perspective regarding generativity will help S-DL extend its scope beyond resource integration

and consider how resource generation shapes value co-creation within and across ecosystem

dyads. At a more general level, digitalization constitutes an important driver of both servitiza-

tion as well as the horizontalization of previously vertical supply chain relationships and the

reorganization of these around digital platforms. The very importance of digitalization for

servitization makes it important to explicitly incorporate this angle into S-DL research on

service ecosystems. For its part, horizontalization, together with the flexible recombinability

of digital resources, greatly extends value co-creation opportunities through recombination,

thus boosting ecosystem-level value co-creation potential. The study of types of digitally

enhanced recombination occurring within service ecosystems therefore appears a potentially

fruitful avenue of research. Finally, a more explicit consideration of digital platforms as a

defining element of service ecosystems should support a more definitive identification of

ecosystem boundaries, thereby addressing the vagueness that currently characterizes may S-

DL studies in this regard.

Finally, we suggest two theories could potentially provide the backdrop to provide a

systematic integration of all three perspectives into a coherent theory of ‘ecosystem value co-

35
creation’. One theoretical lens is social exchange theory, a broad conceptual approach that

treats social life as involving a series of sequential transactions between interdependent parties

that generates obligations (Blau, 1986; Cropanzano & Mitchell, 2005). Social exchange theory

is useful here as social exchanges tend to be open ended and involve greater trust and flexibility,

rather than economic exchanges which tend to be quid pro quo and involve less trust and more

active monitoring (Organ, 1990). As social exchange theory consists of three interrelated

components – rules and norms of exchange, resources exchanged, and the relationships that

emerge – this aligns well with extant research in across all three perspectives and offers an

intriguing future research direction.

A second theoretical backdrop is institutional theory, which is beginning to be explicitly

considered in both the strategic management (Autio & Thomas, 2018; Gawer & Phillips, 2013)

and the S-DL (Lusch & Nambisan, 2015; Vargo & Lusch, 2016) perspectives. Institutional

theory posits that social structures, or patterned social arrangements in society, are both shaped

by and impose constraints upon the actions of firms and individuals (DiMaggio & Powell,

1983; Scott, 2008). From the perspective of ecosystem research, a particularly salient such

social structure is constituted by organizational fields, or: “…sets of organizations that, in the

aggregate, constitute a recognized area of institutional life; key suppliers, resource and

product consumers, regulatory agencies, and other organizations that produce similar services

or products” (DiMaggio & Powell, 1983: 148). Institutional theory, and organizational fields

in particular, potentially offers a rich and robust theoretical lens to integrate the three

perspectives of value co-creation.

To conclude, in this review of ‘value’, ‘co-creation’, and ‘ecosystems’ from three

disciplinary perspectives – strategic management, service-dominant logic and information

systems – we have highlighted the core issues that each perspective focuses on, illuminated

key insights and identified blind spots. We hope that this review, our exploration of cross-

36
fertilization opportunities and suggested avenues for further research inspires others to

continue to build upon this important topic.

37
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 TABLE 1 – Comparison of Literature Streams

Strategy Service-Dominant Logic Information Systems

Ecosystem Production system Consumption system Affordance platform
as...
Value as... Instrumental utility Phenomenological experience Function
Co-creation Production of complementary products and User engagement with resources made available Generation of innovative inputs and other
as... services by independent suppliers drives indirect by the resource provider in user-provider dyad resources (e.g., data) by large, uncoordinated
network externality through supermodular audiences, expressed as generativity
complementarities in production and
consumption
Emphasis  Governance and coordination  Emergence and evaluation of value experiences  How digital platforms afford new functions and
on...  Producer-centric value creation through  User-centric value co-creation through resource capabilities
complement leverage integration  Resource generation within collaborative
communities
Key insights  Governance conditions for the creation of  Co-creation of value-in-use through resource  Conceptualization of digital platforms,
different kinds of ecosystems integration digitalization, platform-centric ecosystems
 Typology of ecosystems  Value-in-use as user benefit  Understanding of digital affordances and how
 Management of ecosystems  Ecosystem-level value co-creation as system they can enable change in collaborative
 Ecosystem vs industry and value chain: viability and adaptability communities
boundary conditions  Conceptualization of value co-creation as user  Recognition of the importance of generativity
 Setting up value co-creation potential: experienced process and how digital platforms can give rise to it
governance conditions  Dyad-level dynamics  Recognition of the implications of
 Appreciation and modelling of externality  Value as ecosystem emergent property digitalization for innovation and economic
(direct and indirect)  Consumption (user) system focus organization
 Focus on economic value and cost-benefit-risk  Importance of the institutional environment in  Socio-material aspects of digitalization
tradeoffs shaping value experiences  Conceptualization of the impact of
 Production system focus digitalization on business processes (e.g., the
business model canvas)
 Potential to connect firm-level business models
and ecosystem-level processes
Overlooked  Insufficient attention to within-dyad  Focus on within-dyad resource integration risks  Little explicit examination of value -- emphasis
issues interactions overlooking how cross-dyad interactions being on functions and functionalities (i.e.,
 Insufficient attention to the user (consumption) regulate value-in-use (e.g., through their effect what the platform can 'do')
perspective on resource quality)  Over-attribution of agency to the digital
 Insufficient appreciation of the user as an  Emphasis on 'institutionalization' risks platform itself risks insufficient appreciation of
active agent in value co-creation overlooking other ecosystem processes and agency by different stakeholders and drivers
and motivations thereof

44
 Strategy
 Emphasis on transactional relations in user-
facing dyads risks under-appreciation of
mutuality in dyad exchanges and its consequent
impact on ecosystem viability
 Emphasis on governance through blueprint
risks overlooking informal interactions and role
evolution
 Under-appreciation of generativity and
resource generation through user engagement
and its impact on ecosystem dynamic
 Insufficient attention to how ecosystems come
into being and their evolutionary dynamics
 Emphasis on governance overlooks how social
exchanges can be harnessed for ecosystem
momentum (ecosystem as a self-sustaining
system of social exchanges)
 Insufficient attention to the link between
business models and ecosystem dynamics
 Insufficient application of social exchange
theory
 Narrow conceptualization of value as
instrumental utility for the user inhibits
understanding of ecosystems as interaction
systems
View publication stats
Service-Dominant Logic
mechanisms that impact dyad-level value co-
creation (e.g., indirect externality)
 Insufficient attention to the role and
contributions of service and resource providers
in value co-creation
 The all-encompassing conceptualization of
value-in-use reduces the utility of this concept
in informing managerial choice
 Although there is some recognition of
ecosystem-level value co-creation as a key
determinant of ecosystem viability, little insight
into underlying boundary conditions
 Insufficient elaboration of how specific
institutionalization mechanisms and processes
enable informal governance
(‘institutionalization’ as a black box)
 Insufficient attention to ecosystem-level
governance mechanisms in general
 Insufficient identification of the boundaries of
service ecosystems undermines the viability of
the concept
 Insufficient application of social exchange
theory to understand processes of value co-
creation
 Focus on resource integration ignores resource
generation
45
Information Systems
 Emphasis on systemic attributes (notably the
vaguely defined notion of digital affordances)
risks insufficient appreciation of governance
mechanisms and how they regulate ecosystem
dynamics
 Insufficient exploration of how governance and
other non-technical aspects can shape
generativity
 Loose definition of generativity with little
coherent examination of its drivers and forms
 Insufficient application of social exchange
theory to understand community-level
dynamics in ecosystems
 Little appreciation of the motives of different
stakeholders to participate in the ecosystem
 Phenomenological focus on ecosystem and
platform developments may distract from
theory development