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  • Publication
    How Incumbent Firms Strategically Transform from Product-Focus to Ecosystem Leadership
    (Universität St. Gallen, 2019)
    The emergence of ecosystems in a sector represents a significant and potentially disruptive challenge for product-focused incumbent firms. The existing literature explains the emergence of new ecosystems mainly as a disruptive process of technological change that challenges the original, product-focused activities. Therefore, we know relatively little about how incumbents prevail when ecosystems profoundly transform entire sectors, but do not replace the product business. I use an in-depth, longitudinal case study of a machine manufacturer to explore how incumbents cope with emerging ecosystem-based competition. I find that the focal incumbent created an ecosystem in a process of continuous change following a logic of continuity, thereby transforming and complementing the original product-focused business. I also show how the focal firm changed over multiple strategic cycles, engaging in in-house solutions and customized orchestration before successfully shifting to an ecosystem logic. My main theoretical contribution is a process model of accumulated learning that highlights historical embeddedness and continuous organizational learning as important, yet under-recognized drivers in ecosystem creation.