Rahul Kapoor

Carliss Baldwin, Marcel Bogers, Rahul Kapoor, Joel West (2024), Focusing the ecosystem lens on innovation studies, Research Policy, 53 (3), pp. 104-949.

Abstract: For nearly a century, the key role of innovation in economic growth has been acknowledged and studied. Today, innovations are increasingly understood as being embedded in ecosystems of autonomous actors, whether firms, other organizations, or individuals. These actors contribute in complementary ways to create a value proposition that is greater than the sum of the parts, with the integration of their products and processes made possible by modular interfaces between actors. Here we review the emergence of the ecosystem lens within innovation studies in the context of the Special Issue on Innovation Ecosystems and Ecosystem Innovation. After summarizing the history of the special issue, we review the nine articles in the special issue and show how they relate to defining the actors, joint value creation by the actors, coordinating the actors, value capture by the actors, and then the large issue of analyzing ecosystems as the unit of analysis. From this, we offer suggestions for future ecosystem research, including opportunities to combine the ecosystem lens with other lenses used in innovation studies, and new methods for studying ecosystem phenomena.

Rahul Kapoor and Johann Peter Murmann (2024), The Organizational and Technological Origins of the US Shale Gas Revolution, 1947 to 2012, Industrial and Corporate Change, 33 (1), pp. 106-125.

Abstract: We explore the origins and the development of hydraulic fracking technology that made possible United States’ unexpected rise as a top producer of oil and gas. As hydraulic fracking was first used extensively to produce shale gas and only later to produce shale oil, we focus on analyzing what is often referred to as the “shale gas revolution.” We trace how the shale gas ecosystem evolved, what role different actors played in the unexpected shale gas revolution, and how the strategies and knowledge bases of the different actors differed and evolved over time.

Rahul Kapoor and Daniel Wilde (2023), Peering Into a Crystal Ball: Forecasting Behavior and Industry Foresight, Strategic Management Journal.

Abstract: What makes some managers and entrepreneurs better at forecasting the industry context than others? We argue that, regardless of experience or expertise, a learning-based forecasting behavior in which individuals attend to and incorporate new relevant information from the environment into an updated belief that aligns with the Bayesian belief updating process is likely to generate superior industry foresight. However, the effectiveness of such a cognitively demanding process diminishes under high levels of uncertainty. We find support for these arguments using an experimental design of forecasting tournaments in the managerially relevant context of the global automotive industry from 2016-2019. The study provides a novel account of individual-level forecasting behavior and its effectiveness in an evolving industry, and suggests important implications for managers and entrepreneurs.

Shiva Agarwal and Rahul Kapoor (2023), Value Creation Trade-off in Business Ecosystems: Leveraging Complementarities while Managing Interdependencies, Organization Science, 34 (3), pp. 1216-1242.

Abstract: We explore the role of ecosystem-level complementary technologies in explaining an innovation’s commercialization success. On the one hand, connections with complementary technologies help innovations create more value for their users. On the other hand, it can also limit the focal innovation’s value creation by exposing them to performance bottlenecks and adjustment costs. We further draw on the notion of specialization of complementary assets to ecosystems by considering complementary technologies that are specialized to a focal ecosystem and those that are available across multiple ecosystems. We highlight that while those complementary technologies that are specialized to an ecosystem facilitate greater value creation, they are more likely to subject the focal innovation to performance bottlenecks. Evidence from 244,034 apps launched by software developers for Apple’s iPhone ecosystem during 2008-2015 offers strong support for our framework.

John Eklund and Rahul Kapoor (2021), Mind the Gaps: How Organization Design Shapes the Sourcing of Inventions, Organization Science.

Abstract: An important problem for many firms is sustaining their rate of innovation by launching new products on an ongoing basis. Accordingly, firms need to replenish their innovation pipelines with new inventions as existing inventions are weeded out or reach fruition. The replenishment can be done through internally generated inventions or through externally sourced inventions via licensing, alliance, or acquisition modes. Drawing on incentives- and knowledge-based views of the firm, we consider the difference in managerial decision making between centralized and decentralized research and development (R&D) organization designs and how it impacts firms’ propensities to draw on externally sourced inventions. As compared with centralized designs, decentralized designs are associated with greater incentives for managers to replenish their firms’ pipelines but are limited in terms of intraorganizational knowledge flows that can facilitate the creation of inventions. We explore these mechanisms using a novel data set of firms’ sourcing decisions within the pharmaceutical industry between 1996 and 2015. We find that firms with decentralized R&D designs replenish their pipelines with a higher proportion of externally sourced inventions than do firms with centralized designs. This difference is found to be mainly attributed to external sourcing via licensing and for inventions of moderate novelty. This study offers an important contribution to the question of how firms organize for innovation, highlighting the relationship between internal R&D organization design and the external sourcing of inventions. In so doing, it illustrates that the choice of organization design in terms of centralization or decentralization can shape a firm’s locus of innovation.

Rahul Kapoor and Thomas Klueter (2021), Unbundling and Managing Uncertainty Surrounding Emerging Technologies, Strategy Science, 6 (1), pp. 62-74.

Abstract: Emerging technologies, while offering enormous potential for economic growth, carry a high degree of uncertainty regarding whether and when that potential may be realized. How can firms evaluate the uncertainty surrounding an emerging technology? To address this question, we offer a structured approach that unbundles the uncertainty surrounding emerging technologies, incorporating both supply- and demand-side factors. These include the focal technology itself, the potential market applications, the users adopting the technology, the ecosystem of activities that support the technology’s value creation, and the business model with which the technology is being commercialized. We further consider that the uncertainty surrounding each of these sources may not be resolved in a vacuum, but, rather, that it may interact with other sources of uncertainty in a pooled, sequential, or reciprocal way. Such a structured approach of evaluating uncertainty can help firms and managers in terms of the cognitive processes and the managerial practices and provide microfoundations for dynamic managerial capabilities. We illustrate the applicability of the framework for two emerging technologies—gene therapy and autonomous vehicles—and how the framework can be integrated with prominent managerial practices for managing uncertainty.

Natalya Vinokurova and Rahul Kapoor (2020), Converting Inventions into Innovations in Large Firms: How Inventors at Xerox Navigated the Innovation Process to Commercialize Their Ideas, Strategic Management Journal, 41 (13), pp. 2372-2399.

Abstract: How can inventors in large firms navigate their organizations’ innovation processes to commercialize breakthrough inventions? Using historical case studies of three breakthrough inventions at Xerox—office workstations, personal computers, and laser printers, we illustrate how inventors navigated multiple evaluation criteria across different organizational units to attract resources towards inventions. These criteria stemmed from Xerox's first successful breakthrough invention, the 914 copier and the specific objectives of the organizational units. We highlight two approaches deployed by Xerox inventors—searching across the organization for more favorable evaluation criteria and shaping the evaluation criteria to help attract resources. While searching leveraged the heterogeneity of evaluation criteria across the different organizational units, shaping required the presence of evaluative uncertainty with respect to the appropriate criteria for evaluating breakthrough inventions.

Martin Ganco, Rahul Kapoor, Gwendolyn K. Lee (2020), From Rugged Landscapes to Rugged Ecosystems: Structure of Interdependencies and Firms’ Innovative Search, Academy of Management Review.

Abstract: Managers and academics are increasingly viewing innovating firms as being interdependent on other firms in the business ecosystem. But how might the structure of interdependencies shape the innovativeness of firms in an ecosystem? To answer this question, we develop a search-based theory that considers a multiplicity of upstream and downstream firms simultaneously innovating in an ecosystem, contributing to and searching for novel combinations of components. We conceptualize two types of structural interdependencies between firms in an ecosystem based on the structure of technological interactions between components and the structure of input–output flows between stages of production. Using a simulation model, we show that downstream firms can benefit from mixing and matching components produced upstream, whereas upstream firms can benefit from optimizing their search more narrowly around their focal components. Importantly, these benefits that accrue to upstream and downstream firms are significantly impacted by the structure of technological and flow interdependencies in the ecosystem.

Rahul Kapoor and Thomas Klueter (2020), Progress and Setbacks: The Two Faces of Technology Emergence, Research Policy, 49 (1).

Abstract: Emerging technologies are an important driver of economic growth. However, the process of their emergence may not only be characterized by technological progress but also by setbacks. We offer a perspective on technology emergence that explicitly incorporates setbacks into the technology's evolution and explains how industry participants may react to setbacks in emerging technologies. We consider that the locus of innovation in an emerging technology encompasses different types of organizations (industry incumbents, entrants and public research organizations (PROs)) who operate in different institutional environments, and explore how these organizations react to setbacks in terms of their R&D efforts. We study two emerging biotechnologies in the global pharmaceutical industry - gene therapy (GT) and monoclonal antibodies (mAbs). The emergence of both technologies during the 1990s was punctuated by periods of setbacks. We observe a gradual increase in industry participants' R&D efforts during periods of progress and a significant decline in those efforts immediately following setbacks. The decline in R&D efforts was more pronounced for firms than for PROs as well as for those firms that were listed on the stock market in contrast to those that were privately financed. Finally, the decline in R&D efforts towards GT was much more pronounced for those organizations located in countries with high capital fluidity. These findings reinforce that organizational and institutional characteristics that are typically attributed to facilitate R&D efforts towards emerging technologies do induce greater levels of those efforts during periods of progress. However, the same characteristics are also associated with a significant decline in R&D efforts immediately following periods of setbacks. Overall, the study illustrates how setbacks reconfigure the locus of innovation in emerging technologies and offers a richer perspective on technology emergence as one that is rooted in both progress and setbacks. In so doing, it highlights the challenges of sustaining technological progress and offers guidance for policy.

John Eklund and Rahul Kapoor (2019), Pursuing the New while Sustaining the Current: Incumbent Strategies and Firm Value during the Nascent Period of Industry Change, Organization Science, 30 (2), pp. 383-404.

Abstract: This study considers the nascent period of industry change when the prevalent business model is being threatened by a new model, but there is significant uncertainty with respect to whether and when the new model will dominate. We focus on the challenge of incumbents pursuing both models simultaneously during the nascent period, and the implications on their firms’ valuations. Our theory is premised on the adjustment costs incurred by incumbents associated with the sharing of resources across business models and the conflict between managers vying for limited resources. While firms’ assets and competitive environments are key drivers of their value, we argue that they also impact adjustment costs. Evidence from the U.S. electric utility industry, which is undergoing a change from a centralized to a decentralized model, offers strong support for our arguments. The greater the level of incumbents’ assets that are specific to the existing model, and the greater the level of competition that they face, the lower are their firms’ valuations when investing in the new model relative to when investing in the existing model. Hence, ironically, those incumbents potentially most threatened by the change seem to be least rewarded for their efforts to renew themselves. However, pursuing the new model via alliances can help mitigate adjustment costs. The study uncovers the challenges that incumbents face as they pursue the new model in tandem with the existing dominant model, and helps explain why some incumbents may successfully navigate the changing industry landscape while others may stumble.