By Inge Oskam, Bart Bossink & Ard-Pieter de Man
Cross-sector collaboration in innovation ecosystems, a collective of heterogeneous interconnected actors who jointly create value from innovative activities, is growing rapidly in an effort to find sustainable solutions for mission-oriented challenges (e.g., energy transition, transition towards a circular economy). New coalitions of private companies, public organisations and social enterprises aim to contribute to the energy transition and a circular economy. Through collaboration, the cross-sector actors try to find a joint sustainable business model that integrates environmental and social value with economic viability. Most initiatives are characterized by a wide variety of involved parties, all with their own ideas and interests. This naturally creates tensions when collaboratively creating and capturing value (Lepak et al., 2007). For example, one partner focuses on environmental sustainability, while another is primarily interested in creating social value. Or, one partner is happy when the initiative delivers sustainable value in the long term, while for the other it is most important to earn some money in the short term.
Our paper ‘Valuing value in innovation ecosystems‘ explores how collaborating actors overcome the tensions that emerge from their divergent goals and interests and arrive at joint sustainable value creation. For this purpose, we carried out a longitudinal study into four smart city initiatives that aim to develop and implement circular economic innovations. For each initiative, a case narrative and graphical timeline was created based on interviews and numerous archival data sources. By analysing actions and mechanisms that influenced the resolution of tensions, we found that the actors engage in a ‘valuing value process’ in which consciously creating value for all actors is a condition for the survival of the innovation ecosystem. Depending on this process, the cooperating actors follow one of two patterns.
The first pattern is ‘collective orchestration’. In this pattern, the partnering actors have a clear common goal with integrated sustainability objectives. The joint value proposition and partners in the innovation ecosystem remain relatively stable. The tension in this pattern is in balancing joint and individual value. Tracking and exchanging everyone’s contributions and returns in relation to the joint sustainable business model proves to be important here.
The second pattern is ‘continuous search’. This pattern occurs when the partnering actors do not yet have a clear common goal and are primarily driven by ecological and/or social value creation. The tension in this pattern is in seeking a balance between sustainability goals. It involves greater changes in membership of the ecosystem as actors leave and new ones join. The value proposition is designed and redesigned together with changing partners over time. This pattern is more open to new opportunities and may lead to the creation of new and unexpected value.
Our paper delves into these two patterns of the valuing value process and the conditions that give rise to them. The two patterns open up a research agenda that can shed further light on the conditions that need to be in place in order for cross-sector partnerships to develop effective sustainable business models. We advise practitioners to study the starting conditions of their ecosystem and discuss with their partners which pattern they expect to follow. We recommend partnering actors to openly discuss the tensions and possible ways of dealing with them in order to ensure alignment of goals.
These insights are particularly relevant for policy makers now that European subsidy schemes are focussing on mission-oriented innovation by large cross-sector partnerships. Whereas the current way of granting funds is focussed on innovation by fixed consortia, our paper shows the need to create room for unexpected value creation and new partners. Creating this kind of flexibility in grant schemes can increase the sustainable value and impact that these funds aim to achieve.
References
Lepak, D. P., Smith, K. G., & Taylor, M. S. 2007. Value creation and value capture: A multilevel perspective. Academy of management review, 32(1): 180-194.
Janssen, M. J., Torrens, J., Wesseling, J. H., & Wanzenböck, I. 2020. The promises and premises of mission-oriented innovation policy—A reflection and ways forward. Science and Public Policy.
Oskam, I., Bossink, B., & de Man, A. P. 2021. Valuing value in innovation ecosystems: How cross-sector actors overcome tensions in collaborative sustainable business model development. Business & Society, 60(5): 1059-1091.