Valuing Value in Innovation Ecosystems: How Cross-Sector Actors Overcome Tensions in Collaborative Sustainable Business Model Development

This article aims to uncover the processes of developing sustainable business models in innovation ecosystems. Innovation ecosystems with sustainability goals often consist of cross-sector partners and need to manage three tensions: the tension of value creation versus value capture, the tension of mutual value versus individual value, and the tension of gaining value versus losing value. The fact that these tensions affect all actors differently makes the process of developing a sustainable business model challenging. Based on a study of four sustainably innovative cross-sector collaborations, we propose that innovation ecosystems that develop a sustainable business model engage in a process of valuing value in which they search for a result that satisfies all actors. We find two different patterns of valuing value: collective orchestration and continuous search. We describe these patterns and the conditions that give rise to them. The identification of the two patterns opens up a research agenda that can shed further light on the conditions that need to be in place in order for an innovation ecosystem to develop effective sustainable business models. For practice, our findings show how cross-sector actors in innovation ecosystems may collaborate when developing a business model around emerging sustainability-oriented innovations.

Sustainability-oriented innovations are increasingly created by collaborating cross-sector actors, such as businesses, public organizations, non-profits, knowledge institutes and users (Bryson, Crosby & Stone, 2006). Following Adner (2017) and Walrave, Talmar, Podoynitsyna, Romme and Verbong (2017), we refer to this as an “innovation ecosystem”. An innovation ecosystem consists of multiple actors that aim to create and capture value from collaborative innovation activities around a joint value proposition (Jacobides, Cennamo & Gawer, 2018; Ritala, Agouridas, Assimakopoulos & Gies, 2013). Field examples of these innovation ecosystems are found in settings such as smart city projects that use sustainable technology to contribute to solving societal challenges. In such innovation ecosystems, municipalities, non-profits, businesses, and citizens may collaborate to transform a city’s waste management system or to develop a smart energy grid for households. An important element of these sustainability-oriented innovation ecosystems is the development of a sustainable business model that integrates environmental and social value with economic viability (Evans et al., 2017; Schaltegger, Hansen & Lüdeke-Freund, 2016; Stubbs & Cocklin, 2008). For example, an initiative related to local upcycling of residual materials may result in a sustainable business model that combines reusing waste (environmental value) with increased local employment (social value) and new entrepreneurship (economic value). As this field grows, so does the need for insights into how these innovation ecosystems function. A particular challenge for actors in these innovation ecosystems is to manage the tensions that occur during the process of developing a joint business model. Relatively little is known about how innovation ecosystems collaboratively develop viable sustainable business models (Jacobides et al., 2018).