From conceptual to commercial: how novel innovations gain market traction
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Abstract
Scholars often focus on the beginning or ending stages of new venture development
without attending to the “middle stage of entrepreneurship, where innovations are developed, but lack market traction. While scholars recognize that innovations travel tenuous pathways that initiate at idea conception and culminate in commercialization, less research investigates the role entrepreneurs play in fostering the adoption of their own innovations within incumbent organizations. How do novel technologies and innovations gain organizational adoption and grow in market relevancy? To examine this overarching question, I conducted a 24-month field study of 54 entrepreneurial firms matriculating through a digital health accelerator, and the customer organizations (health systems, pharmaceutical companies and insurers), investors, government officials (local and state) engaging with the entrepreneurial firms to further their innovations. Each chapter of my dissertation draws upon this data to explore derivatives of this overarching question at different levels of analysis: (1) entrepreneurial firm; (2) the evolution of each firm’s underlying innovation; and (3) dyadic - between an entrepreneurial firm and an adopting organization.In the first paper of my dissertation, I focus on how entrepreneurial firms engage in market search: information gathering activities that probe whether an innovation can meet market needs, to gain traction for their innovations. By tracing each firms’ search and learning practices, I identified three market search processes. Transactional searchers engaged in selective search, reluctantly revising their innovations in response to limited feedback. Confirmatory searchers engaged in broad search but selective learning, resisting adaptation of their innovations. Diagnostic searchers engaged in broad search and learned from ambiguous feedback to adapt their innovations, discovering new sources of value and revenue. By attending to all three search processes, I contribute a grounded theoretical explanation of how entrepreneurial firms vary in the ways they make progress toward market traction. In doing so, I reveal the hidden costs of market search and show how only some entrepreneurs surmount those costs.In the second paper, I examine how entrepreneurial firms repurpose their existing innovations to develop new use-cases and expand their market scope. Scholars frequently suggest that to grow, entrepreneurial firms must stay the course and scale existing capabilities, or pivot in entirely new directions. Yet these prescriptions neglect the recombinant process by which firms decompose and repurpose their existing innovations without straying from their strategic course. With detailed analysis of 58 use-cases from 54 entrepreneurial firms innovating in digital health, I show how entrepreneurial firms varied in their pursuit of organizational adoption. I show that when entrepreneurs pursued a customer centric process, they developed disruptive ways to repurpose their innovations, but strategically paced the introduction of these extensions to seed adoption. Firms that leveraged a market centric process, also developed novel ways to repurpose their innovations, but immediately deployed all aspects of their innovations in attempt to beat the
competition. Only a customer centric process aided entrepreneurs in gaining organizational adoption for their innovations. By unpacking the recombinant process by which entrepreneurial firms create new uses for existing innovations, I contribute a critical mechanism that helps explain how entrepreneurial firms gain adoption for their innovations as they grow.
The third paper explores how novel innovations are adopted when they threaten to displace adopting organizations’ work practices. With a novel data set of 13 dyadic pairs formed between six entrepreneurial firms and three prospective customer organizations, I analyze how entrepreneurs revised and repositioned their innovations to address each organization’s concerns. All six entrepreneurial firms had developed innovations that utilized machine learning to perform medical diagnostics work. By exploring the process of adoption between pairs of entrepreneurs and adopters, I induct the contingencies that trigger different strategies within the same firm. I show how outside innovators can play different roles in determining how digital innovations displace work and power relations.
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Attribution 4.0 International