Managed Ecosystems, and Translucent Institutional Logics: Engaging Communities
Elizabeth J. Altman, Frank Nagle, Michael L. Tushman · Academy of Management Proceedings · 2019
When organizations need input into their innovation or production process, they have traditionally been faced with the decision to make the input themselves or buy it through the market. However, rapidly decreasing information costs allow firms to harness external communities that are neither employees of the firm hierarchy, nor traditional contracted market participants such as supply chain partners. We introduce the managed ecosystem governance form in which a central organization engages external communities and also manages them by maintaining some degree of control over community activities. This model is evident in various organizational approaches including multi-sided platforms, crowdsourcing, and the gig economy. Building upon the knowledge-based view of the firm, we argue that these increasingly common governance models offer a wealth of opportunities, but require organizations to adopt a translucent institutional logic that is in-between the traditional closed logic of the firm and open logic of the market. To successfully employ this model, firms must learn to shepherd communities, leverage them without exploiting them, and share intellectual property rights.