A comprehensive framework to research digital innovation: The joint use of the systems of innovation and critical realism
Introduction
Business strategy increasingly depends on the pervasive and instrumental role of digital innovations to create competitive advantages for firms and whole industrial sectors (e.g. Bharadwaj et al., 2013, Nylen and Holmstrom, 2015). Examples include trans-firm collaboration and business processes in platforms (e.g. Howard et al., 2006), the development of new products and services in ecosystems (e.g. Suseno et al., 2018), and efficiency and costs reduction in shared infrastructures (e.g. Messerschmidt and Hinz, 2013). As these innovative efforts require diverse organizations to agree, coordinate and jointly work to accomplish interdependent objectives (e.g. Nambisan et al., 2017, Tilson et al., 2010, Yoo et al., 2012), leading actors, such as multinational corporations, business associations and software manufacturers, must develop the strategic capability of agency to influence the redefinition of technological architectures and industries in order to create and capture value in external environments characterized by complexity, uncertainty and competing priorities (ibid).
This approach differs from the alignment of the internal information system (IS) function to business strategy (e.g. Avison et al., 2004, Chan et al., 1997) because it considers the evolving character of digital innovation and the distributed role of different actors to affect the external resources that organize, deliver and diffuse technologies in society such as institutions, common practices and standards (e.g. Bharadwaj et al., 2013, Yoo et al., 2010). As a result, Bharadwaj et al. (2013, p. 473) ask ‘how can we draw the boundaries of digital business strategy and how can we best characterize its scope?’ and identify this quest as one of the essential guides for the future thinking on digital business strategy and framework of the next generation of insights. To address this innovation-based perspective, we adopt a systemic and holistic view of digital business strategy to represent and study the form and dynamics of the external sociotechnical environment that matters for organizations (c.f. Merali et al., 2012, El Sawy et al., 2010, Tanriverdi et al., 2010).
Although heading in the right direction, research on digital innovation is still far from comprehensively addressing its strategic dimensions. There have been important calls to consider more flexible boundaries beyond the focal innovator (e.g. Henfridsson and Bygstad, 2013, Winter et al., 2014), the systemic nature of innovation at societal levels (e.g. Loebbecke and Picot, 2015, Winter et al., 2014), the evolution of innovation structures (e.g. De Reuver et al., 2018, Tilson et al., 2010) and the agential role of leading actors (e.g. Nambisan et al., 2017, Winter et al., 2014). This research contributes by proposing a framework composed of SIs (e.g. Cooke et al., 1997, Freeman, 1987, Nelson, 1993) as a conceptual base and alternative unit of analysis, which posits innovation processes in society as intricate and multilevel systems of actors, activities and institutions. We also propose CR (e.g. Collier, 1994, Danermark et al., 2002, Sayer, 2000) as the philosophical stance and provider of research approaches to study the structure and evolution of SIs.
The paper is structured as follows. First, we expound the opportunities for the study of digital innovation. We continue by explaining SIs and how to formulate SI-based units of analysis in the ambit of digital innovation, as well as pointing out some related deficiencies in SI research practice. We then move on to CR and demonstrate the compatibility between SIs and the ontology of CR. After that, we explain and exemplify the study of information systems innovation diffusion based on SIs and critical realist approaches. Finally, we formulate a set of relevant research questions to guide the study of digital innovation through SIs and CR.
Section snippets
The need to expand digital innovation research
We use the comprehensive conceptualization of digital innovation given by Nambisan et al. (2017, p. 224): ‘the creation of (and consequent change in) market offerings, business processes, or models that result from the use of digital technologies … [In which] the outcomes themselves do not need to be digital … It includes a broad swath of digital tools and infrastructure … for making innovation possible … And the possibility that the outcomes may be diffused, assimilated, or adapted to specific
Systems of innovation
SIs is a conceptual base to understand and explain innovation processes in society (c.f. Cooke et al., 1997, Freeman, 1987, Nelson, 1993). It was developed under the foundation of general systems theory, evolutionary economics and institutional economics (e.g. Edquist, 2005, Soete et al., 2010). According to SIs, innovation is about producing, diffusing and using new knowledge or novel combinations of new or existing knowledge (ibid). As we will explain, SIs considers the real complexity of
The SI as an alternative unit of analysis in digital innovation research
The SI framework clearly addresses the opportunities in digital innovation research because it conceptualizes innovation based on systemic boundaries at multiple levels in society, and explains agency and how actors influence technological change. It penetrates the details of those aspects by explaining the components of systems in terms of activities, actors, institutions and relations, and expounding on how actors are influenced by the paths of technological trajectories and the potential for
Critical realism
CR (c.f. Collier, 1994, Danermark et al., 2002, Sayer, 2000) is a metatheory, originally developed from a general philosophy of science called transcendental realism (Bhaskar, 1997) and a more specific human science philosophy called critical naturalism (Bhaskar, 1998), by adding an interpretive thread to a deep ontological stance primarily conceptualized from the natural sciences (Sayer, 2000). Basically, critical realists contend that there is a concrete and mind-independent reality that has
CR as an ontological base of SIs
There is a clear compatibility between the SI framework and CR ontology. Ontology matters because it guides studies in terms of epistemology and research approaches (e.g. Archer, 1995, Fleetwood, 2005, Reed, 2009). To begin, both frameworks depict reality as macrostructures that are constituted of a multiplicity of components, relations, multilevel emergence of powers and the subjectivity of people to give life to the social realm. There are also parallels in terms of temporal stability and
Joint application of SIs and CR in digital innovation research
This section explains how to study comprehensive SI-based units of analysis by using CR approaches. Two of the most often employed explanatory frameworks in CR research are Danermark et al.’s (2002) staged model for studying the composition of social structures and Archer’s (1995) morphogenetic approach to researching agency and structural change processes (e.g. Dobson, 2012, Dobson et al., 2013, Raduescu and Vessey, 2008). Given the novelty of the joint use of SI and CR, we develop a thought
Conclusions
The scope of digital business strategy has been substantially extended due to its dependence on the increasingly complex external environment that affects digital innovation. This study proposes a comprehensive framework to address the calls to research digital innovation in a systemic way to encompass the multilevel causes at societal levels that affect IS in organizations, as well as explain agency and how it influences the structural evolution of systems and technological change. Addressing
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