The institutional dynamics of markets and innovations2018-06-18
With the emergence of firms such as Spotify, Uber and Airbnb, the markets related to music, travel and accommodation have lately been under dramatic changes. In a new doctoral thesis Kaisa Koskela-Huotari has been studying how such market transformations occur through institutional dynamics between markets and innovations.
Kaisa Koskela-Huotari, PhD in Business Administration at CTF, Service Research Center at Karlstad University, has been studying the evolution of markets through a service ecosystem perspective. The doctoral thesis aims to explain of how innovations come to be and how markets transform to different degrees as they interact with new innovations.
“As an example of market transformation, think of how the way we listen to music has changed over the past 10 years since the emergence of Spotify and other music streaming services. We have gone from owning collections of CDs to streaming music 24/7 from around the world. Instead of listening to the whole album of our favorite band, we tune into our favorite playlists of songs without always even knowing who the artists are. These are some of the changes most visible to consumers. Simultaneously, there has been other, even more dramatic changes, for the other actors involved in the music business. It is these kind of changes in the ways we cocreate value within markets, that I seek to explain in my doctoral thesis”, says Kaisa Koskela-Huotari.
Understanding market evolution from a service ecosystems perspective
Kaisa Koskela-Huotari uses the service ecosystems perspective to understand how markets evolve and how innovations and markets are connected to one another in this process. The service ecosystems perspective takes a systemic view on value creation. This means that value is not seen as something produced by firms and delivered to customers, but as an outcome of joint efforts of multiple actors (e.g., firms, their employees and consumers) all actively integrating their knowledge, skills and other resources in order to pursue their goals. The service ecosystems perspective also highlights the importance of institutions—shared rules, norms and meanings—in enabling and constraining value cocreation. Overtime, these ‘rules’ institutionalize, meaning that they become routinized, taken-for-granted and more difficult to change as their origin as agreements between people is forgotten.
Kaisa Koskela-Huotari argues in her doctoral thesis that, by using the service ecosystems perspective, markets can be seen as institutionalized value cocreation structures. In other words, markets are enduring social structures that guide the way we organize different aspects of our lives. Consider, for example, the different ways of solving personal transportation. Regardless of whether you choose to use a car, a bus or a bike, you are reproducing a value cocreation structure that includes market-facing exchanges. Innovations, on the other hand, represent novel ways of cocreating value. These reconceptualizations enable to see markets and innovation, not as disconnected phenomena, but as parts of the same story of how value cocreation structures evolve.
“One of the main points of my doctoral thesis is that innovations always emerge in the context of pre-existing markets. Market as pre-existing solutions and ways of cocreating value, shape the way we think about possible innovations by limiting what we see conceivable. We need institutional complexity—conflicting ways of doing and thinking about things—to be able to come up with new ideas of how things can be done and to innovate”, says Kaisa Koskela-Huotari. These new innovations then might become institutionalized and replace the existing markets.
Everyone can be a market disruptor
Kaisa Koskela-Huotari hopes that her doctoral thesis paves way for the academic discussions around innovations and markets to be reconnected. On a more practical note, she hopes that the thesis would help to recognize that firms are not the only actors that shape markets, but that everyone has the opportunity to influence and change these value cocreation structures.
“We are all reproducing various different markets on a daily basis. If we want to see, for example, more environmentally friendly materials and ways of doing things, we need to actively change our own behavior and require the same from others as well. Anyone can become a market disruptor by changing the way they do things.”
Kaisa Koskela-Huotari defended her doctoral thesis ”The Evolution of markets – A service ecosystems perspective” on March 16th at Karlstad University.