Industrial Marketing Management 38 (2009) 450–458

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Industrial Marketing Management

How to influence the birth of new business fields — Network perspective☆

Kristian Möller a,⁎, Senja Svahn b,1

a Department of Marketing and Management, Helsinki School of Economics (HSE), P.O. Box 1210, FI-00101 Helsinki, Finlandb Faculty of Business and Technology Management, Tampere University of Technology, P.O. Box 541, FI-33101 Tampere, Finland

a r t i c l e i n f o

☆ This study is a part of the Liike 2 Programme of the Athe LIITO Tekes Programme.⁎ Corresponding author. Tel.: +358 50 3836190.

E-mail addresses: kristian.moller@hse.fi (K. Möller),1 Tel.: +358 3 311 511.

0019-8501/$ – see front matter © 2008 Elsevier Inc. Aldoi:10.1016/j.indmarman.2008.02.009

a b s t r a c t

Article history:Received 20 March 2006Received in revised form 12 December 2007Accepted 18 February 2008Available online 28 April 2008

This article explores the management challenges of emerging new business fields by using a networkperspective. We are interested in the extent to which individual firms, by mobilizing cooperative networks ofactors, can influence the emergence of radically new business fields. A framework describing the environmentand the phases of emergence is proposed. Then the activities within each phase are discussed. Finally, weidentify and examine the company-level capabilities involved in the management of these core activities. Thestudy contributes to the management of new business fields.

© 2008 Elsevier Inc. All rights reserved.

Keywords:Business networksDynamic capabilitiesNetwork managementBusiness field emergenceStrategy

1. Introduction

This conceptual article examines the managerial challenges facedby companies involved in the emergence of new business fields duringperiods of radical technological change. This landscape is one inwhichnew technological paradigms such as the Internet, nanotechnology,mobile telephony andmultimedia services are being created as a resultof activity by networked actors. Eisenhardt andMartin (2000) describethis emerging business scene as “high-velocitymarkets,” characterizedby nonlinear and unpredictable change, with blurred market bound-aries and ambiguous and shifting market players, with no evidently-successful business models. We prefer the business field concept asthere is not yet any clear market structure and the field approach, byadopting amore sociological perspective, emphasizes the presence of abroader set of actors than the market concept (Granovetter, 1985;Martin, 2003). The field concept is anchored in institutional theory andrefers, according to DiMaggio and Powell (1991, 64–65), to “thoseorganizations that in the aggregate, constitute a recognized area ofinstitutional life: key suppliers, resource and product consumers,regulatory agencies, and other organizations…” Field approach alsoemphasis the interorganizational links between actors and theircognitions of the emerging business field (Lawrence & Phillips, 2004;Greenwood, Suddaby, & Hinings, 2002). This ties it more directly to thenetwork perspective as compared to the market construct.

cademy of Finland and a part of

senja.svahn@tut.fi (S. Svahn).

l rights reserved.

Above mentioned characteristics, nonlinear and unpredictablechange, multiple players with blurred and shifting roles, pose seriousproblems for managers operating in the creation and commercializa-tion of breakthrough innovations which often result in new businessfields. The early emergence of new business fields is not transparent;there is no clear market structure with identifiable actors. On thecontrary, the emergence of such science- and technology-based fieldsas biotechnology and mobile internet services, involves many types offirms and non-business actors such as government agencies, supra-national bodies, university research centers, industry associations andregulatory agencies (Geels, 2002; Lundvall, 1992; Nelson, 1993). Thelevel of technological complexity and the diversity of resources andcapabilities required to develop the necessary infrastructure meanthat it is almost impossible for any single firm to create a new tech-nology or business (Lundgren, 1995; Murtha, Lenway, & Hart, 2001;Teece, 1986). Driven by the technological breakthroughs and globalcompetition, understanding how this kind of landscape emerges isbecoming highly relevant for corporate renewal and new businessdevelopment (Doz, Santos, & Williamson, 2001).

How should companies that are aspiring to create new businessesbehave?What kind of capabilities should they have? Although there isa growing body of research on the general characteristics of theemerging business fields using either the industry evolution perspec-tive (Murtha et al., 2001) or the network perspective (Håkansson &Waluszewski, 2002; Hinterhuber, 2002; Möller, Rajala, & Svahn,2005), there is surprisingly little research-based knowledge on themanagement of radical new business creation. The majority ofbusiness network research has focused on existing networks,especially on supply and production networks (Choi & Hong, 2002;Gadde & Håkansson, 2001).

Fig. 1. Systemic Innovation Space (K. Möller).

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In brief, we lack conceptual frameworks that link the character-istics of emerging business fields with their underlying managementactivities and capabilities. This kind of broad-spectrum framing hasbeen argued to be highly relevant for managers in their search for anunderstanding of new business fields (Normann, 2001). Our studyseeks to address this knowledge gap. We aim to: (1) develop aconceptual framework describing the phases of the emergence of anew business field; (2) identify the key activities that firms shouldmaster in these phases; and, (3) identify and examine the managerialcapabilities required by these value-creating activities. By answeringthese questions we will contribute to the management theorypertaining to radical new business emergence.

In pursuing these goals, we integrate notions from industrialnetwork theory (Håkansson & Snehota, 1995; Möller & Wilson, 1995),the strategic or value net approach (Jarillo, 1993; Möller et al., 2005;Möller & Rajala, 2007; Parolini, 1999), the resource and dynamiccapabilities perspective (Eisenhardt & Martin, 2000; Möller & Svahn,2003; Teece, Pisano, & Shuen, 1997; Zollo & Winter, 2002), andorganizational learning studies (Cohen & Levinthal, 1990; March,1991). The network approach forms the primary perspective, as thecreation and commercialization of new business fields are carriedout through linked actors in complex interorganizational networks(Lundgren, 1995; Lundval, 1992; Powell, Walter, Koput, & Smith-Doerr,1996).

The article is organized as follows.We start with a discussion of theemergence of radically new business field(s). The dimensions of thislandscape are identified and a framework proposed which suggeststhat emergence can be captured in three phases: exploring for futurebusiness; mobilizing applications; and coordinating the dissemina-tion. The core activities constituting these phases are then put forwardand the management capabilities involved are identified andanalyzed. The article concludes with a discussion of the managerialimplications of the study.

2. Emerging new business fields — development of a frameworkmodel

The emergence of radically new business fields is characterized byboth technological and commercial uncertainty. In order to makesense of this landscape, management must be able to understand itscharacteristics and the forces shaping it. We examine different formsof innovation in order to recognize and differentiate relativelycontinuous incremental innovations from the early weak signals ofmore radical innovations and new technological systems whichgenerally precede the birth of new business fields. The nature ofinnovations characterizes the emergence environment. Another keyviewpoint is provided by the cyclical character of technologicaldevelopment and its underlying mechanisms. This understandinggives a dynamic perspective to our framework. Finally, the differenttypes of actors involved in the new business emergence and their rolesare discussed. The elaboration of these three aspects enables us toconstruct a model for emerging new business fields, which we thenuse to explore the tasks and capabilities involved.

2.1. Types of innovations and their environmental properties

Freeman and Perez (1988) distinguish four types of innovation:(1) incremental innovations, which occur more or less continuously inany industry (e.g., new generations in Random Access Memories(RAMs), various versions of iPod, Apple's path breaking media player);(2) radical innovations, which are discontinuous events unattainablethrough incremental adjustments to already existing regimes (analogvs. digital mobile phones); (3) new technological systems, which arefar-reaching changes in the technology affecting several branches ofthe economy (digital imaging, mobile telephony); and, (4) newtechno-economic paradigms or technological revolutions which are

so far-reaching in their effects that they have a major influence on thebehavior of the entire economy and society (electromechanicaltechnology vs. electronics, the Internet). The taxonomy is based onthe scale (i.e. single innovations vs. clusters of innovation) and thescope (minor vs. major changes) of technological change. Althoughthese types of innovation are, as Lundgren (1995) points out, neitherindependent nor mutually-exclusive but embedded, they are usefulfor characterizing different innovation networks.

We suggest that the complexity of an innovation can be based onthe number of capabilities required by an innovation, and also by thelevel of autonomyor embeddedness of the innovation in relation to theexisting infrastructure. High autonomy and low embeddednessindicate that an innovation can be “plugged-in and played” withinthe existing technical and social infrastructure. Vice versa, highembeddedness refers to an architectural characteristic of an innova-tion requiring adjustments in the current infrastructure before itsapplications can be commercialized (Clark & Henderson, 1990; Tidd,1995). By using the number of capabilities and the level of embedded-ness as dimensions, a Systemic Innovation Space (Fig. 1) is proposed.

The diagonal vector in the Innovation Space describes the movefrom autonomous and relatively simple innovations to embedded andcomplex ones, and indicates both increasing uncertainty in estimatingthe potential success of an innovation and an increasing need tomobilize a group of specialized actors to construct and exploit theinnovation. The value of a complex embedded innovation and itsappropriation by the engaged actors will only become transparent inthe future and will be influenced by actors and forces that probablycannot be recognized at the outset of the innovation process (Ford &McDowell, 1999; Möller & Törrönen, 2003).

We suggest further, that the two dimensions of the SystemicInnovation Space not only describe the complexity of innovations butalso drive the importance of business networks in the innovationprocess.A few initial suggestions can be made. Firstly, the more capabilities aninnovation requires, themore probable it is that its creation and businessrealization will be carried out by an intentionally formed net oforganizations; it is improbable that any single firm can master therequired technological or knowledge bases. This situation is illustrated bythe iPod, which requires the efforts of not only Apple but of Internetoperators,music producers, and over-the-net payment systemproviders.Secondly, themore newsupporting systems (i.e. specific infrastructure orplatform solutions) required for the innovation to be commercialized, themore probable it is that its creation and realizationwill be carried out byseveral intentionally developed and interlinked networks of organiza-tions. An example is the development of multimedia home entertain-ment as systems involving several competing but overlapping andinteracting systems, such as digital TV, DVDs, and the Internet. Thissuggestion is based on the point that if several new infrastructures arerequired, they demand the efforts of business networks havingspecialized knowledge and competences. Thirdly, the less the innovationrequires capabilities and new supporting infrastructure, the moreprobable it is that a single organization can master the process.

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In sum, the number of specialized capabilities that the construc-tion and commercialization of an innovation requires, and the extentto which these processes presume adjustments in the currentinfrastructure, or new even infrastructure formation, are drivers ofthe complexity of emerging new business fields. The more thelandscape is characterized by the conditions of the upper right-handcorner of the Innovation Space, themore complex and less transparentit is, posing a challenge for the sense-making capability of the involvedfirms and their management.

2.2. Emergence of new business fields — key phases

Research in technological change provides additional insights intothe dynamics of the innovation environment. In their study oftechnological change, Tushman and Anderson (1990) suggest twocycles. The first is an era of “ferment”, marked by competitionbetween emergent technological designs (e.g. the LCD and the Plasmaflat-panel TVs). The second is an era of “incremental change”, markedby gradual improvement of the new dominant design (e.g. newgenerations of Intel processors). A discontinuous technological changetriggers ferment. Its impact can either enhance or destroy currentresources. Discontinuous and resource-destroying change, exempli-fied by the impact of digital quartz technology on the Swiss watchindustry, brings with it serious technological and commercialuncertainty, and may ruin the position of major incumbents whohave been slow to react (Dosi, Nelson, & Winter, 2000). Incrementalchange is more continuous and generally improves the positions ofactors that are mobilizing these innovations.

These two eras present different challenges to network actors.During ferment, actors who conceptualize new innovations search forpartners with complementary resources and capabilities, and try tomobilize relevant actors to build the necessary infrastructure forcommercialization. In cases where there are two or more technolo-gical solutions, the emergence of two or more networks competing forthe dominant design can be expected. A current example is the formatbattle between the next generation high-definition video discsbetween the Blu-ray Disc Association (BRD), a global group lead bySony, and the HD DVD system backed up by an equally strong groupguided by Toshiba.

In his analysis of the emergence of a new technological systemnetwork, digital image processing and its commercial application fieldsin Sweden (radar applications with users in the air force and public andcommercial air controlling, photography, and medical applicationsformingpart of the early emergence of the telemedicinefield), Lundgren(1995) suggested three partly-parallel but distinct phases in networkemergence: genesis, coalescence and dissemination. These form theprocess background for our model. ‘Genesis’ is the creation of noveltyand variety in the innovation network, generally through several R&Dinitiatives andprojects by individual actorswho rely on their establishednetwork partners. Sense making and early identification of theapplication potential of new emerging technological knowledge drivethis process. ‘Coalescence’ takes place when the proponents of newtechnology have identified each other and any supporting actors, andform a network. This mobilization of actors and the construction ofcommercially viable applications are characterized by intense develop-ment of new capabilities, which also increases legitimacy among criticalconstituents such as potential users and financiers. ‘Dissemination’refers to the expansion of the primarily R&D-oriented network towardssuppliers of components and complementary products, services andsystems, and towards major customer groups. The new technology isexploited for creating applications for different user segments.

2.3. Diversity of actors

A final characteristic in our description of the innovationenvironment is the variety of actors in the creation and commercia-

lization of an innovation. Institutional theory suggests that companyinnovative behavior is embedded in broader political, educational andsocial institutions (DiMaggio & Powell, 1991; Lundvall, 1992; Nelson,1993). As the deregulation and globalization of the telecommunica-tion industry suggests these often have a vital role in the emergenceand shaping of new business sectors. For example, supra govern-mental, governmental and industry organizations can influence theformation of technological standards.

We suggest that the more embedded an innovation is within thecurrent infrastructure and the greater the amount of new infra-structure needed for the commercialization of a new innovation, themore innovating firmswill have to develop relationshipswith politicaland social actors. This is even more obvious if, instead of individualinnovations, companies are creating technological systems, assistingin the emergence of new technological paradigms, and taking part inthe development of new business fields resulting from technologicaladvancements.

2.4. Framework for the emergence of new business fields

Pulling together our discussion, we suggest a framework whichsynthesizes the characteristics of the environment and the emergencephases of new business fields. As Lundgren (1995), we too use threephases (Fig. 2).

The Exploration for Future Business phase is characterized bycompetition between the actors and collaboration in the explorationand making sense of the application potential offered by emergingtechnologies. The Mobilization for Applications phase concerns actorscompeting and collaborating in constructing dominant designs andproduct applications. The Coordination for Dissemination phase coversactors competing and collaborating in scaling up production and dis-tribution networks to create markets. A main outcome of theseinterrelated phases is the emergence of new business fields. Growth ofthe ellipses reflects the expansion of the networks required to trans-form an idea into an innovation, and to turn an innovation into a viablebusiness.

We suggest that the degree of complexity, novelty, embeddednessand dynamics, described at the top of the Framework, influence theexecution of the value activities which constitute the three phases inthe emergence of new business networks. The higher these character-istics, the more complex the environment is for the firms. Theinterlocked and overlapping nature of the three phases is symbolizedby the over-arching ellipses.When considering this framework, we aremuch indebted to Lundgren's (1995) and to Tushman and Anderson's(1990) technology cycle. Our exploration phase represents an earlystage of ferment, with the latter part represented by mobilization forapplications and for dissemination. Inmoremanagerial terms, the firsttwo phases represent pre-market competition and cooperation, whileactivities in the third phase address market competition.

3. Firms in emerging business networks — value activities andcapabilities

We now shift our attention to the company level to consider howorganizations initiate and carry out the activities which result inbusiness networks creating new business fields. Key issues are: howthe involved actors perceive the emerging network, how theyinfluence and adapt to it, and what capabilities they need to succeed.These questions are addressed in each of the three phases ofemergence using the perspective of dynamic capabilities, and specialattention is paid to the role of knowledge and learning.

3.1. Early emergence — exploration for future business options

The phase of exploration, marking the birth of radically newbusinesses, generally starts unnoticed. This paradox is explained by

Fig. 2. Landscape of emergent business fields (K. Möller).

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the fact that the change is being born within business networkspopulated by incumbent firms that are carrying out their existingbusinesses through well-established value architectures under tradi-tional technological paradigms. However, the actors sowing the seedsof change also populate this landscape. Research activities inuniversities, public research centers, and in large incumbent corpora-tions, as well as the investigations pursued by small innovative scienceand technology driven firms plant these seeds.

This mixture of old and new, stability and change, forms a complexsystem of translucent and opaque interorganizational networksillustrated by the combination of traditional food production net-works and the emergence of biotechnology (Hinterhuber, 2002), andby the landscape of ICT convergence. Because of this non-transpar-ence, flux and uncertainty, we suggest that the activities of sensemaking and focus identification are essential in this phase, and discussthese from the perspective of a large incumbent firm.

Sense making is an actor's capability to perceive and interpret theemerging business landscape (Weick, 1995). This is demandingbecause of the tacit and dispersed nature of potential business ideasembedded in the science and technology research driven by newknowledge. Ideas are beliefs about how this emerging knowledge canbe utilized. They are often fuzzy, and there is ambiguity about thepossible cause-and-effect relationships between existing and emer-gent knowledge. Vague ideasmay not yet present a heuristic picture ofhow to pursue them (Scharmer, 2000).

The wide dispersion of ideas and technological knowledge isanother characteristic of early emergence. Actors exploring newtechnologies and advancing novel business ideas often come fromseveral fields (Håkansson & Waluszewski, 2002; Lundgren, 1995). Thecreation of new mobile Internet-based banking services, for example,demands expertise in Internet-related software solutions, Internet-related wired technology, mobile terminals, mobility software, radiotechnology, secure-over-net payment technology, financial servicesand database management.

Facedwith this complex network landscape, how should a companywanting to be at the forefront of capitalizing opportunities offered byemerging technologies behave? In other words, is it possible to createlearning and knowledge management solutions that match theambiguous and uncertain character of emerging business networks?

Two key issues are involved here; how to recognize widely dis-persed and vague ideas, and how tomake sense of them. One aspect ofthe recognition process is exposure, or access to ideas and stimuli. It

appears that actors located in nodes which connect multiple actorsand create different types of new knowledge have a better chance ofrecognizing emerging technological and business opportunities thanactors which are highly specialized (Håkansson, Havila, & Pedersen,1999; Powell et al., 1996). This relates to the recent discussion on thecognitive capabilities of networked firms. Based on their currentnetwork positions and roles, each actor has a specific view of theemerging opportunities. This cognitive representation of the networkforms the actor's network theory or “picture,”which guides the actor'sattention and also influences his on-going sense making in theemergence landscape (Håkansson & Waluszewski, 2002; Johanson &Mattsson, 1992; Mouzas, Henneberg, & Naude, 2007; Spender, 1989).

High specialization in current business tends to lead to a narrowoutlook, one which precludes the development of a wide perspectiveon emergence and its opportunities. In simple terms, hierarchical andcentrally governed business networks, exemplified by such traditionalfields as the steel industry and paper and pulp production, tend toprovide less variety and ideas for their members compared todecentralized networks with multiple possibilities for both strongand weak ties, typical of the more dynamic ICT field (Barabasi, 2002;Gilsing & Nootebohm, 2006; Powell et al., 1996; Powell, 1998). Thisview is also supported by the finding that weak ties, often based onsocial relationships with many actors, form an important source ofideas that originate outside an actor's more immediate and institu-tionalized network environment (Granovetter, 1973; Uzzi, 1997).

These findings suggest that companies involved in severalinterlinked but separate networks have an increased exposure toideas emanating from other actors. The use of this potential is not,however, without its problems. There must be motivation fortransition from on-going routines, which exploit a firm's currentknowledge base, to activities involving exploration and discovery.Many authors observe that this transition is not an automatic one, buta result of major internal or external shocks that lead to thequestioning of current practices and to critical self-evaluation of anexisting worldview (e.g., Cyert & March, 1992; Fiol & Lyles, 1985;Holmqvist, 2003; March, Schulz, & Zhou, 2000). In a sense, it is aquestion of whether an organization can pursue exploitation andexploration simultaneously (Birkinshaw & Gibson, 2004; March,1991). This is not easy as these behaviors are based on differentlearning modes. In adaptive learning, actors utilize their existingcognitive framework or recipe for the business and other networkactors. Generative learning presumes that the actor is able to subject

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the framework to critical examination and not only create radicallynew knowledge but also reconstruct the business recipe (Argyris &Schön, 1978; Slater & Narver, 1995; Spender, 1989, 1996). In this sense,the actor's learning culture plays an important role in shaping sense-making capability.

Organizations are becoming sensitive to the exploitation trappresent in the narrow focus on current business with its tight networkrelationships. Several multinational corporations have establishedformal knowledge management functions and given boundarypersonnel the authority to scout and make sense of evenweak signalsof new emerging technological breakthroughs and business opportu-nities (Doz et al., 2001; Normann, 2001; Ramirez & Wallin, 2000;Seufert, von Krogh, & Back, 1999).

In brief, the sense-making capability entails, besides openness tonew information and knowledge, a capacity to learn, or what Cohenand Levinthal (1990) called ‘absorptive capacity,’ which depends onthe knowledge base of an organization, the learning skills of itsboundary-spanning personnel, their motivation for discovery-typesearch behavior, and whether it has been able to create anorganization which enables knowledge transfer and creation (Zahra& George, 2002; Zollo & Winter, 2002). We suggest that actors whohold relevant positions in several networks can be expected to havebetter absorptive capacity, since theymust have acquired learning andcommunication capabilities in order to make sense of, and exploit, thetypes of knowledge possessed by their network partners.

For example, in order to speed up their learning of the emerging3rd Generation mobile telephony technology, Nokia Mobile Phonessent over a hundred development engineers to work in Japan in thelate 1990s as Japan was leading the development of that technology(Kulkki & Kosonen, 1998). In sum, network positions offeringextensive exposure and proactive scouting, combined with a strongsense-making capacity, give an actor a pool of ideas about emergence.The next question is whether some or one of these ideas can beprioritized and developed.

Focusing and Selecting. Many organizations collect vast amounts ofinformation and even transform part of it into ideas without beingable to turn this experience accumulation into any radical break-throughs. A critical threshold is the capability to select and thus providefocus for application development. Zollo and Winter (2002) includeboth evaluation and legitimization processes in this capability. Inlearning theory, the legitimization is considered to be part of theassimilation process of a firm's absorptive capacity (Zahra & George,2002). Even with established assessment routines, selection can bevery difficult as many ideas are in embryonic form and too immaturefor their potential to be evaluated.

Several network related aspects influence an actor's selectionsituation and selection capability. Firstly, if an emerging idea has ahigh level of embeddedness and its realization is related to severaldifferent technologies and business networks, evaluation becomesmore difficult. Secondly, involvement in different networks and theirdevelopment projects enhances an actor's evaluation and selectioncapability by providing access to multiple learning experiences andperspectives. In today's decentralized corporations these experiencesare often dispersed among several companies and business unitswhose local boundary spanners have the best opportunities to observeand participate in the creation of new knowledge and value activities.

The essential problem in this kind of corporate context is how tocollect, evaluate and synthesize these fragmented ideas and visions.Synthesis presumes, in addition to the possession of a goodinformation system, the use of not only cross-functional but alsocross-business-unit teams and the existence of an open corporateculture that is conducive to exploration. Even extensive resources donot guarantee this sense-making and selection capability, as illu-strated by IBM's failure to anticipate the breakthrough of personalcomputers and the changing role of the Microsoft operating system(Fine, 1998). If new interpretations, made locally in a corporation, or

proposed by other network members, are contradictory to thecorporation's dominant logic, they will not be accepted or actedupon (Von Krogh & Grand, 2000). This finding emphasizes the crucialrole played by corporate culture in fostering generative learning andlegitimizing risk taking.

We conclude the discussion of the activities and capabilitiesinvolved in the exploration phase of radical emergence with a briefsynthesis.

▪ Positional advantage — position in multiple business networkswith a variety of weak links provides extensive exposure to newideas and emerging knowledge.

▪ Experience advantage — learning through multiple network posi-tions and partner relationships enhances a firm's sense-makingcapability. This is manifested at the level of absorptive capacity, andincludes the abilities to focus, assess and select.

▪ Internal driverof these dynamic capabilities is a generative learningorientation, encouraging both experimentation and risk taking.

We contend that these positional advantages, cultural values andcompetencies collectively lead to a framing capability. This refers tothe cognitive capacity to form an architectural understanding ofemergence. It also involves the mental flexibility to reframe when theneed arises (Normann, 2001). This is the secret behind visioning,sensing future potential before other actors do.

3.2. Mid emergence — mobilization for applications

The core issue in the mid-emergence phase is how to turn a strongvision manifested in an articulated technological or business conceptinto a realized dominant design or product application. The nature ofthis phase depends on whether there are more than one companysharing similar concepts. We assume a competitive situation where atleast two rivals are racing to bring an application to market. Thiscompetition concerns: (1) the influencing and mobilization of actorswho command attractive current resources and capabilities; and, (2) co-creating new resources and capabilities that are beyond the initiatingfirm.

Mobilization for application demands several interlinked network-ing capabilities. Actors expected to gain important roles in theemerging network must first be identified. These actors must thenbe convinced of the viability and earning potential offered by themobilizer's view of the new value system, and finally, an architectureand organization for network collaboration must be created. This isthe phase inwhich a balanced appreciation of both the creation of newknowledge and its exploitation is required. In this respect, it concernsboth value creation and value appropriation.

In emerging value systems, actors face great uncertainty in therelative value of embryonic new knowledge. In this setting, framingcapability allows the development of a systematic view of theemerging field and the envisioning of its architectural developmentwith different types of actors, their roles and capabilities. Visioninghowever, is not enough: mobilization of an application networkrequires an attractive and credible development agenda.

Agenda setting. A nascent hub-firm should have specific resourcesand knowledge that make it an attractive mobilizer for potentialpartners and the field, including the institutional actors who establishrules for the emerging business. A mobilizer should be able to developand communicate an agenda for influencing the field in a preferreddirection. Through agenda construction, a company or a net, caninfluence the relevant actors' sense-making processes and conse-quently the way they frame and interpret the business emergence.This aspect, which is called “meaning power” or “premise control”(Hardy, 1996; Perrow, 1986; Swan & Scarborough, 2005), refers to theextent to which an actor can influence the meanings through whichthe emerging business field is seen and constructed by the involvedactors. Agenda construction links the sense-making perspective and

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actors' focusing and decision making processes, thus, making it anessential part of the social construction of new business.

Nokia Mobile Phones was, for example, active in the establishmentof the Open Mobile Association (OMA), which is a network of firmsdriving the openness and interoperability of future mobile services.Through this action Nokia tried to accelerate the development ofmobile service and content production as well as to make it moredifficult for Microsoft to introduce its Windows-based operatingsystem to mobile devices (http://www.openmobilealliance.org).

A prominent position in the current network or networks and astrong reputation for technological and business leadership enhancecredibility in agenda setting. However, an established power positionis not always critical in radical emergence. The examples of Cisco,Intel, Microsoft and Sun Microsystems show that the capability tocreate and govern crucial new understanding and resources in thevalue-creation system of the emerging field can be more decisive thana strong pre-position, which companies like IBM had.

Net mobilizing. In addition to influencing an emerging larger-business network to adopt its technological solution and to acce-lerate potential lock-in, a mobilizer must simultaneously create aspecific strategic net responsible for creating and producing thecommercial applications of the technology. Again, the stronger anactor's resources and the more credible its technology and businessvision, the easier it is to attract and select strong partners toparticipate in a strategic net that covers the new value system frompilot customers to component production and service supply. In thisearly phase, still dominated by the technological development ofapplications and production processes, the emphasis is on thesharing of technical knowledge and the joint creation of workingsolutions. This demands, in addition to a systematic view of thevalue-activity architecture, the ability to establish a collaborationsystem for the sharing and co-creation of knowledge and capabil-ities with other net actors who represent different communities ofpractice, each of whom has their own knowledge articulations andworking cultures embedded in people and routines.

Bluetooth Coalition is a good example of a technological innovationwhere partially competing and partially complementing wirelesstechnology and service companies joined their forces to develop atechnological solution for future commercial applications and services(http://www.bluetooth.com). In short, Bluetooth is an industrialspecification for wireless personal area networks. It provides a wayto connect and exchange information between personal digitalassistants, mobile phones, laptops, PCs, printers and digital camerasvia a low-cost, globally available short range radio frequency. As suchit has huge commercial potential for wireless applications. Thespecification was developed by Ericsson, and later formalized by theBluetooth Special Interest Group (SIG). The SIG was formallyannounced on May 20, 1999. It was established by Ericsson, IBM,Intel, Toshiba and Nokia, and later joined by many other companies asassociate or adopter members.

The core capability in net mobilization, besides agenda construc-tion, is to bridge different communities of practice. Bridging isessential when creating new specialist knowledge, which can resultin product and process improvements. It requires the ability to crossthe professional language and cultural barriers embraced by, forinstance, experts in product and process technologies, softwaredevelopers, marketing and business managers (Brown & Duguid,2001; Dougherty, 1992; Dyer & Nobeoka, 2000). The ability tounderstand specialist knowledge domains requires a sphere ofjointly-held knowledge that provides the representatives of differentcommunities of practice with a base they can exploit in order toinitiate the mutual learning and combining of their specialist knowl-edge constructs (Nonaka & Takeuchi, 1995).

Value appropriation represents a specific aspect in mobilizing theapplication net. Themobilizer should carefully assess the future value-creation potential of the key value activities in the new net and their

ownership. A resource-based view provides some suggestions. Anactor that commands resources through which it can carry outactivities that are valuable, rare, inimitable and non-substitutable (i.e.,the so-called VRIN attributes, Eisenhardt & Martin, 2000; Wernerfelt,1984), has a very strong power position in a strategic net and can oftenappropriate the largest share of the revenue created by that net. Valueitself is determined by the relative importance of the activity to thefinal offering made by the net. Utilizing its architectural knowledge,the mobilizer should try to ensure that it commands the key valueactivities in the emerging business field. This is not easy, as illustratedby IBM's surrendering one of the strongest value-positions in the PCfield to Microsoft, its much smaller partner initially.

In sum, net mobilization requires:

▪ Architectural understanding of the value system within the emer-ging field and top management risk taking in committing the com-pany to a specific development agenda.

▪ Agenda communication for key actors — potential technologicaland marketing partners, financiers and customer communities.

▪ Organization-wide network-player orientation, with key person-nel sharing and supporting the achievement of joint goals.

The mobilizer must be able to create an organizational forum forsharing the work and responsibilities among actors, to establishcoordination mechanisms for net cooperation, and to instill a netidentity. As most joint development work is carried out throughmulti-actor/multi-functional teams, team management and bridgingcapabilities are at the heart of the process. The role played by boun-dary personnel is crucial in this process.

3.3. Fromemergence tomarket competition— coordination fordissemination

The last phase in our emergence framework represents thetransition from a situation of pre-market competition to marketcompetition. This phase is characterized by competition among thestrategic coalitions or nets that are being formed for rapid marketcreation. It involves time-to-market competition, which emphasizesspeed and escalation of production and distribution. As these types ofnetworks and nets, especially supplier nets, have already been theobject of considerable research (see Dyer, 1996; Dyer & Nobeoka,2000; Gadde & Håkansson, 2001; Möller et al., 2005), only a cursorydiscussion is offered here.

In the application development phase, there are two core tasks:to create a winning application design through technologicalcooperation, and to influence the emerging business and institu-tional network via agenda-setting practices. In the disseminationphase, the emphasis is on the mobilization and coordination of ahighly efficient demand–supply value system by exploiting thespecialist capabilities of a variety of component and servicesuppliers and distribution channel members. These requirementsmay call for the reorganization of the existing net by bringing innew members. They may also require adopting more centralizedcoordination procedures in order to achieve the efficiency needed inthe competition for market share.

The net-management capability in this primarily vertical value netis manifested in the information and management systems thatcombine the business processes of each actor and monitor theefficiency of production, logistics, customer delivery and service. It isessentially a coordinating capability requiring knowledge of thearchitecture of the value system, which constitutes the completebusiness process represented by the net. In an advanced case, thiswould lead to the coordinated management of a complete valuesystem ranging from customer care to component production, andwould call for tools from supply chain management, enterpriseresource planning and customer relationship management (Lambert& Cooper, 2000; Means & Schneider, 2000).

456 K. Möller, S. Svahn / Industrial Marketing Management 38 (2009) 450–458

The shift from technology co-creation to market competitionsuggests that the actor roles in the net should be carefully re-specifiedand supported by a set of matching contractual arrangements. Thisinvolves the examination of potential changes in value appropria-tion. The mobilizer should attempt to influence the value architec-ture of the net so that it maintains the core value appropriationposition.

In terms of knowledge and learning, the mobilization andcoordination of vertical, efficiency-seeking strategic nets, emphasizethe capability of exploiting current actor competencies througheffective knowledge transformation and sharing (Dyer & Nobeoka,2000; Levinthal & March, 1993; March, 1991; Möller & Svahn, 2006).Knowledge codification is an essential part of this process, forming aprerequisite for the coordination of business processes and logisticsamong key members of the net. IKEA, Dell and Toyota are goodexamples of this kind of tightly connected, demand driven, assemblynets which have reached high efficiency and the ability to meetcustomer demand.

4. Managerial implications and future research

This article makes several managerial contributions. It increasesour understanding of the birth of radically new business fields throughthe proposed model (Fig. 2) describing the environment and phases ofnew business emergence. Based on our analysis, we suggest that thiscomplex socioeconomic and technological process can be capturedthrough three interlinked phases: (1) Exploration for Future Businessopportunities, (2) Mobilization for Applications, and (3) Coordinationfor Dissemination.

Another observation is that managers should adopt a networkperspective for capturing these phases, as they are constituted by

Table 1Phases of new business emergence: activities and capabilities (K. Möller).

Phase of emergence Activities

Exploration for future business Sense making: perceiving and inideas and concepts. Innovative sfirms and proactive incumbentsamongst the first to comprehenof scientific inventions.

Early emergence is a landscape of local innovationand wide spread ideas related to emerging scienceand technology inventions. There are no clear paths ofcommercial development but flux and uncertainty.

The phase is characterized by exploration and sensemaking of the embryonic business ideas.

Focusing and selecting: prioritizia concept for application develoThis requires entrepreneurial orideas bears a strong risk, whichanalyzing the pioneer's problemIt includes developing views of the potential

development alternatives or paths of the emergingbusiness field.

Mobilization for applications Agenda setting: creating and comdevelopment of the emerging apto influence the beliefs and behto be relevant for the developmproviders, process and manufacchannel companies, pilot customagencies).

This phase is characterized by competition to developwinning applications, which may end-up becomingdominant designs in the emerging field.

It includes the formation of nets of collaborative firms;these nets then compete for winning the race to firstcommercial applications.

Net mobilization: creation of a ncompetitive application for comdevelopment work and ensuringposition.

Coordination for dissemination Demand–Supply net mobilizationactors ensuring the production anew offering.Competition to achieve rapid growth through strong

channel coverage and efficient production, logisticsand marketing.

Net management: developmentdemand–supply net for competi

complex interorganizational linkages among firms, governmentagencies, universities and research institutions, industry associationsand even supra-national organizations. In examining these phases, weshow how the characteristics of a network environment influence thebehavior of the firm and how firm behavior structures the emergingbusiness field. The literature has not yet examined the interactiveconstruction process in such detail.

An important implication in the identification of the phases ofemergence is that different types of capabilities are required to surviveand operate in the different phases. In other words, there is no singlegeneric management mode or capability profile covering the birth of anew business field. In order to contribute to the management ofcomplex networks, we have identified both the core company-levelactivities in each phase of emergence and the organizationalcapabilities involved in the carrying out of these activities (Table 1).

Identification, sense making and selection of the embryonicbusiness ideas related to the emerging technological innovationscharacterize the Exploration for Future Business opportunities phase.Management can influence and develop the sense-making capabilityof its organization through several activities. First, sense makingdepends on the variety of different ideas and emerging knowledgeclaims that the organization perceives. This exposure is related to itsnetwork relationships and the number of weak ties of its personnel.Firms should try to develop a generative learning culture, encouragingits boundary personnel to scout for novel ideas and form personalnetworks. This kind of culture would support and legitimize criticalquestioning of current managerial logic and help to accept novel andrisky ideas for further development. Making wise selections is part ofan organization's visioning capability. We contend that visioning is acognitive capacity based on firm's positional advantages (networkrelationships and weak ties), learning culture and learning capacity.

Capabilities

terpreting emergingcience and technologycompete on trying tod the business potential

Sense making is influenced by a firm's exposure tonew ideas, being a function of firm's networkrelationships. A variety of strong and weak ties isimportant. Firms between networks have a greatersense-making potential.Generative learning — being open to new ideas andcarrying out explorative learning challenging firm'sdominant logic, an ability to critically examinecurrent managerial framework.

ng, choosing and legitimizingpment — conscious lock-in.ientation; early lock-in to newcareful followers may avoid bys and solutions.

Framing/visioning capability — ability to formarchitectural understanding of the emerging field,based on exposure and generative learning.Selecting as a capability is based on a generativelearning culture willing to accept novel ideas andbusiness risks.

municating an agenda for theplication network. The goal is

aviors of the key actors believedent of the field (technologyturing partners, marketing anders, financiers, institutional

Agenda creation — construction of an attractive andcredible development plan, presumes a goodvisioning capability.Agenda communication presumes communicationskills and credibility provided by track record andperceived credence of the agenda.

et of actors that can develop amercial use. Coordinating thea strong value appropriation

Net mobilization is influenced by the attractivenessof the agenda and actor's resource base andreputation.Application net management presumes a capability tobridge different communities of practice andcoordinate their collaboration through multi-actorand multi-functional teams.

: creation of an efficient net ofnd distribution capacity for the

Demand–Supply net management presumes strongcoordination capability based on knowledgecodification and business process integration andcoordination through information systems tools.and coordination of an efficient

ng for market share.

457K. Möller, S. Svahn / Industrial Marketing Management 38 (2009) 450–458

How do firms develop these abstract organizational and managerialcapabilities? Only a few limited notions on this broad issue can begiven in this context.

▪ The CEO should encourage different perspectives and “out-of thebox” thinking among the top management team. This is supportedby recruiting outside the business and by providing forums inwhich debate and critical perspectives are not only tolerated butencouraged. Bringing in experts from different domains of theemerging technology and applications enhances the learningopportunities of an organization and facilitates the generation ofinnovative ideas.

▪ Empower the boundary spanners of the firm; provide forums forcross-functional personal interaction; provide social recognitionand job-related rewards for jointly-created ideas. These actionsspread and support the collective learning orientation to themiddle management and key operational personnel.

▪ When an articulated vision and agenda starts to take shape providefocus. Top management must be entrepreneurial (i.e., to make anuncertain investment decision and mobilize the new businessdevelopment through a project organization).

During the Mobilization for Applications phase, actors andevolving nets compete in the race for the first commercial applicationsand potential dominant designs. A key managerial task for a proactivefirm is to influence the development of the field and its own positionthrough agenda setting. A credible development agenda reduces thetechnological and commercial uncertainty perceived by such relevantactors as financial institutions, potential component and technologysuppliers, channel organizations and corporate customers, andincreases their propensity to invest in the development of the newfield. Successful agenda communication may establish the intellectualleadership for the focal firm, which supports its mobilization of anetwork to develop and launch the application. By reducing perceivedrisk and providing direction, the agenda setter creates focused actionin this larger network.

Mobilizing an application net presumes an attractive initial conceptand business agenda and good credibility based on an actor's resourcesand reputation. The stronger these aspects are the better partners a firmcan attract to the net, enhancing its potential towin the application race.Winning the race is, however, dependent on the firm's capability tomanage the application net. A fundamental factor in application dev-elopment is the capability to get organizations with widely diverseknowledge and capability profiles (e.g., different technological expertiserepresenting hardware and software solutions, production expertise,and marketing know-how) to collaborate in a new commercialapplication. This requires an organization-wide network-player orienta-tion. The mobilizer must be able to create an organizational forum fordistributing the work and responsibilities among actors, establishingcoordination mechanisms for net cooperation, and instilling a sense oftrust and cooperation among the partnering firms. As most develop-ment work is carried out through multi-actor/multi-functional teams,team management and bridging the boundaries of the communities ofpractice are at the heart of the process.

In the Coordination for Dissemination phase, the logic of competi-tion changes from application development and time-to-marketcompetition, to a more general competition about being able tocapture a dominant market share of the growing new business field.Creating access to end-customers through suitable channels andensuring a production capacity to match the accelerating demand isessential. These tasks presume a reconfiguration of the application netinto a more centrally coordinated demand–supply net havingmembers who can provide the production and distribution capacityand capabilities. Core capabilities in the management of this kind ofnet are the codification of production and logistic information andestablishment and running a management system through whichthe relevant business processes of the participating companies are

integrated and coordinated. The Internet supported order systemcreated by Dell in the PC field is a good example of an efficientdemand–supply net.

To conclude, proactive firms possessing strong learning andnetworking capabilities not only survive in the dynamic environmentof new business fields, but can also influence the birth of futureinnovations and new product developments.

In the future, urgent research efforts are needed at least in threeareas. First, more empirical evidence is needed on the proposed three-phase framework of the emergent business fields. This could beachieved through longitudinal analysis of selected established fields.Geel's work (2002) on evolutionary economics offers helpful insights.Special attention should be paid to the existence of these phases andthe key influences on the transitions between one phase and the next.Second, we need more understanding of the company-level core tasksand the related capabilities, especially concerning the early emer-gence, arguably characterized by exploration and the mid emergence,where the mobilization for applications takes place. This calls for bothcompany-level and network/net-level research. Third, it is not enoughto identify and receive support for the key managerial capabilitiesinvolved in emergence; we need a better grasp of the processesthrough which these capabilities can be learned and constructed.

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Kristian Möller is a Research Professor and Director of the Business Networks ResearchDomain at the Helsinki School of Economics. Formerly the President of the EuropeanMarketing Academy, Dr. Möller is an active member of the academic network in Europe.Professor Möller's current research is focused on business nets, business marketing,marketing strategy and business performance, and on marketing theory. His recentarticles have been published in Industrial Marketing Management, Journal of BusinessResearch, Journal of Management Studies, Journal of Marketing Management, andMarketing Theory.

Senja Svahn is Professor of Business Marketing (acting) at the Tampere University ofTechnology, Finland, and a Docent at the Helsinki School of Economics. Her research isfocused on strategic management, business nets, and marketing capabilities. She hascompleted her doctoral dissertation on the management of business nets, and co-authored amanagerial book on the interorganizational networks in business. Her recentarticles have been published in Industrial Marketing Management, Journal of BusinessResearch, Journal of Management Studies, and Marketing Theory.