Despite nearly 30 years of academic research on the benefits of related diversification, there is still considerable disagreement about precisely how and when diversification can be used to build long‐run competitive advantage. In this paper we argue that the disagreement exists for two main reasons: (a) the traditional way of measuring relatedness between two businesses is incomplete because it ignores the ‘strategic importance’ and similarity of the underlying assets residing in these businesses, and (b) the way researchers have traditionally thought of relatedness is limited, primarily because it has tended to equate the benefits of relatedness with the static exploitation of economies of scope (asset amortization), thus ignoring the main contribution of related diversification to long‐run, competitive advantage; namely the potential for the firm to expand its stock of strategic assets and create new ones more rapidly and at lower cost than rivals who are not diversified across related businesses. An empirical test supports our view that ‘strategic’ relatedness is superior to market relatedness in predicting when related diversifies outperform unrelated ones.

Changes in the global environment are generating opportunities for companies to build advantage by creating loosely coupled networks or ecosystems. Ecosystems are larger, more diverse, and more fluid than a traditional set of bilateral partnerships or complementors. By leveraging ecosystems, companies can deliver complex solutions while maintaining corporate focus. This article describes six keys to unlock ecosystem advantage: pinpointing where value is created, defining an architecture of differentiated partner roles, stimulating complementary partner investments, reducing the transaction costs, facilitating joint learning across the network, and engineering effective ways to capture profit.

No abstract

A growing recognition of the importance of disruptive innovation has led researchers to examine the question of how disruptive innovation comes about and to what extent it reflects "discovery" versus "creation" of opportunities. Earlier research has focused on the organisational preconditions for disruptive innovation to arise. Much less attention has been paid to the role of innovation processes, including their goals and design, in promoting disruptive innovation. In this paper we aim to begin to fill this gap by better understanding how new innovation processes can act as antecedents for disruptive innovation.We adopt an inductive theory-building methodology using a set of case studies of Chinese firms to develop propositions about how novel R&D and production processes can foster disruptive innovation. We find that in the case of China the adoption of new innovation processes that re-define the focus of innovation and re-engineer traditional R&D processes in ways that allow the novel deployment of Chinese cost advantages can create offerings that incorporate the key elements of disruptive innovation in the sense that they challenge incumbents' established business models. Realising disruptive innovation opportunities requires proactive initiatives. We conclude by discussing the managerial implications and possible responses as well as directions for future research.

No abstract