Under the radar: Industry entry by user entrepreneurs

Abstract

This is the accepted version of the paper.This version of the publication may differ from the final published version. Permanent repository link ABSTRACTWe inductively develop a model of the commercialization process for new products or services user entrepreneurs undertake when entering an industry while drawing on proprietary technology developed in another industry. Extending the growing field of user entrepreneurship, we identify a two-phase approach to industry entry by user entrepreneurs who start "under the radar" of incumbent firms, gain experience, attract a first potential customer base, and then, in a second phase, engage in commercialization. During this process, a community of fellow users is of major importance for the entrepreneur, serving as a knowledge pool for skills development and experimentation with different commercialization paths. We study a nascent group of firms founded by users of video games who became entrepreneurs on entering the animation industry by producing Machinima, a new film genre characterized by shooting film in video games. We explain how user entrepreneurs gain access to complementary assets (video games) for their new use (shooting film), how they deal with intellectual property issues when using other firms' assets, and how user entrepreneurs combine domain knowledge about film production with their experience in video games and the art of Machinima. Our propositions hold implications for management and policy.

Social Software and Strategy

“…Moreover, the perception of Facebook as a platform to do business is changing the gaming industry. Finally, aligning internal software development efforts with external community development creates new challenges for design science (von Krogh and Haefliger, 2010).…”

Influence of Shadow IT on Innovation in Organizations

“…Sometimes, this user innovation can be source of a successful commercial product. Sports equipment such as the rodeo kayak [1], mountain bike [2], snowboard [3], and surfboard [4], medical equipment [5], juvenile products such as the baby jogger [6], services such as computerized commercial banking services [7], computer games [8], and films in the animation genre [9] are few examples where user innovations was a success.…”

Untitled

“…For some users, innovation ideas and efforts become the starting point for their businesses. User entrepreneurship occurs in vastly different industries (Chandra & Leenders, 2012;Haefliger, Jäger & Von Krogh, 2010;Shah, Smith & Reedy, 2012;Shah & Tripsas, 2007). Shah and Tripsas (2007) propose that user-entrepreneurship is more likely to dominate classic sources of entrepreneurship under four conditions: (1) when the use of a particular product provides enjoyment; (2) when users have relatively low opportunity cost; (3) when the industry is characterized by niche markets with a high variety in demand; (4) when the market for the product is highly uncertain.…”