Soft but Strong: Software-Based Innovation and Product Differentiation in the IT Hardware Industry

2022 | Management Information Systems Quarterly | Citations: 0

Authors: Kim, Keongtae; Lee, Jeongsik “Jay”; Gopal, Anandasivam

Abstract: It has been argued in recent years that software is a significant value-creating ... Expand

Abstract: It has been argued in recent years that software is a significant value-creating factor within the manufacturing sector, leading to an increased interest in understanding the mechanisms by which firms may benefit from software-based innovation. Empirical work in evaluating these mechanisms, however, remains underdeveloped. In this paper, we examine one such process through which software-based innovation may provide value for information technology hardware firms in the U.S. Specifically, we examine the influence of software patents on the extent to which firms are able to benefit from product differentiation in their product markets. Using data on over 380,000 patent grants for innovations filed by 730 public IT hardware firms over the time period 1996-2015, we find that greater levels of software-based innovation within the firm are associated with higher levels of product differentiation in product markets: increases in the intensity of software patents within the firm’s patent stock, which we refer to as software intensity, are associated with lower total similarity of product offerings, relative to those offered by rivals, as well as fewer effective competitors in the market. Furthermore, using a different dataset consisting of 23,000 new IT hardware product announcements, we show that firms with greater software intensity subsequently launch a higher number of new products. Moreover, these firms are more likely to launch products that are not only differentiated from those of rivals but also distinct from their own product lines. Our research contributes to the emerging literature on software-based innovation by substantiating an important mechanism through which software helps transform industry sectors, specifically through product differentiation. Collapse

Topics: innovation management computer hardware product differentiation software patent digital innovation

Methods: topic model term frequency–inverse document frequency longitudinal research robustness check difference in differences

DIGITAL CONVERGENCE: EXAMINING THE DISSOLUTION OF INDUSTRIAL AND TECHNOLOGICAL BOUNDARIES

2022 | European Conference On Information Systems | Citations: 0

Authors: Müller, Lukas; Hund, Axel; Wagner, Heinz-Theo

Abstract: Digital convergence is frequently discussed in research. The concept of converg ... Expand

Abstract: Digital convergence is frequently discussed in research. The concept of convergence describes how formerly separate areas are increasingly merging. So far, however, we have only a rudimentary understanding of digital convergence for several reasons. First, digital convergence is not clearly conceptualized and used differently across contexts. Second, we have little insight into what is converging and at what pace. We conceptualize digital convergence by arguing that its sociotechnical nature requires jointly considering technical and social aspects. Our analysis of a longitudinal patent data set covering 31 years and 677,045 patents from 124 industries shows that (1) industry boundaries defined by the Standard Industrial Classification (SIC) are dissolving as companies interact with technological knowledge outside their industrial boundaries. (2) Specific technology classes defined in the International Patent Classification (IPC) increasingly cite -and converge with -other technology classes. We close by highlighting promising avenues for future research on digital convergence. Collapse

Topics: website innovation management digital innovation database system spreadsheet

Methods: longitudinal research SEC EDGAR longitudinal data analysis

Theories: information systems theory

Digital Innovation Units: An Empirical Investigation of Performance Implications

2022 | International Conference on Information Systems | Citations: 0

Authors: Schumm, Max; Hanelt, André; Firk, Sebastian

Abstract: Digital innovation is both a necessary and a challenging endeavor for most firm ... Expand

Abstract: Digital innovation is both a necessary and a challenging endeavor for most firms. To achieve progress in this regard, firms across contexts increasingly set up digital innovation units (DIUs). Despite its popularity in practice, the prospects of this initiative are to date unclear. Building upon dynamic capabilities theory, we hypothesize the performance implications of DIUs and employ panel data regressions to a longitudinal and cross-industry data-set to investigate our predictions. We find that DIUs increase performance and that this effect is strengthened by the presence of digital ventures in the industry as well as the degree to which the industry relies on tangible assets. Our additional analyses provide a nuanced perspective on the implications of DIU establishments. On the base of these findings, we derive important implications for IS research about digital innovation and transformation as well as DIUs and provide recommendations for managerial practice. Collapse

Topics: organizational productivity electronic market innovation management digital transformation digital innovation

Methods: longitudinal research LexisNexis propensity score matching descriptive statistic SEC EDGAR

Theories: dynamic capabilities theory

An Institutional Perspective on Digital Transformation

2021 | International Conference on Information Systems | Citations: 1

Authors: Kriebel, Johannes; Foege, Johann Nils

Abstract: In this study, we argue and show that firms' and industries' digital transforma ... Expand

Abstract: In this study, we argue and show that firms' and industries' digital transformations follow an institutional logic. In particular, we suggest that the information technology portfolios of firms within an industry and among industries will become more similar over time, as firms seek to secure legitimacy among stakeholders. We introduce institutional intuition as the critical attribute of firms that enables them to successfully depart from the industry's information technology portfolio. To test our theorizing, we conducted a textual analysis of the 10k filings of all S&P 1500 firms from 1993 to 2018 building quantitative, longitudinal measures for different facets of digital transformation. We find that firms with greater industry similarity achieve higher performance. Yet, firms that diverge from the industry and have the right institutional intuition can break out of this logic and achieve superior performance. Collapse

Topics: digital transformation business model organizational productivity innovation management digital innovation

Methods: theory development qualitative content analysis word embedding longitudinal research Compustat

Theories: institutional theory institutional isomorphism theory

Soft but Strong: Software-Based Innovation, Product Market Competition, and Value Creation in the IT Hardware Industry

2018 | International Conference on Information Systems | Citations: 0

Authors: Kim, Keongtae; Lee, Jeongsik; Gopal, Anandasivam

Abstract: We study the impact of software-based innovation on the value of patented invent ... Expand

Abstract: We study the impact of software-based innovation on the value of patented inventions, firms’ competitive position in the product market, and the market value of the firms in the U.S. information and technology (IT) hardware industry. Our analysis of over 227,000 patents by 741 public IT hardware firms in the period of 1996-2006 reveals several novel findings. Patented inventions with greater software intensity are more frequently cited and more likely to be renewed for legal protection. This effect is stronger for software patents than non-software patents, though it varies across firms depending on business scope and patent value measures. Increases in software innovation are associated with greater software contents in the subsequent period’s business profile while those of nonsoftware innovation orient business away from software-based products and services, and this pattern is particularly strong for pure IT hardware firms. Greater software innovation also drives the shift toward more software-intensive business, allowing firms to differentiate themselves from rivals in product and service offerings. This differentiation benefit appears unique to pure IT hardware firms. Despite the advantages of pure firms in software-enabled technological value creation and competitive positioning, diversified firms are no less likely to create firm value from software-based innovation. We find evidence that firms optimize their innovation strategies along the dimension of exploitation and exploration subject to their business scope constraints. Our study offers one of the first evidence that software innovation helps mitigate product market competition and thus substantiates a mechanism through which software-based innovation creates economic value. Collapse

Topics: innovation management software patent computer hardware research and development digital innovation

Methods: qualitative content analysis regression analysis method ordinary least square longitudinal research SEC EDGAR

Theories: ambidexterity theory