Backing the Right Horse : A Study of the Effect of Membership Dynamics on Value Creation in the Smart Home Market

Innovation ecosystems usually form around complex product systems that cannot be materialized by one firm alone but requires cooperation among a diverse set of firms. This requires a certain level of coordination to collectively create value. Standard consortia provide a forum to achieve the required level of coordination, while revealing some fraction of the roles and dynamics within and across the underlying innovation ecosystems. In our study, we draw on recent studies on standard consortia and innovation ecosystems to examine the effect of dynamics across competing ecosystems and prominent ecosystem roles on product certifications in the smart home sector. Our framework is based on the dialectic of own interests and ecosystem interests, bridging the affiliation perspective and structure perspective described by Adner (2017). We derive two dimensions of visible membership dynamics, switching and spanning. This paper draws on a unique longitudinal dataset comprising more than 700 firms and their memberships in six standard consortia between 2006 and 2019. We focus on the Z-Wave alliance to study value creation in form of product certifications. The analyses show that firms switching more often in previous periods tend to contribute less to value creation to the Z-Wave alliance, also showing a shorter membership in the Z-Wave alliance as well as across all standard consortia, reflecting a lower level of alignment. In contrast, we find a positive association between higher spanning in multiple alliances in previous periods and value creation towards in Z-Wave alliance. Theoretical and practical implications are discussed