Drivers of institutional innovation in networks: unleashing the innovation potential of domesticated markets

Purpose – This paper aims to apply innovation networks (INs) theory to the context of domesticated markets, where innovation triggers deinstitutionalization. In such contexts, the success of INs depends on their capacity to transform the business field in which they are embedded, so that it accommodates innovative business models. Such “institutional INs” beget a meso-level finality, and this poses different requirement on their effectiveness. The purpose of this paper is to confront extant models of collaborative innovation in networks with this specific context to offer exploratory insights into how innovation can be achieved in domesticated contexts and what the differential implications are for network configurations and strategic “reinstitutionalization” practices. Design/methodology/approach – Based on an illustrative embedded case study in the Dutch steel industry, a framework offering indications on the effectiveness of discrete configurational dimensions and their fit with reinstitutionalization practices for institutional INs is suggested. The case builds on 26 semi-structured interviews and 4 focus groups with top managers in the industry. As the aim is to extend theoretical models of INs to this under-researched context, an abductive approach to theorizing, consistent with the extended case method, is adopted. Findings – Findings suggest that collaborating to redesign an institutionalized business field collectively implies a more explicit attention to interdependencies within the business field. Practical implications – Besides suggesting modifications to extant frames regarding heterogeneity in and the configuration of networks, this paper has some practical implications. The framework proposed offers managers some support in the largely ignored issue of developing a collective action network. With these findings, we aspire to stimulate further research into this relevant, yet underdeveloped, topic. Originality/value – The study extends IN theory toward innovation realization in domesticated contexts. In such contexts, IN’s success depends on their capacity to transform the business field in which they are embedded, so that it enables innovative ways of creating end-customer value. Besides suggesting a new area for theorizing about innovation networks, institutional innovation networks are also a useful template for institutional innovation and collective action research. The paper offers a framework to support managers in the largely ignored challenge of developing a collective action network. In an increasingly transparent, connected and consolidated business environment, such a challenge becomes ever more essential.