Bottlenecks, cooperation, and competition in nascent ecosystems

• Author: Kathleen M. Eisenhardt,Douglas P. Hannah
• Published date: 01 September 2019
• DOI: http://doi.org/10.1002/smj.3054
• Date: 01 September 2019

COMMENTARY

Bottlenecks, cooperation, and competition in nascent

ecosystems

Douglas P. Hannah

1

| Kathleen M. Eisenhardt

2

1

McCombs School of Business, The

University of Texas at Austin, Austin,

Texas

2

School of Management Science and

Engineering, Stanford University, Stanford,

California

Correspondence

Douglas P. Hannah, McCombs School of

Business, University of Texas at Austin,

Austin, TX 78712.

Email: dph@utexas.edu

Abstract

Douglas P. Hannah and Kathleen M. Eisenhardt were rec-

ognized as a runner up for the 2019 Ralph Gomory Best

Industry Studies Paper Award.

KEYWORDS

competition, cooperation, ecosystems, Gomory award, industry studies

We are honored to have our paper, “How firms navigate cooperation and competition in nascent eco-

systems”, SMJ 39(12), 3163-3192, selected as an SMJ nominee and a runner-up for the 2019 Ralph

Gomory Best Industry Studies Paper Award from the Industry Studies Association. The Industry

Studies Association has a long history of supporting and recognizing exemplary industry studies

research, and we are honored to be included in such excellent company.

As the title suggests, our study investigated how firms intertwine cooperation and competition. It

emerged from a broader investigation of how entrepreneurial founders navigate the uncertainty and

ambiguity of nascent ecosystems. Ecosystems are settings in which firms produce discrete but com-

plementary products, and thus depend on one another to jointly create value (Adner, 2017; Kapoor,

2018). Our interest in this question was piqued (as research often is) by disconnects between the aca-

demic literature on ecosystems, which often emphasized capabilities and efficient exchange, and our

interviews with founders and executives, who did not.

Using theory-building methods and five cases in a racing research design, a core insight is the role

of bottlenecks in shaping the contours of effective strategies. Bottlenecks are components that con-

strain industry and firm growth due to their scarcity, poor quality, or weak performance (Baldwin,

2015). Our emergent theoretical framework identifies three strategies by which firms can succeed by

navigating bottlenecks within ecosystems. Each strategy has its own distinct pattern of cooperation

and competition as well as unique advantages and disadvantages.

One, which we termed the bottleneck strategy, was new to the literature. It involves hopscotching

across components as the industry evolves and bottlenecks move. This complex strategy requires a

dynamic balancing of the dialectic tension between competition and cooperation. In contrast, the

component strategy (i.e., enter the market for one component, cooperate for the rest) and system

Received: 4 June 2019 Accepted: 4 June 2019 Published on: 20 June 2019

DOI: 10.1002/smj.3054

Strat Mgmt J. 2019;40:1333–1335. wileyonlinelibrary.com/journal/smj © 2019 John Wiley & Sons, Ltd. 1333