Discussion of Findings

ecosystem possess superior digital capabilities, most likely particularly in developing complex digital infrastructure and digital platforms (Yoo et al. 2012). Contrary to the predictions of IT entrants exclusively profiting from relational rents (Dyer and Singh 1998), incumbents might be spun into the network that has been established by IT entrants, allowing them to leverage a widespread network and profit from relational rents as well (Lavie 2006). It is assumed that this is a result of the effort to engage in digital innovation, which implies close collaboration among a variety of actors providing digital and physical components (Bohnsack et al. 2021). Accordingly, this finding lends support for the assertion that digital innovation is not a zero sum game, where the profits of one actor automatically harm the profits of another. Instead, flourishing established ecosystems, revitalized by the force of digital innovation (Nischak and Hanelt 2019), might create profits for either side instead of outright disruption of incumbents (Skog et al. 2018). As previously stated, digital innovation entails combining novel components brought by IT entrants with established components provided by incumbents, resulting in a modular-layered (Yoo et al. 2010) or hybrid product architecture (Hylving and Schultze 2020) that realigns existing business models in the ecosystem (Bohnsack et al. 2021). As a result, an established innovation ecosystem has new chances to increase its resilience (Yoo et al. 2010;

Nischak and Hanelt 2019), resulting in overall profit opportunities. The environmental context of digitalization, thus, appears to be different from previously reported conditions, where incumbents faced huge challenges due to the advent of technology-enabled entrants eventually resulting in a decline of performance (e.g., Hill and Rothaermel 2003; Abernathy and Utterback 1978).

Second, the findings suggest that network centrality of IT entrants as measured in the automotive ecosystem has a positive impact on incumbents' performance. These findings are seen in the light of IT-enabled actors increasingly occupy strategic positions, even in established industrial-age contexts such as the automotive ecosystem (Biedebach and Hanelt 2020). Thus, IT-enabled actors appear to have influence within the automobile ecosystem, according to the additional analysis (see Figure B:11). The demand for their digital capabilities in the automotive ecosystem has enabled them to establish digital infrastructure and command essential platforms (Gao and Iyer 2006; Huber et al. 2017). To participate from technological advances such as technical standards or digital platforms, incumbents may need to partner with IT entrants (Zahra et al. 2022). Incumbents thus might address the challenges posed

by digital innovation best by partnering with IT-enabled actors that are well- connected. Hence, it is assumed that incumbents particularly aim to enter into symbiotic relationships with influential digital entrants that capture central positions in the automotive ecosystem in order to harness their capabilities, knowledge and information access. Therefore, the process of developing a layered modular architecture as a prerequisite for digital innovation will be facilitated (Yoo et al. 2012), as incumbents draw on digital capabilities and acquire an understanding of new technologies. By partnering with central, influential IT-enabled actors that established digital infrastructure in the automotive ecosystem, incumbents might benefit from access to various other partners via such digital platforms or standards. It is assumed that this fosters incumbents’ performance as it avoids complicated negotiations with multiple partners with uncertain returns. As a result, this study concludes that collaborating with new entrants benefits incumbents' performance by resulting in larger economic returns, which is consistent with past research on strategies incumbents pursue to mitigate incumbent discounts (Ansari and Krop 2012; Zahra and Nambisan 2012) and claims that “the more incumbents engage in symbiotic cross-boundary management (i.e. effective partnerships with challenger firms), the higher the chances of incumbent survival when faced with radical innovations”

(Ansari and Krop 2012, p. 1364).

1.6.1 Implications

The work complements to IS research related to digital innovation in three ways. First, this study illuminates the influences of actor constellations on digital innovation success. While prior works have emphasized the role of digital ventures in digital innovation (Huang et al. 2017), the role of IT-enabled actors was referred to as more broadly and reveals important differentiations of such actors. More specifically, this work suggests that network centrality of IT entrants seems to be of particular importance as it is positively associated with automotive incumbent performance.

Therefore, automotive incumbents seem to profit from entrants that have been involved in widespread firm networks. Thus, this study contributes to the literature on digital innovation that has revealed challenges of incumbent firms (Svahn et al. 2017), stemming from architectural change (Yoo et al. 2010; Hylving and Schultze 2020), by pointing to the influence that actor constellations and interactions in established ecosystems might have in resolving these challenges. Partnering with well-

connected IT entrants might relieve incumbents from the burden to develop everything by themselves and from the fear that such partnerships may be an invitation for digital disruption. Hence, this study also adds to the literature on digital innovation in the automotive industry by emphasizing the importance of close collaboration between physical product manufacturers and digital capability providers in adapting to the changes brought on by digital technology in order to achieve overall profit benefits (Bohnsack et al. 2021; Hanelt et al. 2021b; Svahn et al. 2017).

Second, this study contributes insights on the open questions about financial implications associated with digital innovation by the econometric analysis (Kohli and Melville 2019). As the findings suggest, network centrality of IT entrants in the automotive ecosystem appears to matter, as it is positively associated with automotive incumbent performance. Thus, digital innovation seems to enable various actors to profit from relational rents (Lavie 2006), while the previous postulated assumptions of isolating mechanisms seem to be revoked (Dyer and Singh 1998).

This finding can be associated to an increase in collaboration of automotive incumbents with well-connected and influential IT entrants in order to drive digital innovation (Yoo et al. 2010) and thus achieve superior firm performance. The findings contradict previous beliefs about incumbent performance being negatively influenced by new entrants (e.g., Benner 2007; Hill and Rothaermel 2003) and provides explanations for this based on the specific traits of digital innovation (Yoo et al. 2012).

With this work, the theoretical foundation of digital innovation and its economics is broadened by connecting it to well-established theories on incumbent discount and the relational view on competitive advantage (Dyer and Singh 1998).

Third, the findings complement the growing body of knowledge about ecosystems underlying digital innovation (Hodapp and Hanelt 2022). The findings indicate that well-connected, influential IT-actors have a positive impact on automotive incumbent firm performance, implying that entrants assist in ecosystem renewal by providing actors with new profit opportunities (Nischak and Hanelt 2019). Furthermore, the findings indicate that successful digital innovation requires interactions between actors from various ecosystems, afforded by the convergence of contexts evolving from widespread digitalization (Tilson et al. 2010), which is in line with research that suggests ecosystems influence one another (Wang 2021; Selander et al. 2013;

Biedebach et al. 2021). This research illustrates the performance implications of such ecosystem interactions for incumbent firms as a distinct group of actors. Thus, this

study complements the expanding body of research on inter-ecosystem relations in the context of digital innovation (Wang 2021).

The study offers valuable contributions to managerial practice as well. First, in the discourse about challenges automotive incumbents face due to digital innovation (Svahn et al. 2017), the findings might be helpful for managers reflecting about the threat of digital disruption (Skog et al. 2018). Managers could utilize these findings to enrich their competitive analyses and strategic thinking (Zahra and Nambisan 2012).

They might do so by developing a perspective on their competitive environment, which includes not only competitors and partners in their home-turf ecosystem, but also collaboration potentials in technology-driven ecosystems like the IT ecosystem.

As a result, extended partner scouting and management is required. Second, with this study, managers of automotive incumbents are encouraged to embrace specific new entrants. By forming joint partnerships with well-connected players, performance outcomes might be improved (Bohnsack et al. 2021). Finally, third, in the era of digital innovation, learning about ecosystems and actively participating in them, which can stimulate the adoption and commercialization of innovative technologies (Hill and Rothaermel 2003), has become a strategic imperative. The ecosystem perspective helps to overcome established views on competition, which is often perceived as a zero sum game, and embrace the pursuit of benefits for a larger set of actors.