China Europe International Business School (CEIBS), United States
A key consideration of innovation ecosystem is the coordination among firms with interdependent technologies. In this study, we explore what would happen to the development of an ecosystem when coordination is constrained by externally imposed changes. Focusing on how firms within an ecosystem adapt to externally imposed coordination constraints through innovation, our theory builds on the recent studies on technologies ecosystems and the more established literature on the dynamics of inter and intra-firm coordination. Our arguments highlight that externally imposed coordination constraints can stimulate, rather than limit the development of an ecosystem, because the adaptive pressures among firms trigger higher levels of innovation activities to search for alternative solutions that can overcome the blocked coordination with independent technologies. Using the data of the semiconductor industry in China under the shock of the U.S. export control policy through the Export Controls Reform Act (ECRA) in 2018, which restricted the coordination of Chinese semiconductor firms with major global IC designs and manufacturers, our propositions are confirmed under a difference-in-differences design. Moreover, we also found that the increase in innovation triggered by externally imposed coordination constraints is more pronounced for ecosystem bottlenecks, while the increase is more limited for the core technologies of an ecosystem.
