Managing External Innovation: The Case of Platform Extensions

platform. Integrating systemic innovation concept within the organization strategy
reduces the cost of coordination and provides control benefits, but it has been seen that
many firms lack adequate resources (e.g. financial or technical) to create the necessary
environment for successful systemic innovation (Maula, 2006).
Systemic innovation had become a collaborative process where the focal company (i.e.
platform owner) and the external parties create a resource pool for parties working on
different components of the systemic innovation that are the innovation platform and its
complements. The focal companies had become more dependent on the innovation in
complements to support their platform; therefore, the external parties are crucial for the
platform success (West & Gallagher, 2006). In order to reach these external resources,
the focal company must demonstrate a credible commitment to the systemic innovation
process and there must be significant benefits to both parties (Cusumano & Gawer,
2002). Although the focal company provides the architecture of the systemic innovation,
the external parties are not under the direct control of the focal company.
Systemic innovation involves a shift from an internal innovation process to an open and
collaborative process. This shift in the innovation process created the need to find new
governance modes and tools to carry out activities related to the creation of a successful
systemic innovation.
2.2.2 Software ecosystems and platforms
A platform can be defined as a product, service or technology that provides a base on
which other parties to build complementary products or services that run on top of the
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