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Heidi M.J. Bertels Successfully Defended!
Entering new value networks: A theory for incumbent firms

ADVISOR:  Peter A. Koen, Howe School of Technology Management

COMMITTEE MEMBERS :

Carol V. Brown, Howe School of Technology Management, Deborah J. Dougherty, Rutgers University, Guido H. Petit, Alcatel-Lucent, Richard R. Reilly, Howe School of Technology Management, Brian J. Sauser, School of Systems and Enterprises

ABSTRACT:
This study focuses on entry into value networks new-to-the-business-unit by incumbent business units. A value network is the network of suppliers, customers, retailers, distributors and/or partners that exist to bring to market a product with a specific set of performance criteria. Given the constant, but not always obvious, threat of disruption and obsolescence of existing businesses over time, it is important for incumbent firms to instigate organic growth. Prior research has shown that value network entry projects provide growth opportunities but are challenging for incumbents. How established organizations can increase their odds of success with value network entry is not well understood. Hence, the research question in this study is: How can incumbent firms successfully manage entries into value networks that are new to them?

This research explores the research question through the analysis of seven case studies in three distinct business units by means of grounded theory methodology. The theory that emerges links compatibility of expected outcomes of different participants in a value network entry and the presence of a pull-in or pull-out action by a crucial participant to the outcome of the project. More straightforwardly, the theory explains that the organization attempting a value network entry needs to ensure that all parties of the value-network-to-be-entered expect the outcome of the entry to be of substantial value to them. This is complex in reality since expected outcomes are instable for a variety of reasons, and participants may change their criteria for judging whether something is of substantial value to them. Therefore, initially substantial expected outcomes may turn into insubstantial ones (and vice versa), causing incompatibility (compatibility) in the value network, and leading to pull-out (pull-in) actions of participants. If these participants possess a functional monopoly (e.g. in distribution), their actions will influence entry success.