How Open Innovation Strategy and Effectuation within Platform Ecosystem Can Foster Innovation Performance: Evidence from Digital Multi-Sided Platform Startups

Abstract

This article explores how effectuation approaches – entrepreneurial action that deals with a set of means as given and focuses on selecting between possible effects that can be created with that set of means – contribute to digital Multi-Sided Platform (MSP) startups significant growth. The study integrates effectuation theory with an open innovation strategy within the platform ecosystem to understand the innovation process under resource constraint, limited knowledge, and uncertainty. Our inductive multiple-case study findings from three leading digital MSP startups show how their founding team uses the knowledge, ideas, and resources from external parties within the platform ecosystem, including agents, user communities, and supporting partner firms, along with means from the entrepreneurs’ background, in the beginning to produce high growth innovation outcomes. Platform-based entrepreneurship becomes the integrating point of effectuation theory from entrepreneurship research and open

innovation strategy through strategic management research. The bridge for these two areas suggests implications for plat- form-based entrepreneurship research in strategic entrepreneurship.