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Article

The Economics of Hacking  

Kai-Lung Hui and Jiali Zhou

Hacking is becoming more common and dangerous. The challenge of dealing with hacking often comes from the fact that much of our wisdom about conventional crime cannot be directly applied to understand hacking behavior. Against this backdrop, hacking studies are reviewed in view of the new features of cybercrime and how these features affect the application of the classical economic theory of crime in the cyberspace. Most findings of hacking studies can be interpreted with a parsimonious demand-and-supply framework. Hackers decide whether and how much to “supply” hacking by calculating the return on hacking over other opportunities. Defenders optimally tolerate some level of hacking risks because defense is costly. This tolerance can be interpreted as an indirect “demand” for hacking. Variations in law enforcement, hacking benefits, hacking costs, legal alternatives, private defense, and the dual-use problem can variously affect the supply or demand for hacking, and in turn the equilibrium amount of hacking in the market. Overall, it is suggested that the classical economic theory of crime remains a powerful framework to explain hacking behaviors. However, the application of this theory calls for considerations of different assumptions and driving forces, such as psychological motives and economies of scale in offenses, that are often less prevalent in conventional (offline) criminal behaviors but that tend to underscore hacking in the cyberspace.

Article

External Enablers of Entrepreneurship  

Per Davidsson, Jan Recker, and Frederik von Briel

“External enabler” (EE) denotes nontrivial changes to the business environment—such as new technology, regulatory change, demographic and sociocultural trends, macroeconomic swings, and changes to the natural environment—that enable entrepreneurial pursuits. The EE framework was developed to increase knowledge accumulation in entrepreneurship and strategy research regarding the influence of environmental factors on entrepreneurial endeavors. The framework provides detailed structure and carefully defined terminology to describe, analyze, and explain the influence of changes in the business environment on entrepreneurial pursuits. EE characteristics specify the environmental changes’ range of impact in terms of spatial, sectoral, sociocultural, and temporal scope as well as the degree of suddenness and predictability of their onset. EE mechanisms specify the types of benefits individual ventures may derive from EEs. Among others, these include cost saving, resource provision, making possible new or improved products/services, and demand expansion. EE roles situate these (anticipated) mechanisms in entrepreneurial processes as triggering and/or shaping and/or outcome-enhancing. EE’s influence is conceived of as mediated by entrepreneurial agency that—in addition to agent characteristics—is contingent on the opacity (difficulty to identify) and agency-intensity (difficulty to exploit) of EE mechanisms, with the ensuing enablement being variously fortuitous or resulting from strategic deliberation.

Article

Governance in Digital Open Innovation Platforms  

Likoebe Maruping and Yukun Yang

Open innovation is defined as an approach to innovation that encourages a broad range of participants to engage in the process of identifying, creating, and deploying novel products or services. It is open in the sense that there is little to no restriction on who can participate in the innovation process. Open innovation has attracted a substantial amount of research and widespread adoption by individuals and commercial, nonprofit, and government organizations. This is attributable to three main factors. First, open innovation does not restrict who can participate in the innovation process, which broadens the access to participants and expertise. Second, to realize participants’ ideas, open innovation harnesses the power of crowds who are normally users of the product or service, which enhances the quality of innovative output. Third, open innovation often leverages digital platforms as a supporting technology, which helps entities scale up their business. Recent years have witnessed a rise in the emergence of a number of digital platforms to support various open innovation activities. Some platforms achieve notable success in continuously generating innovations (e.g., InnoCentive.com, GitHub), while others fail or experience a mass exodus of participants (e.g., MyStarbucksIdea.com, Sidecar). Prior commentaries have conducted postmortems to diagnose the failures, identifying possible reasons, such as overcharging one side of the market, failing to develop trust with users, and inappropriate timing of market entry. At the root of these and other challenges that digital platforms face in open innovation is the issue of governance. In the article, governance is conceptualized as the structures determining how rigidly authority is exerted and who has authority to make decisions and craft rules for orchestrating key activities. Unfortunately, there is no comprehensive framework for understanding governance as applied to open innovation that takes place on digital platforms. A governance perspective can lend insight on the structure of how open innovation activities on digital platforms are governed in creating and capturing value from these activities, attracting and matching participants with problems or solutions, and monitoring and controlling the innovation process. To unpack the mystery of open innovation governance, we propose a framework by synthesizing and integrating accreted knowledge from the platform governance literature that has been published in prominent journals over the past 10 years. Our framework is built around four key considerations for governance in open innovation: platform model (firm-owned, market, or community), innovation output ownership (platform-owned, pass-through, or shared), innovation engagement model (transactional, collaborative, or embedded), and nature of innovation output (idea or artifact). Further, we reveal promising research avenues on the governance of digital open innovation platforms.

Article

Innovation in Artificial Intelligence: Illustrations in Academia, Apparel, and the Arts  

Andreas Kaplan

Artificial intelligence (AI), commonly defined as “a system’s ability to correctly interpret external data, to learn from such data, and to use those learnings to achieve specific goals and tasks through flexible adaptation,” can be classified into analytical, human-inspired, and humanized AI depending upon its application of cognitive, emotional, and social intelligence. AI’s foundations took place in the 1950s. A sequence of vicissitudes of funding, interest in, and support for AI followed subsequently. In 2015 AlphaGo, Google’s AI-driven system, won against the human grandmaster in the highly complex board game Go. This is considered one of the most significant milestones in the development of AI and marks the starting of a new period, enabling several AI innovations in a variety of sectors and industries. Higher education, the fashion industry, and the arts serve as illustrations of areas wherein ample innovation based on AI occurs. Using these domains, various angles of innovation in AI can be presented and decrypted. AI innovation in higher education, for example, indicates that at some point, AI-powered robots might take over the role of human teachers. For the moment, however, AI in academia is solely used to support human beings, not to replace them. The apparel industry, specifically fast fashion—one of the planet’s biggest polluters—shows how innovation in AI can help the sector move toward sustainability and eco-responsibility through, among other ways, improved forecasting, increased customer satisfaction, and more efficient supply chain management. An analysis of AI-driven novelty in the arts, notably in museums, shows that developing highly innovative, AI-based solutions might be a necessity for the survival of a strongly declining cultural sector. These examples all show the role AI already plays in these sectors and its likely importance in their respective futures. While AI applications imply many improvements for academia, the apparel industry, and the arts, it should come as no surprise that it also has several drawbacks. Enforcing laws and regulations concerning AI is critical in order to avoid its adverse effects. Ethics and the ethical behavior of managers and leaders in various sectors and industries is likewise crucial. Education will play an additional significant role in helping AI positively influence economies and societies worldwide. Finally, international entente (i.e., the cooperation of the world’s biggest economies and nations) must take place to ensure AI’s benefit to humanity and civilization. Therefore, these challenges and areas (i.e., enforcement, ethics, education, and entente) can be summarized as the four summons of AI.

Article

Platformizing Organizations: A Synthesis of the Literature  

Pankaj Setia, Franck Soh, and Kailing Deng

Organizations are widely building digital platforms to transform operations. Digital platforms represent a new way of organizing, as they leverage technology to interconnect providers and consumers. Using digital technologies, organizations are platformizing operations, as they open their rigid and closed boundaries by interconnecting providers and consumers through advanced application programming interfaces (APIs). Early research examined platformized development of technology products, with software development companies—such as Mozilla Foundation—leading the way. However, contemporary organizations are platformizing nontechnology offerings (e.g., ride-sharing or food delivery). With growing interest in platforms, the basic tenets underlying platformization are still not clear. This article synthesizes previous literature examining platforms, with the aim of examining what platformization is and how and why organizations platformize.

Article

Virtual Worlds Affordances for Organizations  

Kathryn Aten

Virtual work has become critical to competing in the global information economy for many organizations. Successfully working through technology across time and space, especially on collaborative tasks, however, remains challenging. Virtual work can lead to feelings of isolation, communication and coordination difficulties, and decreased innovation. Researchers attribute many of these challenges to a lack of common ground. Virtual worlds, one type of virtualization technology, offer a potentially promising solution. Despite initial interest, organizational adoption of virtual worlds has been slower than researchers and proponents expected. The challenges of virtual work, however, remain, and research has identified virtual world technology affordances that can support virtual collaboration. Virtual world features such as multi-user voice and chat, persistence, avatars, and three-dimensional environment afford, in particular, social actions associated with successful collaboration. This suggests that the greatest value virtual worlds may offer to organizations is their potential to support virtual collaboration. Organizational scholars increasingly use a technology affordance lens to examine how features of malleable communication technologies influence organizational behavior and outcomes. Technology affordances represent possibilities of action enabled by technology features or combinations of features. Particularly relevant to virtual world technology are social affordances—affordances of social mediating technologies that support users’ social and psychological needs. To be useful to organizations, there must be a match between virtual world technology affordances, organizational practices, and a technology frame or organizing vision. Recent studies suggest a growing appreciation of the influence of physical organizational spaces on individual and organizational outcomes and increasing awareness of the need for virtual intelligence in individuals. This appreciation provides a possible basis for an emerging organizing vision that, along with recent technology developments and societal comfort with virtual environments, may support wider organizational adoption of virtual worlds and other virtualization technologies.