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Market-Shaping Strategies: Shifting Loci of Exchange and Eliminating Resource Integration Bottlenecks
Authors: Suvi Nenonen (University of Auckland Business School), Kaj Storbacka (University of Auckland Business School, New Zealand)
Markets are increasingly seen sees as complex systems (Arthur, 2015; Vargo & Lusch, 2011) or ecosystems (Adner, 2017; Lusch et al., 2016), suggesting that market change happens in a balance between deliberate shaping efforts by various market actors, and spontaneous emergent developments (Mars et al., 2012). However, many of the widely taught and used frameworks are based on a linear, dyadic and static view of markets, making them ill-equipped for the contemporary networked and dynamic operating environments.
Recently, Vargo and Lusch (2017, 59) called for more evidence-based research that integrates “frameworks and theories on strategy development and implementation with the complexity of service ecosystems”. Thus, the purpose of our research is to identify recurring patterns of market-shaping: what strategies do market-shaping actors use in order to influence service ecosystems?
Adopting exploratory case study as our method, we analyzed 84 in-depth semi-structured interviews from 21 case companies against the conceptualization of systemic markets put forward by Nenonen et al. (2018). Our analysis identified four recurring market-shaping strategies:
Shifting the loci of exchange. The first identified market-shaping strategy is based on relocating the interface where the monetized exchange takes place. This can take place through monetizing an activity that has been previously conducted outside monetized exchange, or by deliberately bundling or unbundling offerings into larger or smaller entities to be exchanged.
New resources for resource integration. The second market-shaping strategy relies on introducing new resources for resource integration. This can happen through commercializing technological inventions or by introducing new (often operant) resources to actors’ use environment through non-commercial means.
Increasing actor participation. The third market-shaping strategy was the most widely used, and it consists of various ways of encouraging more actors to participate in the market. Observed ways of implementing this strategy included turning non-users and non-payers to paying customers, using lower price points or ‘as-as-a-service’ pricing models that lower capital expenditure and/or align incentives among actors, and eliminating regulatory bottlenecks limiting actors to act as suppliers.
Increasing service ecosystem volume and efficiency. The fourth and final identified market shaping strategy focuses on increasing ecosystem volume and efficiency by using wider or safer methods of matching exchanging actors, scaling up cottage industries, and modifying outdated social norms to improve system efficiency.
Our research contributes to the on-going investigations on how the loci of market exchanges are renegotiated (Lusch & Watts, 2018) and the interplay between resource integration practices and actors’ agency (Taillard et al., 2016). The identified market-shaping strategies can also form a basis for managerial applications on how various market actors – including public actors – can broaden their strategic repertoire from reacting to market changes to inducing them.