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Organizing for Innovation in the Digitized World

Youngjin Yoo, Richard J. Boland, Jr., Kalle Lyytinen, Ann Majchrzak,

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Organization Science
Vol. 23, No. 5, September–October 2012, pp. 1398–1408
ISSN 1047-7039 (print) — ISSN 1526-5455 (online) http://dx.doi.org/10.1287/orsc.1120.0771
© 2012 INFORMS

Organizing for Innovation in the Digitized World

Youngjin Yoo
Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122,
youngjin.yoo@temple.edu

Richard J. Boland Jr., Kalle Lyytinen

Weatherhead School of Management, Case Western Reserve University, Cleveland, Ohio 44106
{boland@case.edu, kalle@case.edu}

Ann Majchrzak
Marshall School of Business, University of Southern California, Los Angeles, California 90089,
amajchrz@marshall.usc.edu

ur era is one of increasingly pervasive digital technologies, which penetrate deeply into the very core of the products,
O services, and operations of many organizations and radically change the nature of product and service innovations.
The fundamental properties of digital technology are reprogrammability and data homogenization. Together, they provide
an environment of open and flexible affordances that are used in creating innovations characterized by convergence and
generativity. An analysis of convergence and generativity observed in innovations with pervasive digital technologies reveals
three traits: (1) the importance of digital technology platforms, (2) the emergence of distributed innovations, and (3) the
prevalence of combinatorial innovation. Each of the six articles in this special issue relates to one or more of these three
traits. In this essay, we explore the organizational research implications of these three digital innovation traits and identify
research opportunities for organization science scholars. Examples from the articles in this special issue on organizing for
innovation in the digitized world are used to demonstrate the kind of organizational scholarship that can faithfully reflect
and inform innovation in a world of pervasive digital technologies.
Key words: digital innovation; technology and innovation management; organizing for innovation in the digitized world;
technology and innovation management

Organizations operate in a world that is increasingly
permeated with digital technology. It is embedded in
the very core of the products, services, and opera-
tions of many organizations. Everyday products such as
TVs, watches, and cars now have embedded software-
based digital capabilities, and organizations are routinely
creating management systems composed of intelligent
machines with digital sensors, networks, and processors.
The pervasive adoptions of and innovations with dig-
ital technologies are radically changing the nature of
products and services. At the personal level, a pair of
running shoes with embedded radio-frequency identifi-
cation chips can communicate with a jogger’s mobile
phone about the distances he or she ran and the num-
ber of steps that were taken, producing a stream of data
for that individual’s analysis or for sharing on social
media sites. At the industrial level, engineers working
on a complex construction project can now use three-
dimensional (3D) scanners to measure precise positions
of steel beam connections and surfaces and compare
them with a full 3D digital model of the building design
so that any discrepancies from the desired tolerances can
be immediately identified and corrected.
A defining characteristic of pervasive digital tech-
nology is the incorporation of digital capabilities into
1398
objects that previously had a purely physical materi-
ality. Examples would include adding software appli-
cations to a screwdriver or adding medical sensors to
clothing. Physical materiality refers to artifacts that can
be seen and touched, that are generally hard to change,
and that connote a sense of place and time. For exam-
ple, shoes have physical materiality because they can
be worn, are hard to convert into a screwdriver, and
carry social meanings of appropriate uses and settings
for wearing them. Digital materiality, in contrast, refers
to what the software incorporated into an artifact can
do by manipulating digital representations. A running
shoe with a microchip has a digital materiality in that it
can record representations of movement in a digital for-
mat, whereas one without the chip cannot. The uniquely
powerful affordances of digital technologies (Kallinikos
et al. 2010) allow designers to expand existing physical
materiality by “entangling” it with software-based digital
capabilities (Yoo 2010, Zammuto et al. 2007). For exam-
ple, a microchip in an automobile can be programmed to
record a driver’s acceleration, braking, and speed as he
or she drives and can then communicate with the driver’s
insurance company, that in turn could reduce insurance
premiums for good driving patterns. In myriad ways, the
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
digital materiality enabled by pervasive digital technol-
ogy presents new possibilities for creating experiences,
relationships, processes, and organizational forms.
The fundamental, unique properties of digital tech-
nology include reprogrammable functionality (enabled
by its Von Neumann architecture) and data homoge-
nization (enabled by discrete representation of data in
bits of 0 and 1) (Yoo et al. 2010). As digital technolo-
gies become pervasive, these properties provide envi-
ronments of open and flexible affordances that result
in two unique characteristics of organizational innova-
tion with digital technologies: convergence and genera-
tivity. These characteristics herald a new area of organi-
zational scholarship exploring the digital materiality of
new product and service designs, new business models,
and new organizational forms associated with pervasive
digital technology. The digital materiality of pervasive
technology is interwoven with and is interacting with our
more familiar physical materiality. Even though there
has been substantial research on sociotechnical systems
since the groundbreaking work at the Tavistock Institute
(see, e.g., Emery and Trist 1965), there has been less
research on the digital materiality created by pervasive
digital technology (Law and Urry 2004, Orlikowski and
Scott 2008, Robey et al. 2003). The desire to promote
increased scholarship in these emerging areas is the pri-
mary motivation for developing this special issue.
In what follows, we first discuss convergence and gen-
erativity as characteristic of innovations produced by the
affordances of pervasive digital technology. Then, we
outline three traits of innovations with pervasive digital
technology that are shaped by convergence and genera-
tivity. We believe these traits are crucial for understand-
ing the potential impact of pervasive digital technology
on innovation processes and organization science. We
then introduce the six articles in this special issue and
review how each relates to these traits. We conclude our
essay by identifying pivotal research questions and dis-
cussing their implications for research on organizational
innovation in our era of pervasive digital technologies.
Convergent and Generative Characteristics
of Pervasive Digital Technology Innovation
Technology affordance refers to “an action potential, that
is, to what an individual or organization with a partic-
ular purpose can do with a technology or information
system” (Majchrzak and Markus 2012). The affordances
of pervasive digital technologies create innovations char-
acterized by convergence and generativity, which we
explore in detail below.
The affordances of pervasive digital technology enable
innovations of convergence in a number of ways. First,
innovation with pervasive digital technology brings pre-
viously separate user experiences together. For exam-
ple, the so-called “triple-play” (combining broadband
1399
Internet, phone, and TV services) or “quadruple-play”
(adding mobile Internet) is a direct outcome of the
affordances of pervasive digital technology for bring-
ing together media contents, storage, and distribution
technologies. Digital convergence, in turn, has created
major new media experiences such as Spotify, Hulu, or
Slingbox. Second, the affordances of pervasive digital
technology create convergence because digital technol-
ogy is increasingly embedded into previously nondigi-
tal physical artifacts, creating so-called “smart” products
and tools. With these smart products and tools, a sin-
gle artifact can create multiple new affordances, each
of which previously required a separate product or tool.
For example, a smartphone can afford voice call, photo
taking, games, and many other capabilities that a user
could possibly need (e.g., emulating beer drinking, serv-
ing as a flashlight)—all on a single device. Third, the ini-
tial convergence of media and products discussed above
sets in motion another type of convergence by bring-
ing together previously separate industries. For exam-
ple, Skype, a software development firm, now competes
directly with traditional telecommunication companies
in international and long-distance markets.
The affordances of pervasive digital technology also
produce innovations characterized by generativity, or “a
technology’s overall capacity to produce unprompted
change driven by large, varied, and uncoordinated audi-
ences” (Zittrain 2006, p. 1980). Generativity means
that digital technologies become inherently dynamic
and malleable. Organizational theories that may have
assumed (either explicitly or by oversight) that tech-
nology is fixed and immutable now must consider the
possibility that the technology providing the basis for
organizational functioning is dynamically changing, trig-
gering consequent changes in organizational functioning.
As with the characteristic of convergence, pervasive dig-
ital technology creates generative innovation in a number
of different ways. First, because of its reprogrammable
nature, pervasive digital technology exhibits a procras-
tinated binding of form and function (Zittrain 2006),
meaning that new capabilities can be added after a prod-
uct or a tool has been designed and produced. An illus-
trative example is smartphones with apps. In this case,
the generativity is accomplished through the establish-
ment of a platform, which enables innovations by third-
party developers to be integrated into the platform after
the fact (Benkler 2006, Tiwana et al. 2010, Tuomi 2002).
Second, the generativity of pervasive digital technology
is manifested in what Boland et al. (2007) referred to
as wakes of innovation. For example, the introduction
of a suite of 3D visualization tools in the construction
industry changed the role and scope of surveyors, dra-
matically increasing the number of points they located
during a construction project (Boland et al. 2007). This,
in turn, required a different locus of control over the sur-
veying function and introduced new forms of contracts

1400
and project management. Finally, the use of pervasive
digital technologies is generative because it leaves an
unprecedented volume of digital traces as by-products.
The innovative uses of these digital traces can lead to
new innovations that were not anticipated by the original
innovators or consumers. For example, some innovators
could start streaming, integrating, and analyzing data
from our jogging exercises and use them to create per-
sonalized training plans and follow their progress. Such
derivative innovations add new layers of affordances to
those digital products and services. Indeed, a bulk of the
innovations in social and mobile media results from gen-
erative use of their digital traces—now reflected in the
popular idea of “big data” (Economist 2010).
Organizational Innovation with
Pervasive Digital Technology
The open, flexible affordances of pervasive digital tech-
nology are fundamentally shifting the nature of inno-
vation processes and outcomes in several ways. In this
essay, we identify three traits of innovations that are
associated with pervasive digital technology as they
are reflected in the articles that appear in this special
issue: (1) the importance of digital technology platforms,
(2) the emergence of distributed innovations, and (3) the
prevalence of combinatorial innovation. We do not view
these traits to be exhaustive, but rather as a tentative,
initial list of key traits of innovation processes and out-
comes in the age of pervasive digital technology.
Digital Technology Platforms
One the most important traits of innovation processes
and outcomes with pervasive digital technology is the
emergence of a platform as the central focus of the
innovation. A platform, as used here, is “0 0 0a building
block, providing an essential function to a technological
system—which acts as a foundation upon which other
firms can develop complementary products, technologies
or services” (Gawer 2009, p. 2). The concept of platform
is not a new one (Ciborra 1996, Kim and Kogut 1996).
However, the pervasive penetration of digital technol-
ogy with its flexible, open affordances has heightened
the role of a platform and made it the central focus
of many firms’ innovation activities. We have observed
this occurring across several industries, including the
automotive, aerospace, media, telecommunications, and
information technology industries.
The role of a platform for innovations with perva-
sive digital technology can be seen from two different
perspectives. From one perspective, to harness the con-
vergence and generativity made possible by pervasive
digital technology, firms now innovate by creating plat-
forms rather than single products. The platform and its
modules form an ecosystem (Gawer 2009, Gawer and
Cusumano 2002, Tiwana et al. 2010) that includes het-
erogeneous actors (see Boudreau 2012). For example,
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
recent smartphone ecosystems connect computing, con-
sumer electronics, media, and the mobile telecommuni-
cations industries, which collectively form complex con-
figurations of actors. As the strategic importance of these
digital platforms has grown, one of the key innovation
imperatives is how to design, build, and sustain a vibrant
platform. For example, digital technology may become
organized into loosely coupled layers of different tech-
nologies, requiring firms to decide which layer(s) of the
platform they will permit other firms to extend (Yoo
et al. 2010).
A second perspective on the role of platforms in per-
vasive digital technology is that the proliferation of dig-
ital tools or digital components allows firms to build a
platform not just of products but of digital capabilities
used throughout the organization to support its differ-
ent functions. For example, large complex information
systems such as enterprise resource planning systems or
electronic patient record systems are increasingly serv-
ing as a platform to which other tools can be added in
order to take advantage of shared data resources (Tilson
et al. 2010). The importance of digital platforms for
organizational sciences increases as digital technologies
become more pervasive; firms can now design and con-
trol multiple products or subsystems using the same dig-
ital tools that in the past would have required different
tools. For example, in the automotive industry, original
equipment manufacturers (OEMs) are now able to con-
solidate the design and control of certain components
with multiple digital capabilities that were formerly dis-
persed among suppliers (see Lee and Berente 2012).
The emergence of a platform as a key element for
innovations with pervasive digital technologies has sev-
eral important implications for organizational inquiry.
First, organizations must be designed to manage the del-
icate balance of generativity and control in the platform.
When an organization exercises too much control over
the platform, it runs the risk of driving out third-party
developers, thus choking the generativity of its platform.
When organizations do not exercise any control, on the
other hand, the platform becomes too varied and frag-
mented and thus it becomes less useful for both devel-
opers and customers; this makes it difficult for the firm
to capture value from its own innovations (West and
Gallagher 2006). For example, when Apple first intro-
duced iOS, it exercised complete control over prein-
stalled, native applications to ensure the value expected
from the platform. It was only when the independent
developers of the “jail-breaking” community introduced
user-installed, unofficial applications created by third-
party developers that Apple reluctantly embraced gen-
erativity among third-party developers and the result-
ing Apple App Store. Generativity became an essential
element of Apple’s product strategy after it embraced
generative application development by third parties as
part of its iOS platform. In contrast, Google allowed
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
too much uncontrolled change in its open Android plat-
form, and it has recently introduced measures to better
control the core of the operating system and how it is
changed. Also, its acquisition of Motorola can be seen
as an attempt to better control the user experience and
hardware interfaces. Therefore, in the context of mul-
tisided markets, uncontrollable third parties, and plat-
form generativity, there is a need to develop theories that
explain how such complex contexts unfold over time.
Although scholarly works on multisided markets and
platform organizing provide a promising departure point
(Eisenman et al. 2006, Weyl 2010), more work is needed
in this area to consider the role of power, knowledge,
culture, and institutional norms in creating and manag-
ing platform generativity in multisided markets.
A second implication for organizational scholars of
a convergent and generative platform is that, as firms
leverage more standardized tools to design, produce, and
support products and services throughout the organiza-
tion and its value chain, they share more data and pro-
cesses across organizational boundaries. The sharing of
data and processes with digital tools challenges conven-
tional norms of ownership, roles, and rules, often trig-
gering new configurations of relationships among actors
involved in innovations. Such reconfiguration can hap-
pen both within and across organizational boundaries.
For example, as digital 3D visualizations of complex
designs became a standard tool for many large construc-
tion projects, a leading construction firm consolidated
software and “digital” construction engineers through-
out to create an internal consulting unit that provides 3D
visualization and simulation capability. This reconfigu-
ration of roles brought significant changes in the way the
firm manages and executes its contracts (Berente et al.
2007). Such reconfigurations of roles, rules, and norms
suggest the value of examining organizational design as
a dynamic emergent process enabled by the digital plat-
form (Yoo et al. 2006).
A third implication for organizational scholars of gen-
erative platforms is that innovation activities increas-
ingly become horizontal as efficiencies are gained by
applying the same innovation activities and knowledge
across multiple products or platforms. For example, the
same app can be developed not only for multiple soft-
ware platforms but also for multiple hardware devices,
such as TVs, phones, and computers. Similarly, the same
software module can be used for a number of differ-
ent products. Such horizontal innovation activities imply
that not only are digital platforms needed but orga-
nizations must increasingly create generative platforms
of knowledge, skills, learning processes, structures, and
strategies (Ciborra 1996, Purvis et al. 2001). More-
over, the notion of boundaries within and across firms
becomes increasingly muddied as any boundary—be it
across firms, functions, or ecosystems—limits innova-
tion and growth. Furthermore, these boundaries likely
1401
include the fault lines between digital and physical mate-
riality (see Dougherty and Dunne 2012). More complex
roles for information systems and organizational mem-
bers are required to allow for continuous scanning to
identify the signals that indicate when boundaries should
be crossed and reconfigured and when they should not,
because too much heterogeneity and boundless innova-
tion creates chaos.
Distributed Innovations
A second trait of innovations with pervasive digital
technologies is the increasingly distributed nature of
the innovation product and process. Over the last sev-
eral decades, scholars of organizational science have
noted that the reduction of communication and coordi-
nation cost as a result of information technology has
led to a geographical dispersion of innovation activ-
ities (Dhanaraj and Parkhe 2006, Gupta et al. 2007,
Maznevski and Chudoba 2000). Scholars have also
noted that the use of information technology “democ-
ratized” the innovation process, distributing the con-
trol over innovation activities across multiple organiza-
tions (Chesbrough et al. 2006, von Hippel 2005). As a
result, the locus of innovation activities is increasingly
moving toward the periphery of organizations. Conse-
quently, firms are drawing on novel forms of organizing,
such as online communities (Faraj et al. 2011), open
innovation (Boudreau 2010), and innovation challenges
(Boudreau et al. 2011), to harness creativity outside of
the organization.
Not only are innovations increasingly moving toward
the periphery of an organization, but the distributed
innovation spurred by pervasive digital technology
increases the heterogeneity of knowledge resources
needed in order to innovate. Even though all innovations
require successful integration of heterogeneous knowl-
edge (Carlile 2002, Nonaka 1994), the convergence of
pervasive digital technology intensifies the degree of
heterogeneity and the need for dynamic balancing and
integration of knowledge resources. For example, con-
vergent products may derive from completely differ-
ent industries and unrelated bodies of knowledge. The
development of digital tools combines the knowledge,
data, and processes of diverse physical machines that
were previously disconnected. This increasingly requires
the integration of heterogeneous knowledge resources
from specialized, self-contained professions or industries
(see Barrett et al. 2012). As a result, the heterogeneity
of knowledge resources increases with pervasive digital
technology, and the quantity of knowledge that requires
integration also continues to grow as new opportunities
for convergent tools and products are generated.
Distributed innovation has several important organiza-
tional implications. First, the fluid generativity of dis-
tributed innovations suggests that knowledge resources

1402
will be increasingly heterogeneous and often only tem-
porarily integrated, with the levels of heterogeneity and
integration changing dynamically in response to unpre-
dictable changes from inside and outside the firm’s
ecosystem. The notion of clearly experienced fault lines
between organizational members (Lau and Murninghan
2005), for example, may give way to much vaguer,
fluidly interpreted fault signals. The notion of organi-
zational incentives (Kaplan and Henderson 2005) may
come to be understood as less of a structural feature of
the organization and as more of an adaptive emergent
coordination mechanism. The notion of a team may need
to be replaced with the notion of highly varying task-
expertise-people units (Brandon and Hollingshead 2004)
that are fluidly combined, carried out, and replaced in
some emergent trajectory toward a goal or problem
resolution.
A second implication of distributed innovation with
pervasive digital technology is that innovation increas-
ingly requires that others be enabled to innovate as
well. The enabling of others can now be seen in the
development of novel technological resources, such as
open data, APIs (application programming interfaces),
and SDKs (software development kits). These tech-
nological artifacts, however, are simultaneously imbri-
cated with certain social norms, organizing principles,
and role separations (Purvis et al. 2001). For exam-
ple, different forms of license agreements associated
with these resource endowments imply different social,
economic, and legal relationships among distributed
actors who may join a common innovation project. This
offers opportunities for forging new organizational and
strategic relationships around different technological and
organizational artifacts that are designed to facilitate dis-
tributed innovation.
A third implication of distributed innovation is the
emergence of new industrial structures. One interest-
ing aspect of distributed innovations is the parallel
coexistence of the “long tail” (Anderson 2006) of
extremely specialized niche players and the “super-
stars” that quickly achieve global dominance as a result
of their capability to integrate increasingly heteroge-
neous bodies of knowledge (Brynjolfsson et al. 2010).
Such industrial structures cannot be easily explained
through theories based on neoclassical economic models
or the assumptions of normal distribution (Andriani and
McKelvey 2009).
Finally, distributed innovation introduces new forms
of risk. Digital technology assumes decontextualization
of representations from physical objects and individuals.
Yet such loose coupling between the realms of the digital
and the physical can lead to serious unintended conse-
quences (see Bailey et al. 2012). The risk of misplaced
faith in distributed innovation with technology increases
as the ability of digital technology to render realistic
representations of the physical world grows. The risks
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
become even more heightened when individuals draw on
multiple tools simultaneously in enacting their practices
(Pentland and Feldman 2007). Organizational scholars
should further explore the new forms of risk from trust-
ing too much on technology.
Combinatorial Innovation
A third trait of innovation with pervasive digital tech-
nology is what we refer to as combinatorial innova-
tion. Increasingly, firms are creating new products or
services by combining existing modules with embedded
digital capabilities. Arthur (2009) notes that the nearly
limitless recombination of digital artifacts has become
a new source of innovation. Many software-based digi-
tal modules that follow standard interfaces can now be
easily “mashed up” with other modules that follow the
same standard. For example, many Web services now
offer standardized interfaces so that other developers can
combine them with their new products or services. The
tracking program associated with running shoes can be
combined with map APIs to store the tracks that a jog-
ger has run and to visualize them on the Web. They can
also be connected to Facebook APIs to share this run-
ning information with the individual’s friends. Another
example comes from circuit design. Electrical engineers
innovate next-generation microprocessors by recombin-
ing thousands of predefined granular logic circuits that
represent the foundations of chip manufacturing. These
may change across microprocessor generations and can
be combined in new ways over time. Similarly, online
communities allow members to build on other members’
contributions to cocreate new content (Faraj et al. 2011,
Lessig 2008).
Combinatorial innovations have several important
implications for organizational science, not least of
them being how combinatorial innovations are man-
aged. Modularity is a crucial condition for combinatorial
innovation (Baldwin and Clark 2000, Schilling 2000).
However, the notion of modularity adopted from the
physical world, such as those used in car manufactur-
ing or aerospace, needs to be expanded in order to fully
support combinatorial innovations with pervasive dig-
ital technologies. With traditional, “physical” modular
designs, modules are created through a decomposition
of complex products. That is, a product is designed first,
then parts and subsystems are designed with standard-
ized physical interfaces. With combinatorial innovations
of pervasive digital technologies, modules are most often
designed without fully knowing the “whole” design of
how each module will be integrated with another (Gawer
2009). When Google Maps API was first introduced,
for example, the designers at Google did not know that
it would be combined with thousands of location-based
databases to create so called “mash-ups.” Nor were they
aware when they developed Google My Maps that it
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
would be used as an emergency coordination and com-
munication capability during a natural disaster—until it
happened during Hurricane Katrina.
With combinatorial innovations, then, the boundary
of a product is unknowable and the product or ser-
vice remains incomplete (Yoo et al. 2010). In this
regard, smartphones remain essentially incomplete prod-
ucts when they are first purchased: users need to install
applications to combine new affordances into an exist-
ing product. In fact, they remain incomplete throughout
their lifetime, as users continue to add and remove appli-
cations and change their functional capabilities. Orga-
nizational theories of innovation that assume a product
has a fixed boundary and follows a certain life cycle
will need to be changed. For example, the idea of a
fixed product is essential for product life cycle models
(Abernathy and Utterback 1978, Utterback 1994), punc-
tuated models of innovation (Anderson and Tushman
1990, Tushman and Anderson 1986), and architectural
innovations (Henderson and Clark 1990). All of these
models assume stable and fixed boundaries around a
product. Organizational scholars need to explore new
theoretical accounts on product development and inno-
vations with more dynamic and permeable product
boundaries.
A second organizational implication of combinato-
rial innovation is that organizations need to invest in
new forms of creativity. In particular, organizations must
build environments for constrained serendipity (Faraj
et al. 2011) whereby emergent and serendipitous behav-
ior is supported among distributed organizations. In fact,
managing and fostering serendipity online may become
a critical dynamic capability for firms. We need to con-
sider what affordances of digital tools can support the
constrained serendipitous interactions that lead to valu-
able combinatorial innovations (see Austin et al. 2012).
A third implication of combinatorial innovation con-
cerns how innovations diffuse in an industry. Instead of
the traditional S-curve diffusion model (Mansfield et al.
1977), the contagious spread of ideas in a social net-
work context has gained increasing interest across dif-
ferent fields, including the spread of obesity (Christakis
and Fowler 2009), viral marketing (Godes et al. 2005,
Ho and Dempsey 2010), and diffusion of digital content
(Susarla et al. 2011). The contagion models of diffusion
of innovation, however, implicitly assume that innova-
tions are being spread but are not changing. Given the
advent of combinatorial innovations, ideas will not sim-
ply spread but will mutate and evolve as they spread.
Boland et al. (2007) use the image of “wakes of inno-
vation” to capture the ever-changing landscape of the
innovations as those from heterogeneous communities
collide with one another. Organization science schol-
ars have an opportunity to develop new theoretical and
empirical methods to study the evolutionary patterns and
dynamics of such combinatorial innovations.
1403
A fourth implication of combinatorial innovation is
a heightened complexity of the innovation process. As
more heterogeneous modules originally produced by
diverse actors are combined to create new innovations,
organizations increasingly run the risk of complex sys-
temic failure or other forms of unintended consequences
(Perrow 1999). Products, tools, and subsystems that
were originally built for one context can now easily tra-
verse to other contexts as they become more mobile
through digital technology. Yet such mobilization of dig-
ital components creates greater risks of failures because
of the heightened complexity of digital capabilities. New
digital tools in the areas of drug discovery (Dougherty
and Dunne 2012), complex system design (Bailey et al.
2012), or financial engineering (e.g., the calamitous
effects of the 2008 financial meltdown) are all examples
of the new forms of systemic risks brought about by per-
vasive digital technology. Scholars have become increas-
ingly aware of the new forms of organizational risks aris-
ing from this type of complexity (Faraj and Xiao 2006,
Jarvenpaa and Majchrzak 2010, Carlo et al. 2012, Weick
and Roberts 1993, Weick et al. 1999). Yet as practition-
ers continue to build new forms of novel combinatorial
innovations, new forms of organizing that embrace and
build on complexity will provide opportunities for orga-
nizational scholarship. Organizational scholars attending
to the implicit paradoxes in these contexts may find par-
ticular value in studying these new forms of organizing
(Andriopoulos and Lewis 2009, Smith and Lewis 2011,
Smith and Tushman 2005).
Articles in the Special Issue
We received 39 full-paper submissions. Through three
rounds of reviews, we eventually accepted six papers
that we felt were the most fully developed. Each article
addresses different aspects of the above-mentioned three
traits. These studies draw on rich and diverse theoret-
ical traditions and employ different empirical methods.
Given the nascent stage of pervasive digital technolo-
gies in our economy, these articles provide early pictures
of what is to come as the current wave of growth in
digital technologies continues. We hope that these stud-
ies will inspire organizational scholars to embrace more
fully the new sociotechnical reality of a ubiquitous pres-
ence of digital technology in everyday life in their the-
orizing and empirics. We also hope that these articles
demonstrate the rich and varied ways in which the con-
ditions and effects of pervasive digital technology can
be investigated.
Kevin J. Boudreau’s article, “Let a Thousand Flowers
Bloom? An Early Look at Large Numbers of Software
App Developers and Patterns of Innovation,” highlights
the impact of digital platforms on the distributed, het-
erogeneous nature of innovations with pervasive digital
technologies. He argues that platform-based innovations

1404
with pervasive digital technologies are different from tra-
ditional mix-and-match innovation strategies of modular
products. Leveraging upon unique monthly sales data
from a point-of-sales database of a leading retailer of
software applications for personal digital assistants, he is
able to analyze the impact of the size and heterogeneity
of the third-party developers on the innovation dynamics
in the highly contested mobile computing software mar-
ket. He finds that the increase in third-party developers
participating in a platform leads to an increase in the
diversity of the applications offered on the platform. He
further finds that the increase in the diversity of products
stimulates innovation within the platform, whereas sim-
ply adding more similar products in a crowded market
has an opposite effect. Therefore, he shows that the pri-
mary goal of building a digital platform is not to create
an economy of scale by having multiple suppliers who
make the same components but to build increased het-
erogeneity by attracting a large number of heterogeneous
developers who build different kinds of products. His
article clearly shows how the generative nature of affor-
dances of pervasive digital technology is deeply related
to both social and technical heterogeneity and how the
locus of innovations and the success of platforms is mov-
ing toward the periphery.
The article by Jaegul Lee and Nicholas Berente, “Dig-
ital Innovation and the Division of Innovative Labor:
Digital Controls in the Automotive Industry,” exam-
ines the impact of embedding of digital capabilities
into physical products on the structure of organizing
for innovations. Situated in the automotive industry,
which is arguably the pinnacle of the industrial econ-
omy, their study explores how the changes in the product
architecture as a result of embedding of digital tech-
nology leads to the emergence of new forms of indus-
trial organization. They argue that digital technology,
because of its homogenizing effect, defies the strict
boundaries of complex physical products across sub-
systems. Through the analysis of patent data on emis-
sion control systems between 1970 and 1998 that cover
two major technological shifts, they explore how the
emergence of a traditional dominant design and that
of a new digital technology have distinctively different
effects on organizational structure. Consistent with the
received innovation literature based on the concepts of
dominant design (Anderson and Tushman 1990, Tush-
man and Anderson 1986) and modularity (Baldwin and
Clark 2000, Henderson and Clark 1990), they report
that after the emergence of a traditional dominant design
based on modular hierarchy, car OEMs focused on
architectural innovations while suppliers increased the
intensity of component innovations. However, with the
emergence of digital control systems, they found that
OEMs refocused on component innovations while sup-
pliers increased architectural innovation activities. The
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
article illustrates how the convergent nature of affor-
dances of digital technology affects industrial organi-
zation, particularly intensifying the need to integrate
heterogeneous knowledge resources. Their work is also
an example of a study that explores the organizational
implications of hybrid innovations.
Whereas the first two articles deal with the generative
nature of affordances of pervasive digital technology, the
following three articles all deal with different forms of
complexity and the risks that arise from the convergent
nature of affordances of digital tools as they are used in
organizations. Michael Barrett, Eivor Oborn, Wanda J.
Orlikowski, and JoAnne Yates discuss the implication of
a kind of hybrid digital innovation that is often over-
looked in organization studies: robotics. Their article,
“Reconfiguring Boundary Relations: Robotic Innova-
tions in Pharmacy Work,” shows how the introduction of
drug-dispensing robots in two UK hospitals changed the
boundary relationship among pharmacists, technicians,
and assistants. Drawing on Pickering’s (1995) theory
on sociomateriality, they analyze the robot’s hybrid and
dynamic materiality that entangles the mechanical ele-
ments and digital inscriptions. By so doing, they directly
deal with the organizational implication of hybrid inno-
vations. Their findings suggest that the manipulation
and control of different forms of hybrid material of
robots influence the reconfiguration of boundary rela-
tionships among three professional groups. For exam-
ple, they find that material differences in the difficulty
of modifying mechanical elements and digital software
lead to different organizational consequences. Further-
more, they note that the highly mobile nature of digital
materiality allows two hospitals to share similar tun-
ing processes and outcomes. Their work adds a more
nuanced approach to the increasingly popular sociomate-
riality discourse (Leonardi and Barley 2010, Orlikowski
and Scott 2008) by explicitly recognizing digital and
mechanical elements as two distinct forms of materiality
and how they jointly influence organizing.
Deborah Dougherty and Danielle D. Dunne’s “Digital
Science and Knowledge Boundaries in Complex Inno-
vation” deals with the consequences of the use of digital
tools for innovations characterized as “wet” science. In
particular, they explore how the use of digital technol-
ogy in new drug discovery creates new types of fault
lines between digital scientists and traditional wet ther-
apy scientists in three knowledge dimensions: defining
the product, building the product, and projecting the
future. Furthermore, they suggest that innovation activi-
ties of both groups of scientists need to be transformed
in order to deal with these new fault lines in knowl-
edge. They propose three specific strategies to deal with
the emerging complexity that arises in the combinatorial
and hybrid nature of innovations with pervasive digi-
tal technologies. Specifically, these three strategies are
(a) building an open problem space, (b) constructing
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
partial models as a way of searching the open problem
space productively, and (c) anticipating multiple futures
by contrasting different models. Their work highlights
the inherent risks and complexity with the use of digi-
tal tools for complex, science-based product innovations.
Both scholars and practitioners should heed their warn-
ings on the new forms of fault lines due to the use of
new digital tools in organizations.
Diane E. Bailey, Paul M. Leonardi, and Stephen R.
Barley’s “The Lure of the Virtual” also deals with the
consequences of digitalization of tools, but here, it is in
the context of new car development. Specifically, they
explore how the increased dependence on more real-
istic digital tools to simulate, visualize, and test new
complex products and their “crashability” leads to unin-
tended consequences of separating physical objects and
people from the virtual representations of design objects.
They also show how the use of these highly realistic
digital tools leads to reconfigurations of jobs and tasks,
and design outcomes are not always desirable. Finally,
they point out that placing too much trust on digital tools
can backfire, and the likelihood of casting blind faith
on digital technology increases as its power and capac-
ity to represent the world grows. Their finding provides
a contrarian perspective to existing stream of research
on virtual work (Jarvenpaa et al. 2004) and electronic
commerce (Ba and Pavlou 2002) that emphasizes the
positive effects of trust. Their work illustrates, indeed,
how users build up different relationships with differ-
ent types of representations and how such differences
in relationships lead to divergent organizational impli-
cations. The authors’ relational account of digital tech-
nology adds also to the current debate on technology
affordances, which focuses on the range of potential
interactions between individuals, groups, and technology
(Majchrzak and Markus 2012).
The final article of this special issue is “Accidental
Innovation: Supporting Valuable Unpredictability in the
Creative Process,” by Robert D. Austin, Lee Devin, and
Erin E. Sullivan. This article focuses on the accidental
and serendipitous nature of innovations that are becom-
ing more pronounced during the era of pervasive dig-
ital technologies. By conducting an inductive analysis
of 20 case studies of innovations in a wide range of
contexts, including arts, design, entertainment, product
development, and scientific discovery, they specifically
discover five key themes that characterize unpredictable
innovations. Based on these five themes, they further
propose six design principles for digital technology to
increase the benefits of accidental innovation while con-
trolling for its cost. In the context of our special issue,
their design principles offer a useful foundation for
designing digital tools to support distributed and combi-
natorial innovations with pervasive digital technologies.
1405
Concluding Remarks
The central challenge to the community of organization
science scholars that we raise in this special issue is that
pervasive digital technology, while being rapidly adopted
by organizations, is fundamentally reshaping them. What
is the nature of the theories and research that can
faithfully reflect and guide these changes? Specifically,
we highlighted the convergent and generative conse-
quences of the affordances of pervasive digital technol-
ogy and how these affordances change the very nature
of innovations in organization. We then offered three
traits of innovation with pervasive digital technology that
have important implications for organizational scholar-
ship and practice. Although we offered some ideas about
how these three traits of digital innovations are lead-
ing to significant changes in organizational practices, we
hope that future research will further explore how these
three traits and other additional traits that we did not
explore are fundamentally rewiring our organizations.
Even though they are still in nascent stages, the articles
in this special issue offer some initial and novel insights
to the readers of Organization Science on the signifi-
cant implications of pervasive digital technology. First,
they show that firms must now learn how to build up
and organize the digital platforms that are increasingly
gaining strategic importance. Second, the articles show
that the introduction of pervasive digital technology in
organizations creates unseen and unexpected fault lines,
and organizations must now learn to carefully deal with
those fault lines in order to take full advantage of new
digital technologies.
One important aspect of innovation that we did not
discuss in detail and that is not covered in the special
issue articles is how pervasive digital technology is also
changing the pace of innovation. By pace, we mean the
rate at which change is happening within the innova-
tion space. On the one hand, digital technology seems to
accelerate the pace of innovation, as the reprogrammable
and generative nature of its affordances makes it easy
for firms to introduce new products and services. The
increased pace in all digital domains has resulted in a
situation in which innovation needs to be continuous,
relentless, and fast. On the other hand, firms must spend
more time to carefully design, build, and deploy plat-
forms and engage in architecting and designing-related
standards. Large-scale platforms such as Internet back-
bones, broadband mobile networks, or large-scale cloud
computing infrastructures take a long time to build, and
they require substantial financial investments and careful
coordination of the standards that define key interfaces
and behaviors (Star 2002, Tilson et al. 2010). Further-
more, such large-scale digital platforms are path depen-
dent (David 1985), creating further resistance to change.
We hope that future research will explore to what extent
this paradoxical impact of pervasive digital technology

1406
on innovation pace can have organizational implica-
tions for cognition, capability building, and sourcing of
knowledge. Future research also needs to examine how
organizations deal with multiple, and sometimes con-
flicting, temporal logics that are implied with multiple
digital and physical tools and their uses.
Recently, several legal scholars have made important
theoretical contributions toward the changing nature of
legal and regulatory systems based on their analysis
of the nature of pervasive digital technology (Benkler
2006, Lessig 2008, Zittrain 2006). Organization science
scholars may want to integrate some of these new ideas
in their conceptualization of how organizations collabo-
rate in a pervasively digital ecosystem. New methods of
research may be needed as well. Scholars have already
begun exploring various methods of analyzing large dig-
ital trace data (Lazer et al. 2009). We expect other novel
approaches that can handle such large digital trace data
will emerge.
We hope that this special issue and its six articles
will inspire organization science scholars to continue to
explore changes in organizations that operate, cooperate,
and compete in a world permeated with digital tech-
nology. Although digital technology seems to offer new
and exciting possibilities for the future—possibilities
filled with the promises of frictionless and instant access
to information, the unbounded recombination of digi-
tal components, and the provision of an unprecedented
amount of big data—the journey to the fully pervasive
digitized world is also likely to be perilous. As much
as the potential benefits of digital technology are real,
so too are the risks and complexity that ride with them.
Entrepreneurs and technologists will continue to invent
more powerful tools and better products using more
powerful, more intelligent, and smaller digital technolo-
gies. Organizations will have to learn how to com-
pete and thrive in this new world. New jobs are being
created. New coordination methods are evolving. And
new forms of organizing are being invented and imple-
mented. These provide a ripe opportunity for organiza-
tion science scholars to revise, test, and falsify existing
theories and to develop new theories that better account
for the new realities of organizational action. We hope
that our special issue provides a useful starting point for
this journey by recognizing some of the new challenges
that await us in the near future.
Acknowledgments
This material is supported in part by the National Science
Foundation’s Innovation and Organizational Sciences Program
[NSF Grant 0621262]. Any opinions, findings, and conclu-
sions or recommendations expressed in this material are those
of the author(s) and do not necessarily reflect the views of the
National Science Foundation.
Yoo et al.: Organizing for Innovation in the Digitized World
Organization Science 23(5), pp. 1398–1408, © 2012 INFORMS
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