Opportunistic innovation in the age of digital services

This study is about competitive dynamics surrounding opportunistic innovation in the digital supply chain (i.e., on-line gaming, multi-media broadcasting, etc.). When a digital service firm falls short of delivering required services, consumers look for alternative service offerings. For competing firms, potential demand is created suddenly, and they are compelled to innovate to capture this opportunity. This innovation response occurs in reaction to a service failure, and we call it opportunistic innovation. We characterize opportunistic innovation as being situational and temporal—the opportunity is created by the failure of another firm, and it is taken up by the fast-responding firms. The goal of this study is to develop a theory of opportunistic innovation and empirically examine its presence and associated constructs. We have compiled the daily usage-and-update history of 460 online gaming services between 2014 and 2017 and their 58 major service failure events. Our results confirm the temporal and situational characteristics of opportunistic innovation. Firms with alternative services quickly introduce innovation to the market shortly after a service failure when the readiness for convertibility at competing firms is high. In addition, results suggest that opportunistic innovation is constrained by the resource congestion on the supplier side in the digital supply chain.