Past research provides instructive yet incomplete answers as to how incumbent firms can address competing concerns as they embrace digital innovation. This research offers only partial explanations of why different concerns emerge, how they manifest, and how firms can manage them. In response, we present a longitudinal case study of Volvo Car's connected car initiative. Combining extant literature with insights from the case, we argue that incumbent firms face four competing concerns-capability (existing versus requisite), focus (product versus process), collaboration (internal versus external), and governance (control versus flexibility)-and that these concerns are systemically interrelated. Firms must manage these concerns cohesively by continuously balancing new opportunities and established practices.

Abstract. Inspired by Herbert Simon's notion of nearly decomposable systems, researchers have examined modularity as a powerful approach to manage technological change in product innovation. We articulate this approach as the hierarchy-of-parts architecture and explain how it emphasizes decomposition of a design into loosely coupled parts and subsequent aggregation of these into an industrial product. To realize the scale benefits of modularity, firms successively freeze design specifications before production and therefore only allow limited windows of functionality design and redesign. This makes it difficult to take advantage of the increased speed by which digitized products can be developed and modified.To address this problem, we draw on Christopher Alexander's notion of design patterns to introduce a complementary approach to manage technological change that is resilient to digital technology. We articulate this approach as the network-of-patterns architecture and explain how it emphasizes generalization of ideas into patterns and subsequent specialization of patterns for different design purposes. In response to the increased digitization of industrial products, we demonstrate the value of complementing hierarchy-of-parts thinking with network-of-patterns thinking through a case study of infotainment architecture at an automaker.As a result, we contribute to the literature on managing products in the digital age: we highlight the properties of digital technology that increase the speed by which digitized products can be redesigned; we offer the notion of architectural frames and propose hierarchy-of-parts and networkof-patterns as frames to support innovation of digitized products; and, we outline an agenda for future research that reconsiders the work of Simon and Alexander as well as their followers to address key challenges in innovating digitized products.

Prior research on digital ecosystems focuses on the focal firm (e.g., a platform owner) and its ecosystem governance. However, there is a dearth of literature examining the non-focal actor, that is, an ecosystem participant who is at the periphery of a digital ecosystem. This paper proposes a theoretical perspective of the non-focal firm's participation across digital ecosystems for cultivating its innovation habitat through capability search and redeem. Capability search involves the location of external capability deemed valuable for extending the firm's innovation habitat. Capability redeem refers to the firm's use of external capability to develop, distribute, and/or monetize its products and services. We generate and sensitize the proposed perspective in the context of Sony Ericsson's innovation habitat by interpreting the mobile device manufacturer's participation across four digital ecosystems (Visual Basic, Java, Digital Music, and Android). Our findings suggest that the non-focal actor cannot rely on a single ecosystem for addressing all relevant layers of innovation. It benefits from pursuing a pluralistic strategy, operating across digital ecosystems to avoid investing all efforts in the same ecosystem. The model of ecosystem capability search and redeem, which is a result of ideographic research explanation, extends current perspectives on digital ecosystems and contributes to the emerging literature in the digital age.

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Although extant research convincingly argues that managers can change product innovation practices by exploiting new forms of generativity afforded by digital technology, the literature has so far been silent on how incumbent firms may conceive of and implement requisite generative capability. Against this backdrop, we report from an action research study into a digital innovation initiative aimed at developing connected cars. The managers in charge of the initiative engaged us as they faced considerable skepticism and push-back from the organization. To help the firm embrace new innovation norms and practices, we therefore infused innovation theory and options thinking into the group of managers as a means to conceive of and implement generative capability. As a result, we present and validate an integrative theoretical model of how incumbent firms may leverage digital options thinking to shape their organizational and technological resources into requisite generative capability. In conclusion, we discuss the contributions of the model and the empirical results to extant literature on generative capability in digital innovation.