Enhancing the Understanding of Processes and Outcomes of Innovation: The Contribution of Effectuation to S-D Logic

S-D logic understands innovation as a novel and useful integration of dynamic resources and highlights the role of institutionalization as an essential driver of innovation. The purpose of this chapter is to examine in more detail the nature of innovation processes and outcomes in the S-D logic framework. The focus is on the contribution that the approach of effectuation can provide to S-D logic in the analysis of innovation. While the S-D logic suggests two particular outcomes of innovation processes-value propositions and transformed service ecosystems-the former alone is insufficient to innovation. For innovation to be sustainable, new market practices must become institutionalized and value propositions agreed upon by the engaged actors to (re)create the market and transform the service ecosystem. The chapter shows how the views of effectuation can help elaborate the institutionalization processes in innovation by emphasizing experimentation in value proposition development and negotiations in actor engagement.