Digital Innovation:Organizational Foundation and Chinese Heterogeneity

The advancement of digital innovation requires a distinctive organizational structure, different from those for non-digital innovation. The research literature, however, has confused appropriate forms of organization for digital innovation with those for nondigital innovation. Organizational heterogeneity, which is often overlooked in research on digital innovation, determines a country’s core digital competencies. From a holistic perspective of corporate organization, industrial organization and innovation system, this study has identified the unique organizational structure for digital innovation in China by comparing organizational structures for digital and non-digital innovations. In terms of corporate organization, Chinese companies have intensified internal competition and cooperation to incentivize digital innovation in areas with mid-and short-term goals of profitability. In terms of industrial organization, multi-platform enterprises and diverse use cases may enhance economies of range and multi-path exploration of digital innovation. In terms of innovation system, administrative intervention in specific domains of the digital economy may help to shape expectations of innovation entities and coordinate their behaviors.