Discovering and Managing Interdependence with Customer‐Entrepreneurs
| Author | Paavo Ritala,Hyunkyu Park,Chander Velu |
| DOI | http://doi.org/10.1111/1467-8551.12444 |
| Published date | 01 January 2021 |
| Date | 01 January 2021 |
British Journal of Management, Vol. 32, 124–146 (2021)
DOI: 10.1111/1467-8551.12444
Discovering and Managing Interdependence
with Customer-Entrepreneurs
Hyunkyu Park ,1Paavo Ritala 2and Chander Velu3
1Department of Management, University of Sussex Business School, Brighton, BN1 9RH, UK, 2School of
Business and Management, LUT University, PO BOX 20, Lappeenranta, FI 53851, Finland, and 3Department
of Engineering, University of Cambridge, Cambridge, CB2 1PZ, UK
Corresponding author email: hyunkyu.park@sussex.ac.uk
Researchon inter-organizational relationships has largely focused on the interdependence
between formal organizations. In recent years, rms have encountered a new logic in
which interdependent parties are not formal organizations but platform-based ‘customer-
entrepreneurs’ that create value through illegal means. Drawing on a 5-year-long quali-
tative study, we examine how rms recognize and instantiate this new logic and, conse-
quently,respond to their interdependencies with customer-entrepreneurs. Viewed through
the lens of institutional logic, we nd that, with the benet of hindsight, r ms recognize
the existence of the logic of customer entrepreneurship, which triggers organizational
sensemaking that is made up of three elements: interpretation of legitimacy compatibil-
ity; interpretation of efciency compatibility; and integration of stakeholder perspectives.
This sensemaking results in either a determined account concluding on the compatibility
calculus in a top-down manner, or an open-ended account avoiding the construction of a
resolute, synthesized view. A determined account leads to a deance strategy, by which
rms attempt to remove the source of interdependencies with customer-entrepreneurs,
whereas an open-ended account guides rms to espouse a decoupling strategy, whereby
rms covertly resort to efciency maximization enabled by the interdependence. Our
results offer implications for the research on inter-organizational relationships and in-
stitutional logic.
Introduction
Inter-organizational relationships are a well-
established means by which rms discover and
manage interdependencies with formal organi-
zations (Gulati and Gargiulo, 1999; Pfeffer and
Nowak, 1976; Shipilov and Gawer, 2020). In
recent years, rms have encountered a new form
of organizational interdependence with their
customers. In this emerging logic, customers no
longer play their traditional roles as passivebuyers
– rather, they proactively create and capture value
by capitalizing on the resources of rms and digi-
tal platforms. For example, numerous children are
now buying toys to create unboxing and pretend-
play videos on YouTube. Furthermore, large
numbers of students are purchasing luxury goods
to re-sell on Instagram and WeChat. We refer to
this phenomenon as customer entrepreneurshipand
dene it as the entrepreneurial activities of actors
conventionally categorized as end-consumers or
end-users in ecosystems (cf. Jacobides, Cennamo
and Gawer, 2018; von Hippel, 2005).
In the logic of customer entrepreneurship,
interdependence transpires as business-like cus-
tomers buying the products and services of rms
and then advertising, reviewing and/or re-selling
them to the rms’ existing and untapped mar-
kets. This emerging logic addresses the efciency
imperatives of rms because it offers a low-cost
route to local and global market expansion. Yet,
it also challenges the legitimacy considerations of
rms, as many customer-entrepreneurs espouse
illegal means to engender outcomes that seem
© 2020 British Academy of Management and Wiley Periodicals LLC. Published by JohnWiley & Sons Ltd, 9600 Gars-
ington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
Managing Interdependence with Customer-Entrepreneurs 125
desirable and legitimate in the eyes of a criti-
cal mass of end-consumers. Indeed, a plethora
of YouTube content creators and WeChat re-
sellers are alleged to breach the laws in relation
to business registration, tax, copyright and child
privacy (see e.g. Jones, 2019; The Economist,
2017). Then, what comes into question is how
rms cope with this new form of interdepen-
dence. Given that interdependence is a necessary
condition for rms to enter inter-organizational
relationships (Gulati and Gargiulo, 1999), rms,
in theory, are motivated to manage their interde-
pendencies with customer-entrepreneurs through
inter-organizational relationships. Or are they?
The literature on inter-organizational relation-
ships (IORs) has examined diverse modes through
which rms discover and manage interdependen-
cies in their networks (Gulati and Gargiulo, 1999;
Pfeffer, 1972; Shipilov and Gawer, 2020). This
literature has mainly assumed that constituents
in these networks are accessible through network
embeddedness and composed of legal entities
qualied to enter into contractual arrangements,
such as franchising contracts (Contractor and
Kundu, 1998), acquisitions (Buckley and Munjal,
2017) and outsourcing partnerships (Lahiri, 2016).
Firms embedded in this context discover interde-
pendence as a consequence of intentional search-
ing (Gulati and Gargiulo, 1999; Oliver, 1990) and
formalize it through a set of safeguarding de-
vices, such as inter-organizational sensemaking
and formal/informal contracting (Caniëls and Gel-
derman, 2010; Howard et al., 2019; Vlaar, Van den
Bosch and Volberda, 2006). The IOR researchers
have also shownthat rms iterate interdependence
management cycles until the parties are ‘connected
in ways that facilitate achievement of a common
goal’ (Fortwengel and Sydow, 2018; Provan, Fish
and Sydow, 2007, p. 482), or the parties conclude
that their ongoing interdependencies no longer
provide incentives for retaining cooperative ties
(Makino et al., 2007; Ring and Van de Ven, 1994).
Largely neglected in the extant literature, how-
ever, is interdependence management, with actors
falling outside the conventional categoryof formal
organizations. As such, we know little about how
the emerging logic of customer entrepreneurship
is instantiated within the rms, and why it takes
place in such a manner. Nor can we explain how
rms discover and respond to the interdependen-
cies with customer-entrepreneurs and the reasons
behind those responses. An in-depth understand-
ing of these issues is warranted because customer
entrepreneurship on digital platforms is becoming
more prevalent, with implications for both organi-
zational success and demise.
This study lls the gap by conducting a longitu-
dinal, qualitative study on the downstream inter-
actions between two cosmetics rms and one type
of customer-entrepreneur, known as daigouag ents
(see Nielsen, 2017). Composed of Chinese expa-
triates around the world, daigou agents enact cus-
tomer entrepreneurship by: (a) purchasing goods
from local stores in advance and re-selling them
to online consumers via social media platforms;
and/or (b) offering online personal-shopping ser-
vices, such as shopping on behalf of clients or
giving shopping tips. These value propositions,
though desirable for myriad online consumers, are
realized through illegal or informal means: many
daigou agents fail to register their businesses, pay
taxes or comply with copyright laws. This study
uses abductive reasoning, which guides us to con-
sult the literature on institutional logic as an ana-
lytical lens to examine the collected data.
A study on the interdependence between rms
and emerging customer-entrepreneurs is unique
in IOR studies and the research on institutional
logic, allowing us to contribute to the extant liter-
ature in two signicant ways. First, we add to the
existing understanding of how rms ‘discover and
manage interdependencies’ (Gulati and Gargiulo,
1999; Pfeffer, 1972; Shipilov and Gawer, 2020,
p. 94). Our ndings reveal that rms tend to
recognize, in hindsight, the existence of customer-
entrepreneurship logic, thereby engaging in orga-
nizational sensemaking to generate an actionable
guideline in response to the retrospectively discov-
ered, new form of interdependence with customer-
entrepreneurs. This sensemaking process has three
key elements: (a) interpretation of legitimacy
compatibility; (b) interpretation of efciency
compatibility; and (c) integration of stakeholder
perspectives. Based on this process, rms generate
either a determined account, guiding rms to defy
the interdependence with customer-entrepreneurs,
or an open-ended account, encouraging rms
to strategically resort to decoupling, in which
they intermittently capitalize on the resources
of customer-entrepreneurs behind the scenes.
Second, the determined and open-ended accounts
explain how sensemaking triggers the variance
in organizational responses to institutional logic,
thereby contributing to the existing discourse on
© 2020 British Academy of Management and Wiley Periodicals LLC.
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