Research Commentary - The New Organizing Logic of Digital Innovation: An Agenda for Information Systems Research

In this essay, we argue that pervasive digitization gives birth to a new type of product architecture, the layered modular architecture. The layered modular architecture extends the modular architecture of physical products by incorporating four loosely coupled layers of devices, networks, services, and contents created by digital technology. We posit that this new architecture instigates profound changes in the ways that firms organize for innovation in the future. We develop (1) a theoretical framework to describe the emerging organizing logic of digital innovation, and (2) an IS research agenda for digital strategy strategies and the creation and management of corporate IT infrastructures. Acknowledgements: We would like to thank two anonymous reviewers who provided insightful comments. We also want to thank Kentaro Nobeoka, Yaichi Aoshima, Arun Kumaraswamy, David Schuff, and Gord Burtch for their suggestions. This paper is in part based upon work supported by the National Science Foundation under NSF grant #0621262. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the National Science Foundation.