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Generativity Theory and Entrepreneurship

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Generativity Theory: How Digital Platforms Spark Unplanned Entrepreneurship

When most people hear the word "generativity," they think of the psychological definition: the need to nurture and guide the next generation. However, in the context of digital entrepreneurship, Generativity Theory has a very different, powerful meaning.

It focuses on how technology develops based on foundations set by previous innovations. It explains how platforms (like Apple or Amazon) create ecosystems where unplanned, third-party innovation can thrive.

What is Generativity in Tech?

No one is solely in charge of scientific or engineering discoveries that prompt commercial exploitation at scale. The leading voice on this subject, Jonathan Zittrain (2006), defines generativity as:

“Technology’s overall capacity to produce unprompted change driven by large, varied, and uncoordinated audiences.”

The keyword here is “unprompted.” This suggests that innovations and outcomes are unplanned and occur without the purposeful intent of the original platform creator.

The Layered Model of Innovation

Platform exploitation becomes the basis for future innovation. This implies a layered model where innovation on one layer’s technology has cascading effects on other layers.

A classic example is the evolution of the smartphone camera:

  1. Layer 1: Available hardware is combined with a recording device.
  2. Layer 2: This expands functionality, creating a digital video camera.
  3. Layer 3: App developers build on this to create platforms like Instagram or TikTok.

Nambisan (2017) expands on this using Apple’s iOS. When Apple introduced Face ID, they didn't just unlock phones; they opened the door for businesses to integrate biometric security into banking apps and sign-in pages, significantly enhancing the user experience.

Real-World Examples of Generative Platforms

New platforms create spaces for entrepreneurship, and changes to platform features can create new "entry points" for startups. Consider these examples:

  • Amazon: The platform hosts millions of independent sellers who build entire businesses around Amazon's logistics infrastructure.
  • The Apple Watch: Immediately after Apple announced physical sensors on their watch, thousands of sport and medical tech startups flocked to the space to interpret that data.
  • Fitness Apps: When wearable technology (like Fitbit) became mainstream, it generated a buzz in the health industry, leading to the current explosion of health-tracking SaaS (Software as a Service) companies.

The Role of Open Innovation

According to Jarvenpaa and Standaert (2018), "generativity promises unprompted, innovative inputs from uncoordinated audiences, whose participation with heterogeneous technological resources generates diverse outputs and opens new possibilities."

However, they note that the promise of generativity may not be fully realized if current systems are not sufficiently open. A lack of openness acts as a barrier to "knowledge spillovers," inhibiting the unplanned innovation that drives the digital economy.

Why We Need New Theories

It is worth noting that Generativity Theory is relatively new compared to classical theories of entrepreneurship. Many classical theories were conceived before the digital age.

While traditional economic theories remain relevant, we must look for new frameworks appropriate for the digital era. While newer theories like Generativity may be less refined, they are crucial for understanding the modern startup landscape. We look to future empirical research to validate these main propositions.

Technological Generativity

The Power of Open Platforms

A "Generative" technology is a platform that invites others to build on top of it. It is adaptable, easy to master, and accessible to everyone.

Example: The iPhone vs. The Toaster

  • The Non-Generative (Toaster): It does one thing well. You can't "reprogram" your toaster to become a radio. It is a closed system.
  • The Generative (iPhone App Store): Apple built the phone, but entrepreneurs built Uber, Instagram, and TikTok. Apple didn't have to invent those ideas; the platform allowed them to happen.
  • The Result: The technology becomes more valuable because thousands of people are constantly finding new ways to use it.
  • The Risk: Generative systems are messy! They are harder to control and can be used for bad things (like malware) just as easily as good things.
The 5 Qualities: For a tech to be generative, it must be: 1. Leverageable, 2. Adaptable, 3. Easy to learn, 4. Accessible, and 5. Transferable.

Build a platform, not just a product!

Video: Generativity and the Internet

References

Jarvenpaa, S., & Standaert, W. (2018). Digital probes as opening possibilities of generativity. Journal of the Association for Information Systems, 19(10), 982-1000.

Nambisan, S. (2017). Digital Entrepreneurship: Toward a Digital Technology Perspective of Entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055.

Zittrain, J. L. (2006). The Generative Internet. Harvard Law Review, 119(7), 1974-2040.

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