Institutional Complexity as a Driver for Innovation in Service Ecosystems

This paper extends research on innovation as institutional change within service science and service‐dominant (S‐D) logic by conceptualizing the emergence of novel solutions in service ecosystems. We pay particular attention to how actors (individuals and organizations) are able to create new solutions that change the very institutional arrangements that guide and constrain them. We propose that institutional complexity–the multiplicity of institutional arrangements confronting actors with conflicting prescriptions for action–drives the emergence of novelty. Institutional complexity reduces the influence of prevailing institutions by activating conscious problem solving and making available multiple institutional ‘toolkits.’ These dynamic toolkits consist of the cultural norms and meanings, as well as material practices, associated with specific institutional arrangements, with which actors can jointly reconstruct and change value cocreation practices and advance change in the institutional arrangements of service ecosystems. This paper contributes to service science and S‐D logic by providing a more comprehensive understanding of innovation driven by institutional complexity, in which the stability of institutional arrangements is reconciled with the actor‐driven creation of novel solutions constitutive of institutional change.