The role of dual institutional- and technological entrepreneurship in the formation of the Japanese social game industry

Dr. Mirko ERNKVIST
Jan Wallander Post-doctoral Researcher, The Ratio Institute, Sweden

The growth of social games has transformed the media landscape in recent years, expanding the game market to new players and at the same time provided a discontinuous shift in production where new entrepreneurial game companies has become dominating platform holders in the field.

Within this context, Japan has become a new global market leader in the area of social games for mobile phones, a divergent development in the overall Japanese game market where other dominating game segments (video games, arcade games) has been in decline for over a decade.This recent development calls for a new reinterpretation to understand the rapid growth of these social game platform holders and their ecosystem of developers. Previous studies that focused on the firm environment has proposed different factors related to the previous strength of the Japanese video game industry including the role of cross-cultural skill formation from related creative industries (Aoyama & Izushi, 2003), characteristics of the Japanese national innovation system (Anchordoguy, 2000; Storz, 2008), and its specific consumer culture (Nobuoka, 2010). While these studies relatively stable environmental factors explain some of the underlying conditions of the Japanese game industry, they are not sufficient by themselves in explaining the dynamic change of growth between different sectors that we have seen during the last decades, as well as the discontinuous shift to new entrepreneurial social game platform leaders.

By comparison, the more strategy oriented entrepreneurship literature has put effort into studying the key role of entrepreneurial action in building up new industries and breaking with old structures. In the case of the video game industry, a number of such studies have put forward the role of technological entrepreneurship in the formation of the industry in US (Cohen; Ernkvist, 2008), Japan (Shintaku, Tanaka, & Yanagawa, 2003; Yoshida, 2002) and elsewhere (Zackariasson & Wilson, 2012). However, while this literature has taken into account the creative role of entrepreneurship, its primary focus on technological entrepreneurship is a necessary part, but not sufficient to understand the growth of major new social game platform companies in Japan. We argue that one additional important entrepreneurial challenge in the introduction of social game industry instead is reflected in its ability to disrupt the institutional status quo, putting emphasis on the role of institutional entrepreneurship to change their institutional environment (Battilana, Leca, & Boxenbaum, 2009). This disruption of the institutional status quo is reflected in the formation of Japanese social game industry involved the introduction of (1) a completely new business model and game design practices, the creation of (2) a new platform with a new set of power relationship between developers, platform holders, supporting actors and users as well as (3) societal controversies regarding the virtual economy and the social impact of the new forms of gameplay.

This paper argues that the key to understand the entrepreneurial process of the new Japanese social game media empires is to see their growth as a result of a combination of both technological and institutional entrepreneurship. While the entrepreneurial function across these two areas have some generic similarities, they also rely on intrinsically different skills, processes and characteristics. Institutional entrepreneurship is more dependent on the highly political process to create and mobilize a wide set of external allies behind a vision for institutional change (Battilana et al., 2009). Discontinuous technological entrepreneurship, by comparison, is more dependent on the ability to secure resource allocation for the new technology among a more limited set of business actors and create an new cognitive vision regarding the nature of the new technology (Kaplan & Tripsas, 2008). In the empirical part of the paper, the general historical characteristics of the formation of the Japanese social games is outlined, providing evidence of how institutional and cultural conditions supported the formation of the new industry. This is followed by a case study of GREE and DeNA, the two leading new social game platform companies that dominate the industry, highlighting the dual role of technological- and institutional entrepreneurship processes in their effort to disrupt the Japanese game industry.

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