Extending the enterprise for improved innovation

Complexity, turbulence, and unpredictability have driven the emergence of a new firm model, the extended enterprise(EE), which addresses the current challenges related to innovation and competition in complex scenarios. It has been defined as a set of collaborating companies, including suppliers, vendors, buyers, and customers, both upstream and downstream, from raw materials to end-use consumption, that work together to bring value to the marketplace (Davis and Spekman, 2004). This new organizational model is considered flexible and adaptive since it fosters knowledge sharing activities with different partners to improve innovation performance. However, few scholars offer a clear definition of what the EE really is and how it is evolving. In management literature, scholars tend to consider the extended enterprise and the network firm interchangeable. However, these two business models are very different and there is little research on how the EE differs from the network firm or how it attains its goals. This paper answers these questions by providing examples of EEs in different sectors.