Organizing Form, Experimentation, and Performance: Innovation in the Nascent Civilian Drone Industry

Our aim is to explore whether the benefits to firms of using community-based innovation extend to nascent markets: uncertain, high-velocity settings with novel, often complex products. Grounded in a rare empirical comparison, we closely track the two ventures (one using community-based innovation and the other firm-based) that pioneered the nascent civilian drone market. We unpack how each addressed the three major innovations that shaped this setting. Our primary insight is that the firm organizing form for innovation performs best relative to communities in nascent markets. Firms have a coordination advantage that enables quickly and accurately targeting experimentation and problem-solving processes to reduce the many specific uncertainties that characterize these markets. Although communities can help, their task self-selection advantage works best in stable settings such as established markets with simple products (e.g., modular software) and in ambiguous settings in which low-cost randomness pays off. Broadly, we contribute a theoretical framework that identifies how organizing form and problem type jointly shape innovation performance. Most important, uncertainty forms a boundary condition for when firms should rely on firm-based (versus community-based) organizing for innovation.