Technological Forecasting & Social Change 89 (2014) 306–315

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Technological Forecasting & Social Change

Market adoption barriers of multi-stakeholder technology:Smart homes for the aging population

Michel Ehrenhard⁎, Bjorn Kijl, Lambert NieuwenhuisUniversity of Twente, NIKOS, Netherlands Institute for Knowledge Intensive Entrepreneurship, PO Box 217, 7500 AE, The Netherlands

a r t i c l e i n f o

⁎ Corresponding author.E-mail address: m.l.ehrenhard@utwente.nl (M. Ehre

http://dx.doi.org/10.1016/j.techfore.2014.08.0020040-1625/© 2014 Elsevier Inc. All rights reserved.

a b s t r a c t

Article history:Received 1 August 2014Accepted 1 August 2014Available online 23 August 2014

For more than a decade, the Smart Home has promised to offer a better quality of life by connectingin-house devices and monitoring their usage. Such platform-based configurational technology hasdemonstrated the potential to improve comfort, healthcare, safety and security, and energyconservation — both at home and in the office. Moreover, since these technologies foster users'independence, Smart Homes can be both an answer to an agingworkforce and a largemarket for anaging customer base. Nonetheless, so far market adoption has mostly been limited to the luxurysegment and the more basic stand-alone technologies. Therefore, the main question driving thisstudy is why Smart Home technology is so scarcely implemented despite its benefits to an agingpopulation. From the literature we derive key market barriers in Smart Home value networks. Weexpand on these findings by means of a value network analysis of a Dutch smart homeimplementation case. In addition, we conducted 14 interviews that provide more insight into thevalue network of specific Smart Home services. Based on our case findings we develop a genericvalue network for Smart Homes and propose opportunities to improve market adoption of SmartHome technologies.

© 2014 Elsevier Inc. All rights reserved.

Keywords:Smart HomeAgingMarket adoptionPlatformBusiness ecosystemValue network

1. Introduction

The world population in both developing and developedcountries is aging due to increased longevity and decliningbirth rates. This effect is further exacerbated by the baby boomthat took place in many countries after the SecondWorld War.The larger absolute and relative number of the elderlywill havesubstantial societal implications, ranging from theworkforce tothe funding of governmental arrangements. Technology mayplay a key role in alleviating a number of these problems (Peineet al., 2014).

While being of value in anoffice environment, such assistivetechnology can have an even greater impact in the homeenvironment. Smart Home technology has the potential toprolong the independence of the elderly and could increasetheir wellbeing (Barlow et al., 2006; Mynatt and Rogers, 2001;

nhard).

Nugent et al., 2008). The demand for such technology will berapidly rising due to the increase in elderly consumers (Peineet al., 2014), and thus Smart Homes provide a substantialgrowth market. Moreover, government may need to turn toSmart Homes to battle ever increasing (health) care costs, ifthey are not already forced to do so by their aging constituents.Yet, the elderly already constitute a substantial market andhave considerable political clout. One might gather that thetechnology is then perhaps not mature enough. However, thetechnology already exists for decades, evidenced by the almostclassic notion of the ‘Home of the Future.’ Why then are SmartHomes so scarcely implemented, in particular considering itsbenefits to an aging population?

Indeed, age has various effects on technology acceptanceand use (Peine et al., 2014; Venkatesh et al., 2003). Forexample, both the expectation that performance is improvedby technology and the expected effort when intending to use atechnology are negatively influenced by age. On theother hand,the effect of facilitating conditions, in the formof organizational

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and technological infrastructure, on use behavior is positivelyinfluenced by age. In other words, despite lower performanceand effort expectations in relation to intended use, actual usewill be higher for the elderly with the proper support(Venkatesh et al., 2003). Likewise, despite concerns aboutuser-friendliness, lack of human response and the need fortraining, older adults were found to have an overall positiveattitude to Smart Home technologies (Demiris et al., 2004).

Perhaps, the hampered implementation lies in the com-plexity of the involved technology. For the delivery of SmartHome services a substantial amount of different types oftechnologies needs to be combined (Mynatt and Rogers, 2001;Peine, 2009). Moreover, multiple stakeholders are involved inthe delivery of these services adding furthermarket complexity.Actually, Smart Homes have more-or-less become a keyexample in the literature of the market issues surroundingcomplex platform-based technologies (Barlow et al., 2006;Peine, 2008, 2009).

Yet, although the implementation of innovations such asSmart Homes is hampered by user and technology issues,especially organizational and market issues are still ratherpoorly understood (Arthur, 2009; Murmann, 2003). In thispaper we will therefore study organizational and marketrelated barriers and propose ways to overcome these barriers.For this purpose we will draw on the notion of value networksto analyze the multi-stakeholder business ecosystem sur-rounding the Smart Home technology platform.

Bymapping the value creating system in this way, we cananalyze the value network around a specific product orservice offering. Also, we can determine which is the bestway to manage the value network in the case of Smart Hometechnologies. By combining our findings from literature andour own empirical study, we can determine barriers in SmartHome implementation in the value creating system andpropose ways to overcome these barriers.

The structure of the paper is as follows. First, we explain theSmart Home concept and go into further detail on the specificintricacies of implementing multi-stakeholder technologiesmentioned. Then, based on these intricacies, we discuss relevanttheoretical concepts related to market acceptance such asplatform markets, business ecosystems and value networks. Inthe methods section, we describe our two-step research design.Based on the collected data we present our findings with regardto implementation barriers and opportunities for Smart Homesin the results section. Based on our findings we propose ways toovercome such Smart Home barriers and draw wider implica-tions for the market adoption of complex multi-stakeholdertechnologies.

2. Theory

To understand the Smart Home phenomenon and itsrelated issues, we first provide a succinct overview on what isknown about Smart Homes. More detailed information onSmart Homes can be found elsewhere (see, e.g., Alam et al.,2012; Nikayin and De Reuver, 2013; Nugent et al., 2008; Peine,2008, 2009; Van de Kaa et al., 2009). Next, we discuss theliterature on platforms and business ecosystems. Then, wespecifically focus on value networks as a way to signal, andpotentially overcome, organizational andmarket barrierswhenimplementing specific Smart Home platform service offerings.

2.1. Smart Home and associated services

Much research attention has been devoted to connected in-house devices and their monitoring usually labeled as SmartHomes, but also known as smart house, home automation,domotique, intelligent home, adaptive home, and aware house(see Alam et al., 2012). The reason for this large interest is thatSmart Homes carry a large promise for many domains rangingfrommore cost-effective healthcare to highly increased comfortat home and in the office. Consequently, SmartHomes can be theanswer to a number of pressing, and less pressing, social issues.But what exactly are Smart Homes? Peine defines the SmartHome concept as “the use of Information and CommunicationTechnology (ICT) in the home to facilitate the interoperability ofhousehold products and services in a built entity” (Peine, 2008,p. 514).

However, the services offered under the guise of SmartHomes are at least as important to understand organizationaland market barriers. Alam et al. (2012) demarcate fourcategories of services that are central in Smart Homes. First ofall, services that provide comfort are getting more common inthe home and are rapidly becoming less of a high-end luxuryproduct. Examples of functionalities are wireless connectedentertainment devices and integrated light and heat control.Second, security and safety services can be used for monitoringof both inhabitants and undesired visitors. Examples offunctionalities are wellness monitoring, fall and immobilityidentification, and activity tracking. Third, services related tointelligent energy usage or energy conservation can be identi-fied. Such services are for example smart electricity smartmetering and energy control. Fourth and final, healthcareservices form a major part of Smart Home developments. Notonly do healthcare services overlap with some of the aforemen-tioned services, but most of the research in the Smart Homesdomain is conducted in relation to healthcare services. Especially,the domain of telemedicine has attracted quite substantialresearch attention (see, e.g., Barlow et al., 2006; Kijl et al., 2010).

2.2. Technology–stakeholder constellations

All four aforementioned service domains depend in variousdegrees on a complex constellation of both technologies andstakeholders. Peine particularly emphasizes the configurationalnature of Smart Homes, where “configurations are the subset oftechnical systems for which the pattern of how to arrange thecomponents can only be defined when the requirements of aspecific application become known” (Peine, 2009, p. 396). Forexample, interoperability and compatibility of devices andsystems are important as devices and systems are usually notprovided by the same firm (Nugent et al., 2008). Consequently,numerous consortia are attempting to define protocols andstandards for Smart Homes (see, e.g., Van de Kaa et al., 2009).

Furthermore, regulation is needed to preventmarket failuresfrom happening (Fransman, 2010). Also, when devices getconnected, especially outside of the home, privacy issues are ofconcern (Alam et al., 2012). Finally, government plays a key rolein supporting Smart Home adoption by joint developmentprojects, regulations, and funding for commercialization(Nikayin et al., 2013). In other words, the accompanying socialand economic-institutional systems are at least as important forthe market adoption of technologies like Smart Homes because

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such technological, social and economic systems actually co-evolve (Nelson and Winter, 1982; Murmann, 2003; Arthur,2009).

It seems that themore user value Smart Home technologiescan potentially create, the more complex the surroundingeconomic–institutional system becomes. This holds that sub-stantial barriers need to be overcome to reap substantialbenefits from Smart Home technologies. Not surprisingly, arecent study found that small businesses in the smart livingmarket currently pursue their individual goals in isolationinstead of focusing on collaboration (Nikayin and De Reuver, inprint). Nonetheless, there are many more technology domainswhere complex constellations of technologies and actors exist.Research into such constellations usually revolves around theplatform concept.

2.3. Platforms

Platforms for service provision come into existence astechnology becomes smarter, i.e. products become embeddedwith microprocessors and intelligence (Lusch et al., 2010). Aplatform consists of services, tools, and technologies that areshared among the stakeholders involved in the platform (Li,2009). Usually, the platform is provided by a single company,which – when this is the case – has a central role in the entirenetwork surrounding the platform. In the case of Smart Homes,platform leadership is particularly important for bringingparties together in the early and growth phase (Nikayin et al.,2013).More generally, authority-based governancewasmostlyfound to be in use in the early stages of developing serviceconcepts and technologies, while trust-based governance wasmostly found to be in use during implementation and rollout,and commercialization (De Reuver and Bouwman, 2012). Inaddition, tangible incentives are important, but also the role ofnon-tangible incentives should not be underestimated (Nikayinet al., 2013).

Interestingly, decentralization was found to be important forplatforms as well, as platforms “designed around a very lean corethat pushes costs, risks, intelligence and initiative to the periphery[allows these platforms] to scale up and evolve very rapidly andeffectively” (Olleros, 2008, p275). Nonetheless, some verysuccessful platforms are still relatively closed. In the case ofSmart Homes, however, most platforms are located in the user'shome and are kept closed for third party service providers, whileonly a few cloud-centric, open platforms exist in the market(Nikayin et al., 2013; cf. Peine, 2008).

Yet, the degree to which a platform allows complementaryproviders to access its core functions increases the likelihood ofestablishing a common service platform(Nikayin andDeReuver,2013). So, essentially, especially considering the developmentstage of Smart Homes, platforms need to open up to a certainextent. The same study, however, found that the degree towhicha platform ecosystem allows complementary providers toparticipate in the development, commercialization, and usageof a Smart Home platform decreases the likelihood of establish-ing a common service platform (Nikayin and De Reuver, 2013).

The success of a platform very much hinges on theadditional offerings of complementors in the form of indirectnetwork effects.More applicationsmay lead tomore interestedconsumers, who in turn may lead to more applications; i.e., thesize of the installed base may attract complementary products

that again increase the size of the installed base (Cenamor et al.,2013).When such indirect network effects are large enough andmarket dynamics are not only driven by quality, incumbents cankeep new entrants out even if they offer superior quality (Zhuand Iansiti, 2012). Successful platform providers may addition-ally benefit from two-sided markets. “With careful pricing thattakes into consideration the differences in cross-elasticity of demandbetween user groups providing value to each other, a firm cansubsidize one side of the market while collecting profits from theother side” (Casey and Toyli, 2012, p. 704).

2.4. Business ecosystems and value networks

To understand platform adoption, one needs to analyze thebusiness ecosystem (Cusumano, 2010). The business ecosystemis a relatively new perspective in strategy research (Iansiti andLevien, 2004; Moore, 1996a, 1996b), which enables researchersto move beyond market positioning and industrial structure byfocusing on three main characteristics: the platform, symbiosis,and co-evolution (Li, 2009). The concept was first introduced byMoore (1996a,b) who views a business ecosystem as a networkof competing and collaborating organizations from differentsectors around a specific technology: business ecosystemsconsist of a loose network of multiple actors involved in theprovision of products and services, often depending on eachother. Since competition is usually stronger between separateecosystems than within the ecosystem, the stakeholders withinthe ecosystem attain a certain level of symbiosis. Symbiosis isfurther enhanced when over time a broad community of firmsevolves that creates additional value by the supply of comple-mentary products and services to the core product or service.

Analyzing a business ecosystem around a specific multi-stakeholder product or service platform offering is not an easytask (Li, 2009), but can be done bymeans of the value networkconcept (Peppard and Rylander, 2006) when considering thatdesigners of business ecosystems constantly see and seek value(Baldwin and Clark, 2000; Boland and Collopy, 2004; Cross,2011). While business ecosystems are rather generic, a valuenetwork – with related concepts like actors, roles and valueadding activities – can be used to describe and analyze a specific(platform based) product or service offering in a detailed way(Kijl and Nieuwenhuis, 2011). In other words, a value networkcan be seen as a specification or subset of a business ecosystem.

Value networks exist where products and services arecomposed of linked components leading to multiple interde-pendencies and much of the value is created outside a firm'sboundaries— often in collaborationwith competitors (Tushman,2004). Lusch et al. (2010, p. 20) define a value network as “aspontaneous sensing and responding spatial and temporal structureof largely coupled value proposing social and economic actorsinteracting through institutions and technology, to: (1) co-produceservice offerings, (2) exchange service offerings, and (3) co-createvalue.” The value of the offering is defined by customers thoughtheir buying and consuming activities (Moller and Rajala, 2007).By analyzing value networks, the viability ofmulti-actor servicescan be determined— this can be done in both a qualitative and aquantitative way (Kijl and Nieuwenhuis, 2011). The underlyingvalue creation logic very much determines the management ofbusiness networks that form the business ecosystem.

Various actors and activities make up the underlying valuecreating system and thus the composition of the network

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(Parolini, 1999). In particular, value networks have specific setsof organizations with agreed roles (Moller and Svahn, 2006).Likewise, Hakanson and Snehota (1995) have drawn attentionto actors, activities, and resources as key elements of a businessecosystem or more specifically a value network. The valueexchanged in value networks can be both of a tangible andintangible nature (Allee, 2008). Examples of intangibles arehuman knowledge, internal structures, ways of working andreputation. Tangible value exchanges can be exchanges ofgoods, services or revenue and other transactions involvinginvoices or contracts.

In this study, we follow the value network role activityanalysis approach (Kijl and Nieuwenhuis, 2011; also see Kijlet al., 2010) by analyzing the main value network rolesperformed by the value network actors who execute certainactivities in the value network — here the role or actor offeringthe actual product or service offering that is being analyzed canbe defined as the nodal role or actor respectively. Morespecifically, we focus on tangible value delivery, i.e. we abstractfrom intangible value exchanges as well as from financialstreams – like payment of subscription fees or invoices – relatedto tangible value delivery. External factors like market andtechnology developments as well as regulation may have aprofound impact on the design of specific value networks butare not part of them (Bouwman et al., 2008).

By mapping the value creating system in this way, we cananalyze the value network around a specific product or serviceoffering. Also, by including main actors' perceptions of organi-zational andmarket barriers,we can determinewhich is the bestway to manage the value network in the case of Smart Hometechnologies. By combining our findings from literature and ourown empirical study, we can determine barriers in Smart Homemarket adoption in the value creating system and propose waysto overcome these barriers.

3. Methodology

We follow a two-step qualitative research approach todetermine the underlying value creating system of the genericSmart Home business ecosystem. Additionally, we also queriedrespondents for specific organizational and market barriers inthe adoption of Smart Homes. Based on the value network andassociated organizational and market barriers we derive marketadoption barriers. First, we conducted a case study at Trimenzo,a Dutch care organization that had just started using a newbuilding with the latest Smart Home technologies. Trimenzomanagement was very open to our study and helped us inmultiple ways. First of all, we obtained relevant documentationon the Smart Home facilities and related developments such asregulation and healthcare financing. Second, we observed theusage of Smart Home facilities in practice by visiting the buildingwhere some of the facilities were demonstrated and thepotential for additional services were discussed. Third, a sessionwas organized with the main parties involved in the develop-ment of the Smart Home building project. During this session,the Chief Executive Officer of Trimenzo, the Trimenzo carehomes division manager, the technology integrator firm, and asoftware provider presented on their role in the project, whatthey did and delivered, and their involvement with other actors.We also queried them for organizational and market barriersthey perceived during the implementation trajectory. In

addition, both directly after the presentations and at a laterstage, additional questions were asked to remove any finalunclarities. Based on the collected data wewere able to describeand analyze the Trimenzo Smart Home actors, roles andactivities and their relations. These were then mapped to createthe Trimenzo value network (for details on this method, see Kijlet al., 2010; Kijl and Nieuwenhuis, 2011).

In the second step of our study we aimed to compare ourfindings in the case study to other service domains. Hence, weaim to refine and extend (Tsang and Kwan, 1999) our initialcase specific findings into other service domains and thereforegeneralize our model. In other words, we cluster similar actors,roles and activities in the four service domains to obtain ageneric model. In Section 2.1, we identified three Smart Homeservice domains next to healthcare: comfort, security andsafety, and energy conservation. In each of these three domainswe conducted interviews with key actors about roles, activitiesand actors in the value network for this specific service domain.In total we interviewed 14 respondents: 5 for comfort, 4 forsecurity and safety, and 5 for energy conservation. Respon-dents were selected based on maximum role variation toobtain a diverse and complete overview of the value networkin the respective service domains — ranging from a construc-tion company and grid operator to a systems integrator andtechnology consultancy. Respondents were asked about thekey actors, roles and activities for each specific service domainand their view on the future development of the field.Additionally, we queried these key actors for organizationaland market barriers they themselves observed in relation toSmart Home technologies. We found there was substantialoverlap in both their descriptions of the value network as wellas the observed organizational and market barriers.

By looking for similarities and differences across the servicedomains we developed a generic – i.e. service independent –value network for Smart Homes. Such a generic value networkshows which roles are of primary importance and which aresecondary. Primary roles should always be fulfilled to have afunctioning value network; secondary roles are complementaryto the main services and can hence create extra value for theend-user. We then use this generic model – and additionalinformation on organizational and market barriers obtainedfrom the interviews – to derive generic barriers for marketadoption of complex multi-stakeholder technologies.

4. Results

In this section, we first describe organizational and marketissues and the results of our value network role activity analysisfor the Trimenzo care organization. Then, we refine and extendthese findings based on 14 interviews in the three other smarthome service domains. Based on both studies we derive ageneric value network for smart home technology and deriveassociated barriers for market adoption as well as opportunitiesto overcome these barriers.

4.1. Study 1: Trimenzo's Smart Home value network

Our case study was conducted at the Trimenzo careorganization as they had just employed a new buildingoptimized for the latest Smart Home technologies. For example,next to advanced telecom infrastructure, Trimenzo could use

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motion sensors to detect immobility of patients. Interestingly,Trimenzo management indicated that government policy hadchangedduring the development of the newbuilding. Originally,the elderly with the highest care need without hospitalizationwere targeted. However, the government's funding schemewasoverhauled in the same year the new building was delivered.According to the CEO this meant that Trimenzo now had totarget the more affluent elderly instead of those in need of thehighest level of care. Thus, we found that, in line with theliterature (see e.g. Bouwman et al., 2008; Kijl and Nieuwenhuis,2011), regulatory change – especially in highly regulated sectorssuch as healthcare – can upset the entire market and havesubstantial impact on an entire business ecosystem or valuenetwork.

Nonetheless, despite the change in type of end-user, bothour interviews and desk research indicated that the effect on thevalue networkwas limited in this case.Mostly, opportunities forgovernment funding of services decreased, yet opportunities foradditional more commercial and luxury services increasedaccording to the CEO. Also, external factors like regulatoryforces may have an important impact on the actual serviceprovisioning but because these are not directly involved in theactual value creation and capture processes, these are not part ofthe specific Trimenzo value network. Based on our deskresearch, observation study, and semi-structured interviewswith key stakeholders, we identified the key roles, actors, andactivities in the Trimenzo value network. An overview of actors,roles, and activities can be found in Table 1.

Based on our collected data and the derived actors, roles,and activities we can relate actors, roles and activities to eachother and create the Trimenzo value network. Trimenzo is anintegrated smart home care service provider and is therefore thenodal value network actor in our analysis. In order to offer value,Trimenzo has to co-operate with several partners. Next toproviders of hardware, software and network connectivity,Trimenzo works together with a system integrator that inte-grates the different hardware and software technologies into oneintegrated service technology platform. This platform can beseen as the technological foundation and enabler of Trimenzo'ssmart home care services. Next to integrating these technologies,the system integratormay offer additional care service providers,like health monitoring service providers, and access to theplatform and in that way extend its functionality for Trimenzoand its users, like (medical) care providers (e.g., doctors andnurses), patients as well as their supporters (family and friends).

Table 1Roles, actors and activities Trimenzo value network.

Role Actor

End user / patient Elderly people with care needsSupport providers Family and friends(Medical) care providers Doctors, nurses, volunteersTrimenzo service provider(nodal role)

Trimenzo (health care organization)

Additional care service providers External care partnersBuilding owner Woonzorg Nederland (housing corporation)Insurance provider Univé, Amicon, etc. (insurance companies)Home builder / designer Architect / construction firmSoftware supplier Unit 4 (software company)Hardware supplier CLB (care system developer)(Platform) system integrator Hollander techniekNetwork provider Telecom operator

The insurance provider helps in financing the actual homecare by offering a health insurance to the patient: in the Dutchcase via the government. In order to optimally make use of thehome care service platform, Trimenzo is renting a buildingsuitable for smart home care services from a housing corpora-tion, which actually owns this specially adapted building. Tomake the building suitable for such services, cooperation wasneeded with specialized homebuilders and designers whooffered customized ‘smart building services’. For an overviewof Trimenzo's value network, see Fig. 1.

4.2. Study 2: towards a generic Smart Home value network

Our case study gives an overview of the value network of onespecific SmartHome service in the care domain. To obtain amoregeneric value network for Smart Home services, we needed toextendour findings in this specific domain by including the otherthree Smart Home service domains as identified earlier: comfort,security and safety, and energy conservation next to healthcare.For this purpose, we interviewed in each service domain 4 to 5key actors and derived from their responses key roles, actors, andactivities for each separate domain (also see, Kijl et al., 2010; Kijland Nieuwenhuis, 2011). In total we conducted 14 semi-structured interviews with a variety of actors. In order to get acomprehensive overview of Smart Home related value networkroles, we listed all roles identified via the interviews. Next, wecategorized these as generic or domain-specific roles. Domain-specific roles are specifically related to one of the four homeservice domains as identified earlier whereas generic roles arerelevant roles for Smart Home services in general. Next, wecategorized the generic roles in two groups: primary andsecondary roles. The resulting list of generic value networkroles and related activities can be found in Table 2.

The primary roles can be regarded as essential roles foroffering SmartHome services, like software (platform)providersand (platform) system integrators— each of these roles can alsobe identified in the specific Trimenzo value network as depictedin Fig. 1. The so-called secondary roles are specific value networkroles that could enhance and enrich the value propositionoffered by the nodal smart homes service provider. Examples ofsuch roles are helpdesk providers and training and educationproviders. Next, we also identified some domain specific roleslike additional care (e.g. health monitoring service) providers,grid operators and security providers.

Activities

Receiving care and treatmentGiving additional support(Medical) care and treatmentIntermediary between care demand and supply, informing intramural care

Offering extra care services (like health monitoring services)Offers ‘smart building’ / housingOffering health insurancesOffers customized ‘smart building’ servicesOffers software (platform)Offers hardwareIntegrates (hardware and software) technologyOffers connectivity services

Demand sideSupply side

Trimenzo service provider

End user / pa�ent / customer

(elderly people)

(Medical) care provider

So�ware provider

Network provider

Hardware provider

Insurance provider

(Pla�orm) systemintegrator

Support providers

Offers connec�vy

services

Offers hardware

Offers integrated

service pla�orm

Offers so�ware

(Medical) care informa�on

Delivers care

Offers addi�onal

support

Offers health

insurance

Offers care and support services

Home builder / designer

(Medical) care

informa�on

Building owner

Offers ‘smartbuilding’

Offers customized‘smart building’ services

Addi�onal care service providers

Offer(s) extra care & support

services

Value delivery

Fig. 1. Value network Trimenzo.

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The generic roles and activities identified in Table 2 permitus to develop a generic Smart Home value network as depictedin Fig. 2. The generic value network consists of both primaryvalue network roles such as system integrator and softwareprovider, and secondary roles such as app provider and trainingand education provider. This value network can be regarded asa generic blueprint for exploiting Smart Home services and inthat way can support organizations active in Smart Homebusiness ecosystems in developing viable value networks fortheir specific product and service offerings.

4.3. Market adoption barriers in the generic value network

Based on studies 1 and 2 we described, analyzed anddeveloped a generic value network for Smart Home technology.In this section, we discuss four key market adoption barriers.These key barriers result from grouping the market adoptionbarriers as identified by our respondents in studies 1 and 2. Thebarriers are related to meeting end-user requirements, platformmanagement, improved value creation and capture, and the roleof the government.

First and foremost, end-users need to be convinced of thevalue of Smart Home technologies. In the interviews, unfamil-iarity with the complex technology, fear of losing control, andprivacy were mentioned by service provides in study 2 asfactors constraining implementation. Especially the possibilitythat outsiders could control security and get access to either thehouse or private information was a point of concern.

Reliability is also of importance for platform management. Inlinewith the Smart Home literature, respondents in both study 1and 2 often emphasized how lack of standardization, interoper-ability, and compatibility of tools, technologies and services

forms a large barrier for reliable implementation. This is also seenas a reasonwhy implementation is often limited to either luxuryentertainment systems or standalone applications. Additionally,respondents mentioned how maintenance costs substantiallyincrease when multiple solutions need to be operated next toeach other. As was mentioned in the literature, the respondentsin study 2 emphasized how important network partnerships arein preventing many of these platform issues. Consequently,speeding up the standard setting would speed up commercialviability.

Despite the uncertainty surrounding standards, valuecreation and capture can already be improved with the currentsystems. Respondents in study 1 and 2 mentioned the prize forthe end-user and/or platform service provider as one of themost important barriers for implementation of Smart Homes.In particular, the prize can be split up into (a) the absolute costof installing Smart Home technology in an existing building,(b) the relative cost of Smart Home technology as compared tothe total building cost for a new building, and (c) the alreadydiscussed maintenance costs.

Finally, while theoretically not considered part of the valuenetwork – the government is not directly involved in smarthome value delivery as a primary or secondary role – the role ofthe government is quintessential. First of all, substantial changesin government regulation can make Smart Home implementa-tion much more difficult as evidenced by the loss of funding inthe first study. On the other hand, respondents in study 2pointed out how regulation can also enforce the implementationof certain standards or certification and thus speed up marketadoption. Second, respondents in study 2 emphasized howgovernment can speed upmarket adoption by subsidizing SmartHome technology. Subsidies are especially beneficial when

Table 2Generic roles and activities Smart Home value network.

Role Activities Category

(Platform) systemintegrator

Integrates (hardware andsoftware) technology

Primary

Customer Pays for the product or serviceoffered

Primary

End user Using the product or serviceoffered

Primary

Hardware provider Offers hardware PrimaryNetwork provider Offers connectivity services PrimarySmart homes service(platform) provider(nodal role)

Offers smart homes services Primary

Software provider Offers software (platform) PrimaryApp provider Provides specific apps SecondaryApp store provider Offers app store functionality SecondaryBank Offers financial services SecondaryBuilding designer /architect

Offers customized 'smartbuilding' services

Secondary

Certification provider Offers certification services SecondaryConsultant Offers consultancy services SecondaryContractor Offers construction work SecondaryGovernment Determines regulation,

privacy aspects, …Secondary

Helpdesk provider Offers support SecondaryHome / building owner Offers 'smart building' SecondaryHome builder Constructing building SecondaryPrivate investor Invests in the service SecondaryPublic investor Invests in the service SecondaryR&D provider Research & development SecondaryRetailer Sells hardware SecondarySoftware developer Develops software SecondaryTechnology standardprovider

Offers technology standards Secondary

Training & educationprovider

Offers training and education Secondary

Video connection provider Offers video connectivity SecondaryWhite goods provider Offers white goods Secondary

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initial set-up costs need to be overcome and benefits can bereaped later. One service provided mentioned how governmentcould for example subsidize a pilot project to see if indeed a cost-effective business case can be made.

5. Discussion

Both developing and developed economies need to preparefor an aging population and related care costs. A partial answerlies in Smart Home technology. On one hand, Smart Homes canenable the elderly to live independently longer and thusdecrease care costs. On the other hand, Smart Home technologyis interesting for an aging customer base as it can improve theirgeneral wellbeing by increased comfort or security. Next, weprovide implications for research and theory, implications forpractice and also discuss limitations of the study.

5.1. Implications for research and theory

The outcome of our study has a number of implications forresearch. First, SmartHome technologymight beused tohelp theelderly stay independent longer. Yet, further in-depth fieldresearch over a period of time is merited to study the preciseeffects of Smart Home technology in use on elder users. On theother side of the spectrum, quantitative studies aremuch neededtoprovide cost–benefit analyses of SmartHome implementation.

Moreover, a study limited to a particular telehealth service used abusiness model engineering approach to quantitatively calculatewhere and how improvements to the value network could bemade (see, Kijl et al., 2010; Kijl and Nieuwenhuis, 2011).Although this method is too specific to derive conclusions forgeneric Smart Home value networks, it would be useful toanalyze larger platform markets using a similar quantitativemulti-actor viability analysis. Our generic smart home valuenetwork could be used as a basis for such an analysis.

Second, Smart Homes are an interesting market for an agingcustomer base even if theywould not lead to longer independentliving. In most countries, the elderly have accrued more wealththan younger generations and, after retirement, have more timeon their hands. The elderly are therefore an important economicforce, also in the form of ‘innosumers’ (Peine et al., 2014).Comfort technology – in the form of internet-enabled integratedentertainment systems – is rapidly rising in market share.Similarly, the elderly might be willing to invest in multi-sensorintegrated security systems to protect their accrued wealth. Weare just at the beginning of what is often dubbed the internet-of-things.

Third, the notion of Smart Home has wider implicationsthan for an aging population alone. For example, energyconservation is already an issue that is high on the agenda ofmany societies. The notion of Smart Home can therefore proveto be a powerful concept. In sum, cost-effectively implementedSmart Homes can contribute to environmental, social and evenfiscal sustainability (for the latter see, Ehrenhard et al., 2012)and may be a catalyst for social entrepreneurship (Van denBroek et al., 2012).

We demonstrated how service specific business ecosys-tems can be analyzed from a value network perspective.Whereas service platform business ecosystems discussionshave mostly a rather generic character, our service specificqualitative value network analysis approach offers a moredetailed and in-depth analysis focusing on actual valueexchange in multi-actor settings which is in line with the“value focus” of business ecosystem designers (Baldwin andClark, 2000; Boland and Collopy, 2004; Cross, 2011). Basedon such value network analysis, additional value creation rolesor activities and gaps between value creation and appropria-tion can be identified. Also, components of the value networkcould be positioned differently or additional value streamscould be created.

A next step could be the development of a ‘value networkcanvas’ – like the business model canvas (Osterwalder andPigneur, 2010) – to help companies in developing an overviewof their business ecosystem and the underlying value network.Whereas the business model canvas has a company-centriccharacter, a ‘value network canvas’ would have a multi-actorfocuswhich ismore in linewith platform based service offerings(Cusumano, 2010; Peine, 2008; Solaimani et al., 2013). Such acanvas could also prove beneficial to governmental regulators topredict system-wide effects of their interventions and keep aclose eye on potential market failure, especially because of itsmulti-actor focus.

By performing a service specific value network analysis on aregular basis, our approach could support theory developmentsurrounding service specific co-evolution of technological, social,and economic systems (Nelson and Winter, 1982; Murmann,2003; Arthur, 2009).

Demand sideSupply side

Smart homes service (pla�orm)

provider

End user / customer

So�ware provider

Network provider

Hardware provider(s)

(Pla�orm) systemintegrator

Offers connec�vy

services

App provider(s)

Offer(s) app store func�onality

Offers integrated

service pla�orm

Offers so�ware

Provide(s) specific

apps

Offers smarthomes

services

Training & educa�on provider

Offers training & educa�on services

Offer(s) service pla�orminforma�on

Primary role

Secondary role

Value deliveryApp store provider

Offer(s) hardware

Home builder / designer Building owner

Offers ‘smartbuilding’

Offers customized‘smart building’ services

Insurance provider Offersinsurance

Fig. 2. Generic Smart Home value network.

313M. Ehrenhard et al. / Technological Forecasting & Social Change 89 (2014) 306–315

5.2. Implications for practice

Practitioners may benefit from this study in a number ofways. First on a more general level, we derived a generic valuenetwork for Smart Home from ourmultiple data sources. Such ageneric value network can help in developing value creatingactivities and decrease the chance of creating lock-in. Addition-ally, awareness of the four key market barriers and associatedopportunities will help practitioners in preventing and other-wise overcoming such barriers.

Second, issues in relation to end-user requirements can beresolved when core platform partners increase awareness ofSmart Home functionalities by better communication of thebenefits of Smart Homes. Also, early user involvement in thedevelopment of this configurational technologywould lead to abetter user experience. Additionally, training would very muchbenefit especially the elderly and improve their self-efficacy inthe use of these technologies (Venkatesh et al., 2003). Obviously,reliability of the Smart Home is key in obtaining and sustainingend-user trust.

Third, for value creation and capture, attempts at decreasingcost are important – and cost can be expected to decreasewhentechnology becomes more mature – but increasing revenuesfor end-users or platform providers could have a far strongereffect. One way of directly increasing revenues is by creatingmore value in the form of complementary services – such asadditional apps or training – particularly when directed at thehigher segment of themarket. Furthermore, platformproviderscould offer an evidence-based business case – to for examplehousing corporations or care homes – detailing how invest-ments in integrated Smart Home technology up front wouldlower various costs during the operational phase.What's more,

value capture could be improved by convincing risk-bearers,for example insurance companies, that users of Smart Hometechnology will have a lower risk of fire or burglary or careservices can be less intensive. Additionally, platform marketsare often two sided so a firm can subsidize one side of themarket with profits from the other side (see also Casey andToyli, 2012). For instance, service providers could pay for accessto the platform. Also, despite the obvious privacy issues, userdata could be sold to service providers for better marketingpurposes.

Fourth and final, government needs to have a keen eye forprivacy concerns of its citizens related to Smart Home tech-nologies. Likewise, government could subsidize Smart Hometechnology training for the elderly. Government can increaseawareness of the benefits of Smart Home technology by targetedcommunication campaigns. Such a campaign could for instancemake clear that Smart Homes enable the elderly to stayindependent longer in their ownhomes. Similarly, elderworkersmight be enabled to work longer or more cost-effectively.Government could for example campaign for, subsidize, orregulate Smart Home energy conservation initiatives in an effortto overcome ‘oil and coal addiction’ or security and safetyinitiatives to decrease the financial and social cost of crime.

5.3. Limitations

First of all, we conducted our studies within a time frame ofabout one year. Although market adoption may seem to beclose – even for the more complete systems – we might beprovenwrong considering the development trajectory of SmartHomes so far. Moreover, if market adoption is indeed close,some of our findings could be outdated soon. Furthermore,

314 M. Ehrenhard et al. / Technological Forecasting & Social Change 89 (2014) 306–315

each separate studywas conductedwithin a timeframe of threeweeks; hence we studied Smart Home developments at aspecific point in time. Therefore, we could not study howcertain interventions to overcome barriers actually worked outover time. Also, despite the importance of two-sided marketsfor many platforms, we did not encounter a two-sided marketin our study and therefore have no specific empirical evidenceon this matter.

Second, the generalizability of our findings is limited in anumber of ways despite our research approach. Our case studywas conducted at a care home, which was one of the first toinvest heavily in Smart Home technology. Yet, if more carehomes will choose Smart Home technology due to changedDutch regulations is to be seen. Also, a care home acts as aplatform or intermediary and bundles demand for Smart Homeservices related to care. This does not mean that the SmartHome is feasible for individual elderly users. Finally, theinterviews were conducted with a few key stakeholders invarious Smart Home service domains. This means that the valuenetwork for each subdomainwas a broad overview, yet we onlyused these to develop a generic value network for Smart Homes.Nonetheless, we will have certainly overlooked some veryinteresting business opportunities that could increase valuecreation.

Third, a limitation of analyzing service specific businessecosystems by means of value networks is that the number ofroles is in principle endless. Choices need to bemade as towhichroles are most relevant for improving value creation in thebusiness ecosystem. Bymaking use of the concept of a nodal roleor actor for a specific service offering as well as distinguishingprimary and secondary roles in our second study we accommo-dated this issue. Arguably, our findings would bemore reliable ifwe had focused on one specific business ecosystem in ourresearch step. However, since there are still few if any studiesthat analyze service specific business ecosystems via valuenetworks we chose validity over reliability.

Fourth, Internet service ecosystems and related valuenetwork structures change rapidly. However, we did not payattention to how the Trimenzo ecosystem evolved over timeand what the underlying reasons for change are. By combininginsights from ecosystems and value networks with research ontechnology and industry evolution further advances could bemade here as well (see e.g. Abernathy and Utterback, 1978;Tushman and Anderson, 1986; Suarez, 2004).

6. Conclusion

Our studywas driven by a desire to understandwhymarketadoption of smart homes is hampered, especially consideringits benefits to an aging population. First, we derived from theliterature that some general technology barriers exist amongelder users –which could be overcomewith the proper support(Venkatesh et al., 2003) – and that elderly attitudes towardsSmart Home technology are positive (Demiris et al., 2004). Wetherefore focused our study on the organizational and marketaspects of Smart Homes. Many scholars study technologyissues related to service platforms, but organizational issues aremostly overlooked (Peine, 2008; Solaimani et al., 2013).Following Cusumano (2010), we therefore studied the organi-zational and market aspects of Smart Home platform adoptionfrom a business ecosystem perspective. We analyzed the

business ecosystem of a specific platform service offeringfrom a value network logic by using concepts like actors, rolesand value added activities. In thisway, wewere able to performa relatively detailed and in-depth analysis of the way value isbeing created in a multi-actor constellation –— typical forplatform based Smart Home service offerings.

We summarize four key findings from our empirical work.First of all, end-users requirements need to be closely consideredwhen designing and implementing a Smart Home platform asend-users determine the value of offered services. Second,platform management is crucial as fully-fledged Smart Homeplatforms can only become viable when standards are set andsystems are reliably integrated. Third, since price has a stronginfluence on user behavior costs need to be contained, howeveradditional value creation via complementary providers couldbe more worthwhile in the short run. Fourth, while theoreti-cally not considered part of the value network, our researchconfirmed that the role of government is not to beunderestimated (see also e.g. Bouwman et al., 2008). Govern-ment can improve Smart Home adoption by, for example,regulating the market, enforcing standards, safeguardingprivacy, or subsidizing pilot projects or initial investment cost.Yet, government can also constrain market adoption bychanging funding schemes and accompanying regulation asevidenced by our case study.

Acknowledgements

We gratefully acknowledge the Netherlands EnterpriseAgency of theMinistry of Economic Affairs for financial supportof this research. Furthermore, wewant to express our gratitudeto the students participating in the Advanced TechnologyVenturing master course for their help in data collection. Wealso like to extend a special thank you to all actors (organisa-tions and individuals)whohave participated in this research, inparticular Trimenzo and Henk-Jan van Essen.

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Michel L. Ehrenhard is an assistant professor of Entrepreneurial Leadership atthe Netherlands Institute for Knowledge Intensive Entrepreneurship (NIKOS)and a fellow of the Institute for Innovation and Governance Studies (IGS), bothat theUniversity of Twente. He is a visiting professor at the Leadership Center ofthe University of Texas at Dallas. He holds a Ph.D. in Business Administration,for which he received the 2010 Best Dissertation Award of the Public andNonprofit division of the Academy of Management. His research interests andexpertise lie at the intersection of organizational behavior, organization theoryand entrepreneurship,with a focus on decision-making during strategic changeprocesses, particularly in relation to organizational culture change, organiza-tional design/ performance management, and institutional pressures.

Bjorn Kijl is a research associate in Business Model Innovation and PlatformMarkets at theNetherlands Institute for Knowledge Intensive Entrepreneurship(NIKOS) at the University of Twente. He holds anM.Sc. (cum laude) in BusinessInformation Technology and is in the final stage of his Ph.D. research. He isthe operational lead of the European Institute of Innovation & Technologyfunded ICT Labs Business Development Accelerator and was a visitingresearcher at ESADE Business School in Barcelona. Additionally, he is afounding partner of Kingfisher Capital, a business model and investmentresearch boutique that serves tens of thousands of private as well asprofessional investors. He is also co-author of the first Dutch bestseller aboutthe investor Warren Buffett.

Lambert J.M. Nieuwenhuis is a part-time professor of Quality of Service ofTelematics Systems at the department of Industrial Engineering and BusinessInformation Systems at theUniversity of Twente. He ismanaging partner of PBFInnovation – where he advises private and public organizations on bringinginnovations tomarket – and director of EXSER: the center of service innovation.He chairs the innovation-driven research program Generic Communication,part of R&D programs funded by the Dutch Ministry of Economic Affairs.Previously, heworkedmore than 20 years for KPN Research, the R&D facility ofKPN, the telephony and Internet market leader in The Netherlands. His mainresearch interests are business modeling and ICT for e-Health.