994: Dancing to the Tune? Digital Transformation and Funding of Startups in Media and Entertainment (15143)

Digital is transforming several industries and disrupting value chains. Digital is sometimes seen as enabling the spread of value chain activities across locations but at other times as reinforcing traditional colocation advantages across activities. While prior research has focused often on incumbent adaptation to such technological change, we look at startups, instead, and how they are affected based on their position in the value chain as well as co-location with other startups along the chain. We develop a theory of digital multiplicity composed of digital variety upstream and digital scale downstream to explain asymmetric benefits to colocation wherein downstream startups tend to benefit more from collocated upstream ones. We analyze the location and outcomes of startups from the US media and entertainment industry amid digital diffusion and find broad support for our theories. Our paper has implications for the literature on digital transformation, innovation ecosystems, as well as strategic entrepreneurship.

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