Digital all the way down; innovation in the software industry

The call for papers for this workshop defines digital innovation as the application of digital tools, technology and digital infrastructure in new products, services, and business models that offer customers enhanced or unique value. While such a broad definition may be appealing in embracing a broad range of innovation practices, it may be argued to conflate two distinct types of innovation: those that bridge digital and physical domains and those that operate solely in the digital domain. An example of the former might be innovations associated with the digitalisation of automobile control systems in which digital technologies enhance the capabilities of a physical product. An example of the latter might be innovation in the software industry, in which the product itself is digital. In this paper we will review the literature on the characteristics of digital artefacts to try to identify the ways in which innovation practices may differ between these two types. Drawing on evidence from 18 small and medium-sized software enterprises in a specific geographic locale, we will explore the extent to which innovation in these firms may be seen as reflecting the particular characteristics of digital products. It will be argued that innovation of digital products, such as software, may be considered as a special case of digital innovation