Technological Forecasting & Social Change 89 (2014) 306315

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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 Nieuwenhuis
University 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

Article history:
Received 1 August 2014
Accepted 1 August 2014
Available online 23 August 2014
Keywords:
Smart Home
Aging
Market adoption
Platform
Business ecosystem
Value network

a b s t r a c t
For more than a decade, the Smart Home has promised to offer a better quality of life by connecting
in-house devices and monitoring their usage. Such platform-based configurational technology has
demonstrated the potential to improve comfort, healthcare, safety and security, and energy
conservation both at home and in the office. Moreover, since these technologies foster users'
independence, Smart Homes can be both an answer to an aging workforce and a large market for an
aging customer base. Nonetheless, so far market adoption has mostly been limited to the luxury
segment and the more basic stand-alone technologies. Therefore, the main question driving this
study is why Smart Home technology is so scarcely implemented despite its benefits to an aging
population. From the literature we derive key market barriers in Smart Home value networks. We
expand on these findings by means of a value network analysis of a Dutch smart home
implementation case. In addition, we conducted 14 interviews that provide more insight into the
value network of specific Smart Home services. Based on our case findings we develop a generic
value network for Smart Homes and propose opportunities to improve market adoption of Smart
Home technologies.
2014 Elsevier Inc. All rights reserved.

1. Introduction
The world population in both developing and developed
countries is aging due to increased longevity and declining
birth rates. This effect is further exacerbated by the baby boom
that took place in many countries after the Second World War.
The larger absolute and relative number of the elderly will have
substantial societal implications, ranging from the workforce to
the funding of governmental arrangements. Technology may
play a key role in alleviating a number of these problems (Peine
et al., 2014).
While being of value in an office environment, such assistive
technology can have an even greater impact in the home
environment. Smart Home technology has the potential to
prolong the independence of the elderly and could increase
their wellbeing (Barlow et al., 2006; Mynatt and Rogers, 2001;
Corresponding author.
E-mail address: m.l.ehrenhard@utwente.nl (M. Ehrenhard).

http://dx.doi.org/10.1016/j.techfore.2014.08.002
0040-1625/ 2014 Elsevier Inc. All rights reserved.

Nugent et al., 2008). The demand for such technology will be

rapidly rising due to the increase in elderly consumers (Peine
et al., 2014), and thus Smart Homes provide a substantial
growth market. Moreover, government may need to turn to
Smart Homes to battle ever increasing (health) care costs, if
they are not already forced to do so by their aging constituents.
Yet, the elderly already constitute a substantial market and
have considerable political clout. One might gather that the
technology is then perhaps not mature enough. However, the
technology already exists for decades, evidenced by the almost
classic notion of the Home of the Future. Why then are Smart
Homes so scarcely implemented, in particular considering its
benefits to an aging population?
Indeed, age has various effects on technology acceptance
and use (Peine et al., 2014; Venkatesh et al., 2003). For
example, both the expectation that performance is improved
by technology and the expected effort when intending to use a
technology are negatively influenced by age. On the other hand,
the effect of facilitating conditions, in the form of organizational

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and technological infrastructure, on use behavior is positively

influenced by age. In other words, despite lower performance
and effort expectations in relation to intended use, actual use
will be higher for the elderly with the proper support
(Venkatesh et al., 2003). Likewise, despite concerns about
user-friendliness, lack of human response and the need for
training, older adults were found to have an overall positive
attitude to Smart Home technologies (Demiris et al., 2004).
Perhaps, the hampered implementation lies in the complexity of the involved technology. For the delivery of Smart
Home services a substantial amount of different types of
technologies needs to be combined (Mynatt and Rogers, 2001;
Peine, 2009). Moreover, multiple stakeholders are involved in
the delivery of these services adding further market complexity.
Actually, Smart Homes have more-or-less become a key
example in the literature of the market issues surrounding
complex platform-based technologies (Barlow et al., 2006;
Peine, 2008, 2009).
Yet, although the implementation of innovations such as
Smart Homes is hampered by user and technology issues,
especially organizational and market issues are still rather
poorly understood (Arthur, 2009; Murmann, 2003). In this
paper we will therefore study organizational and market
related barriers and propose ways to overcome these barriers.
For this purpose we will draw on the notion of value networks
to analyze the multi-stakeholder business ecosystem surrounding the Smart Home technology platform.
By mapping the value creating system in this way, we can
analyze the value network around a specific product or
service offering. Also, we can determine which is the best
way to manage the value network in the case of Smart Home
technologies. By combining our findings from literature and
our own empirical study, we can determine barriers in Smart
Home implementation in the value creating system and
propose ways to overcome these barriers.
The structure of the paper is as follows. First, we explain the
Smart Home concept and go into further detail on the specific
intricacies of implementing multi-stakeholder technologies
mentioned. Then, based on these intricacies, we discuss relevant
theoretical concepts related to market acceptance such as
platform markets, business ecosystems and value networks. In
the methods section, we describe our two-step research design.
Based on the collected data we present our findings with regard
to implementation barriers and opportunities for Smart Homes
in the results section. Based on our findings we propose ways to
overcome such Smart Home barriers and draw wider implications for the market adoption of complex multi-stakeholder
technologies.
2. Theory
To understand the Smart Home phenomenon and its
related issues, we first provide a succinct overview on what is
known about Smart Homes. More detailed information on
Smart 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 the
literature on platforms and business ecosystems. Then, we
specifically focus on value networks as a way to signal, and
potentially overcome, organizational and market barriers when
implementing specific Smart Home platform service offerings.

307

2.1. Smart Home and associated services

Much research attention has been devoted to connected inhouse devices and their monitoring usually labeled as Smart
Homes, 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 that
Smart Homes carry a large promise for many domains ranging
from more cost-effective healthcare to highly increased comfort
at home and in the office. Consequently, Smart Homes can be the
answer to a number of pressing, and less pressing, social issues.
But what exactly are Smart Homes? Peine defines the Smart
Home concept as the use of Information and Communication
Technology (ICT) in the home to facilitate the interoperability of
household products and services in a built entity (Peine, 2008,
p. 514).
However, the services offered under the guise of Smart
Homes are at least as important to understand organizational
and market barriers. Alam et al. (2012) demarcate four
categories of services that are central in Smart Homes. First of
all, services that provide comfort are getting more common in
the home and are rapidly becoming less of a high-end luxury
product. Examples of functionalities are wireless connected
entertainment devices and integrated light and heat control.
Second, security and safety services can be used for monitoring
of both inhabitants and undesired visitors. Examples of
functionalities are wellness monitoring, fall and immobility
identification, and activity tracking. Third, services related to
intelligent energy usage or energy conservation can be identified. Such services are for example smart electricity smart
metering and energy control. Fourth and final, healthcare
services form a major part of Smart Home developments. Not
only do healthcare services overlap with some of the aforementioned services, but most of the research in the Smart Homes
domain is conducted in relation to healthcare services. Especially,
the domain of telemedicine has attracted quite substantial
research attention (see, e.g., Barlow et al., 2006; Kijl et al., 2010).
2.2. Technologystakeholder constellations
All four aforementioned service domains depend in various
degrees on a complex constellation of both technologies and
stakeholders. Peine particularly emphasizes the configurational
nature of Smart Homes, where configurations are the subset of
technical systems for which the pattern of how to arrange the
components can only be defined when the requirements of a
specific application become known (Peine, 2009, p. 396). For
example, interoperability and compatibility of devices and
systems are important as devices and systems are usually not
provided by the same firm (Nugent et al., 2008). Consequently,
numerous consortia are attempting to define protocols and
standards for Smart Homes (see, e.g., Van de Kaa et al., 2009).
Furthermore, regulation is needed to prevent market failures
from happening (Fransman, 2010). Also, when devices get
connected, especially outside of the home, privacy issues are of
concern (Alam et al., 2012). Finally, government plays a key role
in supporting Smart Home adoption by joint development
projects, regulations, and funding for commercialization
(Nikayin et al., 2013). In other words, the accompanying social
and economic-institutional systems are at least as important for
the market adoption of technologies like Smart Homes because

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M. Ehrenhard et al. / Technological Forecasting & Social Change 89 (2014) 306315

such technological, social and economic systems actually coevolve (Nelson and Winter, 1982; Murmann, 2003; Arthur,
2009).
It seems that the more user value Smart Home technologies
can potentially create, the more complex the surrounding
economicinstitutional system becomes. This holds that substantial barriers need to be overcome to reap substantial
benefits from Smart Home technologies. Not surprisingly, a
recent study found that small businesses in the smart living
market currently pursue their individual goals in isolation
instead of focusing on collaboration (Nikayin and De Reuver, in
print). Nonetheless, there are many more technology domains
where complex constellations of technologies and actors exist.
Research into such constellations usually revolves around the
platform concept.
2.3. Platforms
Platforms for service provision come into existence as
technology becomes smarter, i.e. products become embedded
with microprocessors and intelligence (Lusch et al., 2010). A
platform consists of services, tools, and technologies that are
shared 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 entire
network surrounding the platform. In the case of Smart Homes,
platform leadership is particularly important for bringing
parties together in the early and growth phase (Nikayin et al.,
2013). More generally, authority-based governance was mostly
found to be in use in the early stages of developing service
concepts and technologies, while trust-based governance was
mostly found to be in use during implementation and rollout,
and commercialization (De Reuver and Bouwman, 2012). In
addition, tangible incentives are important, but also the role of
non-tangible incentives should not be underestimated (Nikayin
et al., 2013).
Interestingly, decentralization was found to be important for
platforms as well, as platforms designed around a very lean core
that pushes costs, risks, intelligence and initiative to the periphery
[allows these platforms] to scale up and evolve very rapidly and
effectively (Olleros, 2008, p275). Nonetheless, some very
successful platforms are still relatively closed. In the case of
Smart Homes, however, most platforms are located in the user's
home and are kept closed for third party service providers, while
only 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 complementary
providers to access its core functions increases the likelihood of
establishing a common service platform (Nikayin and De Reuver,
2013). So, essentially, especially considering the development
stage of Smart Homes, platforms need to open up to a certain
extent. The same study, however, found that the degree to which
a platform ecosystem allows complementary providers to
participate in the development, commercialization, and usage
of a Smart Home platform decreases the likelihood of establishing a common service platform (Nikayin and De Reuver, 2013).
The success of a platform very much hinges on the
additional offerings of complementors in the form of indirect
network effects. More applications may lead to more interested
consumers, who in turn may lead to more applications; i.e., the
size 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 and
market dynamics are not only driven by quality, incumbents can
keep new entrants out even if they offer superior quality (Zhu
and Iansiti, 2012). Successful platform providers may additionally benefit from two-sided markets. With careful pricing that
takes into consideration the differences in cross-elasticity of demand
between user groups providing value to each other, a firm can
subsidize one side of the market while collecting profits from the
other side (Casey and Toyli, 2012, p. 704).
2.4. Business ecosystems and value networks
To understand platform adoption, one needs to analyze the
business ecosystem (Cusumano, 2010). The business ecosystem
is a relatively new perspective in strategy research (Iansiti and
Levien, 2004; Moore, 1996a, 1996b), which enables researchers
to move beyond market positioning and industrial structure by
focusing on three main characteristics: the platform, symbiosis,
and co-evolution (Li, 2009). The concept was first introduced by
Moore (1996a,b) who views a business ecosystem as a network
of competing and collaborating organizations from different
sectors around a specific technology: business ecosystems
consist of a loose network of multiple actors involved in the
provision of products and services, often depending on each
other. Since competition is usually stronger between separate
ecosystems than within the ecosystem, the stakeholders within
the ecosystem attain a certain level of symbiosis. Symbiosis is
further enhanced when over time a broad community of firms
evolves that creates additional value by the supply of complementary products and services to the core product or service.
Analyzing a business ecosystem around a specific multistakeholder product or service platform offering is not an easy
task (Li, 2009), but can be done by means of the value network
concept (Peppard and Rylander, 2006) when considering that
designers 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 value
network with related concepts like actors, roles and value
adding 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 network
can be seen as a specification or subset of a business ecosystem.
Value networks exist where products and services are
composed of linked components leading to multiple interdependencies and much of the value is created outside a firm's
boundaries often in collaboration with competitors (Tushman,
2004). Lusch et al. (2010, p. 20) define a value network as a
spontaneous sensing and responding spatial and temporal structure
of largely coupled value proposing social and economic actors
interacting through institutions and technology, to: (1) co-produce
service offerings, (2) exchange service offerings, and (3) co-create
value. The value of the offering is defined by customers though
their buying and consuming activities (Moller and Rajala, 2007).
By analyzing value networks, the viability of multi-actor services
can be determined this can be done in both a qualitative and a
quantitative way (Kijl and Nieuwenhuis, 2011). The underlying
value creation logic very much determines the management of
business networks that form the business ecosystem.
Various actors and activities make up the underlying value
creating system and thus the composition of the network

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(Parolini, 1999). In particular, value networks have specific sets

of organizations with agreed roles (Moller and Svahn, 2006).
Likewise, Hakanson and Snehota (1995) have drawn attention
to actors, activities, and resources as key elements of a business
ecosystem or more specifically a value network. The value
exchanged in value networks can be both of a tangible and
intangible nature (Allee, 2008). Examples of intangibles are
human knowledge, internal structures, ways of working and
reputation. Tangible value exchanges can be exchanges of
goods, services or revenue and other transactions involving
invoices or contracts.
In this study, we follow the value network role activity
analysis approach (Kijl and Nieuwenhuis, 2011; also see Kijl
et al., 2010) by analyzing the main value network roles
performed by the value network actors who execute certain
activities in the value network here the role or actor offering
the actual product or service offering that is being analyzed can
be defined as the nodal role or actor respectively. More
specifically, we focus on tangible value delivery, i.e. we abstract
from intangible value exchanges as well as from financial
streams like payment of subscription fees or invoices related
to tangible value delivery. External factors like market and
technology developments as well as regulation may have a
profound impact on the design of specific value networks but
are not part of them (Bouwman et al., 2008).
By mapping the value creating system in this way, we can
analyze the value network around a specific product or service
offering. Also, by including main actors' perceptions of organizational and market barriers, we can determine which is the best
way to manage the value network in the case of Smart Home
technologies. By combining our findings from literature and our
own empirical study, we can determine barriers in Smart Home
market adoption in the value creating system and propose ways
to overcome these barriers.
3. Methodology
We follow a two-step qualitative research approach to
determine the underlying value creating system of the generic
Smart Home business ecosystem. Additionally, we also queried
respondents for specific organizational and market barriers in
the adoption of Smart Homes. Based on the value network and
associated organizational and market barriers we derive market
adoption barriers. First, we conducted a case study at Trimenzo,
a Dutch care organization that had just started using a new
building with the latest Smart Home technologies. Trimenzo
management was very open to our study and helped us in
multiple ways. First of all, we obtained relevant documentation
on the Smart Home facilities and related developments such as
regulation and healthcare financing. Second, we observed the
usage of Smart Home facilities in practice by visiting the building
where some of the facilities were demonstrated and the
potential for additional services were discussed. Third, a session
was organized with the main parties involved in the development of the Smart Home building project. During this session,
the Chief Executive Officer of Trimenzo, the Trimenzo care
homes division manager, the technology integrator firm, and a
software provider presented on their role in the project, what
they did and delivered, and their involvement with other actors.
We also queried them for organizational and market barriers
they perceived during the implementation trajectory. In

309

addition, both directly after the presentations and at a later

stage, additional questions were asked to remove any final
unclarities. Based on the collected data we were able to describe
and analyze the Trimenzo Smart Home actors, roles and
activities and their relations. These were then mapped to create
the Trimenzo value network (for details on this method, see Kijl
et al., 2010; Kijl and Nieuwenhuis, 2011).
In the second step of our study we aimed to compare our
findings in the case study to other service domains. Hence, we
aim to refine and extend (Tsang and Kwan, 1999) our initial
case specific findings into other service domains and therefore
generalize our model. In other words, we cluster similar actors,
roles and activities in the four service domains to obtain a
generic model. In Section 2.1, we identified three Smart Home
service domains next to healthcare: comfort, security and
safety, and energy conservation. In each of these three domains
we conducted interviews with key actors about roles, activities
and actors in the value network for this specific service domain.
In total we interviewed 14 respondents: 5 for comfort, 4 for
security and safety, and 5 for energy conservation. Respondents were selected based on maximum role variation to
obtain a diverse and complete overview of the value network
in the respective service domains ranging from a construction company and grid operator to a systems integrator and
technology consultancy. Respondents were asked about the
key actors, roles and activities for each specific service domain
and their view on the future development of the field.
Additionally, we queried these key actors for organizational
and market barriers they themselves observed in relation to
Smart Home technologies. We found there was substantial
overlap in both their descriptions of the value network as well
as the observed organizational and market barriers.
By looking for similarities and differences across the service
domains we developed a generic i.e. service independent
value network for Smart Homes. Such a generic value network
shows which roles are of primary importance and which are
secondary. Primary roles should always be fulfilled to have a
functioning value network; secondary roles are complementary
to the main services and can hence create extra value for the
end-user. We then use this generic model and additional
information on organizational and market barriers obtained
from the interviews to derive generic barriers for market
adoption of complex multi-stakeholder technologies.
4. Results
In this section, we first describe organizational and market
issues and the results of our value network role activity analysis
for the Trimenzo care organization. Then, we refine and extend
these findings based on 14 interviews in the three other smart
home service domains. Based on both studies we derive a
generic value network for smart home technology and derive
associated barriers for market adoption as well as opportunities
to overcome these barriers.
4.1. Study 1: Trimenzo's Smart Home value network
Our case study was conducted at the Trimenzo care
organization as they had just employed a new building
optimized for the latest Smart Home technologies. For example,
next to advanced telecom infrastructure, Trimenzo could use

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M. Ehrenhard et al. / Technological Forecasting & Social Change 89 (2014) 306315

motion sensors to detect immobility of patients. Interestingly,

Trimenzo management indicated that government policy had
changed during the development of the new building. Originally,
the elderly with the highest care need without hospitalization
were targeted. However, the government's funding scheme was
overhauled in the same year the new building was delivered.
According to the CEO this meant that Trimenzo now had to
target the more affluent elderly instead of those in need of the
highest level of care. Thus, we found that, in line with the
literature (see e.g. Bouwman et al., 2008; Kijl and Nieuwenhuis,
2011), regulatory change especially in highly regulated sectors
such as healthcare can upset the entire market and have
substantial impact on an entire business ecosystem or value
network.
Nonetheless, despite the change in type of end-user, both
our interviews and desk research indicated that the effect on the
value network was limited in this case. Mostly, opportunities for
government funding of services decreased, yet opportunities for
additional more commercial and luxury services increased
according to the CEO. Also, external factors like regulatory
forces may have an important impact on the actual service
provisioning but because these are not directly involved in the
actual value creation and capture processes, these are not part of
the specific Trimenzo value network. Based on our desk
research, observation study, and semi-structured interviews
with key stakeholders, we identified the key roles, actors, and
activities 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 each
other and create the Trimenzo value network. Trimenzo is an
integrated smart home care service provider and is therefore the
nodal value network actor in our analysis. In order to offer value,
Trimenzo has to co-operate with several partners. Next to
providers of hardware, software and network connectivity,
Trimenzo works together with a system integrator that integrates the different hardware and software technologies into one
integrated service technology platform. This platform can be
seen as the technological foundation and enabler of Trimenzo's
smart home care services. Next to integrating these technologies,
the system integrator may offer additional care service providers,
like health monitoring service providers, and access to the
platform and in that way extend its functionality for Trimenzo
and its users, like (medical) care providers (e.g., doctors and
nurses), patients as well as their supporters (family and friends).

The insurance provider helps in financing the actual home

care by offering a health insurance to the patient: in the Dutch
case via the government. In order to optimally make use of the
home care service platform, Trimenzo is renting a building
suitable for smart home care services from a housing corporation, which actually owns this specially adapted building. To
make the building suitable for such services, cooperation was
needed with specialized homebuilders and designers who
offered customized smart building services. For an overview
of 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 one
specific Smart Home service in the care domain. To obtain a more
generic value network for Smart Home services, we needed to
extend our findings in this specific domain by including the other
three 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 5
key actors and derived from their responses key roles, actors, and
activities for each separate domain (also see, Kijl et al., 2010; Kijl
and Nieuwenhuis, 2011). In total we conducted 14 semistructured interviews with a variety of actors. In order to get a
comprehensive overview of Smart Home related value network
roles, we listed all roles identified via the interviews. Next, we
categorized these as generic or domain-specific roles. Domainspecific roles are specifically related to one of the four home
service domains as identified earlier whereas generic roles are
relevant roles for Smart Home services in general. Next, we
categorized the generic roles in two groups: primary and
secondary roles. The resulting list of generic value network
roles and related activities can be found in Table 2.
The primary roles can be regarded as essential roles for
offering Smart Home services, like software (platform) providers
and (platform) system integrators each of these roles can also
be identified in the specific Trimenzo value network as depicted
in Fig. 1. The so-called secondary roles are specific value network
roles that could enhance and enrich the value proposition
offered by the nodal smart homes service provider. Examples of
such roles are helpdesk providers and training and education
providers. Next, we also identified some domain specific roles
like additional care (e.g. health monitoring service) providers,
grid operators and security providers.

Table 1
Roles, actors and activities Trimenzo value network.
Role

Actor

Activities

End user / patient

Support providers
(Medical) care providers
Trimenzo service provider
(nodal role)
Additional care service providers
Building owner
Insurance provider
Home builder / designer
Software supplier
Hardware supplier
(Platform) system integrator
Network provider

Elderly people with care needs

Family and friends
Doctors, nurses, volunteers
Trimenzo (health care organization)

Receiving care and treatment

Giving additional support
(Medical) care and treatment
Intermediary between care demand and supply, informing intramural care

External care partners

Woonzorg Nederland (housing corporation)
Univ, Amicon, etc. (insurance companies)
Architect / construction rm
Unit 4 (software company)
CLB (care system developer)
Hollander techniek
Telecom operator

Offering extra care services (like health monitoring services)

Offers smart building / housing
Offering health insurances
Offers customized smart building services
Offers software (platform)
Offers hardware
Integrates (hardware and software) technology
Offers connectivity services

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311

Supply side

Demand side
Value delivery

Hardware provider

Addional care
service providers

(Medical) care
provider

(Plaorm) system
integrator

Network provider

Insurance provider

Oer(s) extra
care & support
services

Oers hardware

Oers
connecvy
services

(Medical) care
informaon

Oers
integrated
service
plaorm

Trimenzo
service provider

Oers smart
building

Oers soware

Delivers care

Oers care and

support services

Oers
health
insurance

End user / paent /

customer
(elderly people)

(Medical)
care
informaon
Oers
addional
support

Soware provider

Home builder /
designer

Building owner

Support providers

Oers customized
smart building services

Fig. 1. Value network Trimenzo.

The generic roles and activities identified in Table 2 permit

us to develop a generic Smart Home value network as depicted
in Fig. 2. The generic value network consists of both primary
value network roles such as system integrator and software
provider, and secondary roles such as app provider and training
and education provider. This value network can be regarded as
a generic blueprint for exploiting Smart Home services and in
that way can support organizations active in Smart Home
business ecosystems in developing viable value networks for
their specific product and service offerings.
4.3. Market adoption barriers in the generic value network
Based on studies 1 and 2 we described, analyzed and
developed 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 adoption
barriers as identified by our respondents in studies 1 and 2. The
barriers are related to meeting end-user requirements, platform
management, improved value creation and capture, and the role
of the government.
First and foremost, end-users need to be convinced of the
value of Smart Home technologies. In the interviews, unfamiliarity with the complex technology, fear of losing control, and
privacy were mentioned by service provides in study 2 as
factors constraining implementation. Especially the possibility
that outsiders could control security and get access to either the
house or private information was a point of concern.
Reliability is also of importance for platform management. In
line with the Smart Home literature, respondents in both study 1
and 2 often emphasized how lack of standardization, interoperability, and compatibility of tools, technologies and services

forms a large barrier for reliable implementation. This is also seen

as a reason why implementation is often limited to either luxury
entertainment systems or standalone applications. Additionally,
respondents mentioned how maintenance costs substantially
increase when multiple solutions need to be operated next to
each other. As was mentioned in the literature, the respondents
in study 2 emphasized how important network partnerships are
in preventing many of these platform issues. Consequently,
speeding up the standard setting would speed up commercial
viability.
Despite the uncertainty surrounding standards, value
creation and capture can already be improved with the current
systems. Respondents in study 1 and 2 mentioned the prize for
the end-user and/or platform service provider as one of the
most important barriers for implementation of Smart Homes.
In particular, the prize can be split up into (a) the absolute cost
of installing Smart Home technology in an existing building,
(b) the relative cost of Smart Home technology as compared to
the total building cost for a new building, and (c) the already
discussed maintenance costs.
Finally, while theoretically not considered part of the value
network the government is not directly involved in smart
home value delivery as a primary or secondary role the role of
the government is quintessential. First of all, substantial changes
in government regulation can make Smart Home implementation much more difficult as evidenced by the loss of funding in
the first study. On the other hand, respondents in study 2
pointed out how regulation can also enforce the implementation
of certain standards or certification and thus speed up market
adoption. Second, respondents in study 2 emphasized how
government can speed up market adoption by subsidizing Smart
Home technology. Subsidies are especially beneficial when

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Table 2
Generic roles and activities Smart Home value network.
Role

Activities

Category

(Platform) system
integrator
Customer

Integrates (hardware and

software) technology
Pays for the product or service
offered
Using the product or service
offered
Offers hardware
Offers connectivity services
Offers smart homes services

Primary

Offers software (platform)

Provides specic apps
Offers app store functionality
Offers nancial services
Offers customized 'smart
building' services
Offers certication services
Offers consultancy services
Offers construction work
Determines regulation,
privacy aspects,
Offers support
Offers 'smart building'
Constructing building
Invests in the service
Invests in the service
Research & development
Sells hardware
Develops software
Offers technology standards

Primary
Secondary
Secondary
Secondary
Secondary

End user
Hardware provider
Network provider
Smart homes service
(platform) provider
(nodal role)
Software provider
App provider
App store provider
Bank
Building designer /
architect
Certication provider
Consultant
Contractor
Government

Helpdesk provider
Home / building owner
Home builder
Private investor
Public investor
R&D provider
Retailer
Software developer
Technology standard
provider
Training & education
Offers training and education
provider
Video connection provider Offers video connectivity
White goods provider
Offers white goods

Primary
Primary
Primary
Primary
Primary

Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary
Secondary

initial set-up costs need to be overcome and benefits can be

reaped later. One service provided mentioned how government
could for example subsidize a pilot project to see if indeed a costeffective business case can be made.
5. Discussion
Both developing and developed economies need to prepare
for an aging population and related care costs. A partial answer
lies in Smart Home technology. On one hand, Smart Homes can
enable the elderly to live independently longer and thus
decrease care costs. On the other hand, Smart Home technology
is interesting for an aging customer base as it can improve their
general wellbeing by increased comfort or security. Next, we
provide implications for research and theory, implications for
practice and also discuss limitations of the study.
5.1. Implications for research and theory
The outcome of our study has a number of implications for
research. First, Smart Home technology might be used to help the
elderly stay independent longer. Yet, further in-depth field
research over a period of time is merited to study the precise
effects of Smart Home technology in use on elder users. On the
other side of the spectrum, quantitative studies are much needed
to provide costbenefit analyses of Smart Home implementation.

Moreover, a study limited to a particular telehealth service used a

business model engineering approach to quantitatively calculate
where and how improvements to the value network could be
made (see, Kijl et al., 2010; Kijl and Nieuwenhuis, 2011).
Although this method is too specific to derive conclusions for
generic Smart Home value networks, it would be useful to
analyze larger platform markets using a similar quantitative
multi-actor viability analysis. Our generic smart home value
network could be used as a basis for such an analysis.
Second, Smart Homes are an interesting market for an aging
customer base even if they would not lead to longer independent
living. In most countries, the elderly have accrued more wealth
than younger generations and, after retirement, have more time
on their hands. The elderly are therefore an important economic
force, also in the form of innosumers (Peine et al., 2014).
Comfort technology in the form of internet-enabled integrated
entertainment systems is rapidly rising in market share.
Similarly, the elderly might be willing to invest in multi-sensor
integrated security systems to protect their accrued wealth. We
are just at the beginning of what is often dubbed the internet-ofthings.
Third, the notion of Smart Home has wider implications
than for an aging population alone. For example, energy
conservation is already an issue that is high on the agenda of
many societies. The notion of Smart Home can therefore prove
to be a powerful concept. In sum, cost-effectively implemented
Smart Homes can contribute to environmental, social and even
fiscal sustainability (for the latter see, Ehrenhard et al., 2012)
and may be a catalyst for social entrepreneurship (Van den
Broek et al., 2012).
We demonstrated how service specific business ecosystems can be analyzed from a value network perspective.
Whereas service platform business ecosystems discussions
have mostly a rather generic character, our service specific
qualitative value network analysis approach offers a more
detailed and in-depth analysis focusing on actual value
exchange in multi-actor settings which is in line with the
value focus of business ecosystem designers (Baldwin and
Clark, 2000; Boland and Collopy, 2004; Cross, 2011). Based
on such value network analysis, additional value creation roles
or activities and gaps between value creation and appropriation can be identified. Also, components of the value network
could be positioned differently or additional value streams
could be created.
A next step could be the development of a value network
canvas like the business model canvas (Osterwalder and
Pigneur, 2010) to help companies in developing an overview
of their business ecosystem and the underlying value network.
Whereas the business model canvas has a company-centric
character, a value network canvas would have a multi-actor
focus which is more in line with platform based service offerings
(Cusumano, 2010; Peine, 2008; Solaimani et al., 2013). Such a
canvas could also prove beneficial to governmental regulators to
predict system-wide effects of their interventions and keep a
close eye on potential market failure, especially because of its
multi-actor focus.
By performing a service specific value network analysis on a
regular basis, our approach could support theory development
surrounding service specific co-evolution of technological, social,
and economic systems (Nelson and Winter, 1982; Murmann,
2003; Arthur, 2009).

M. Ehrenhard et al. / Technological Forecasting & Social Change 89 (2014) 306315

313

Supply side

Demand side
Primary role

Hardware
provider(s)

Secondary role
App provider(s)

Provide(s)
specic
apps

App store provider

Value delivery

Insurance provider

Oers
insurance

Oers
smart
homes
services

End user /
customer

Oer(s) app store funconality

Oer(s) hardware

(Plaorm) system
integrator

Network provider
Oers
connecvy
services

Oers
integrated
service
plaorm

Oers smart
building

Oers soware

Soware provider

Home builder /
designer

Building owner

Smart homes
service (plaorm)
provider

Oer(s) service plaorm

informaon

Training &
educaon provider

Oers training &

educaon services

Oers customized
smart building services

Fig. 2. Generic Smart Home value network.

5.2. Implications for practice

Practitioners may benefit from this study in a number of
ways. First on a more general level, we derived a generic value
network for Smart Home from our multiple data sources. Such a
generic value network can help in developing value creating
activities and decrease the chance of creating lock-in. Additionally, awareness of the four key market barriers and associated
opportunities will help practitioners in preventing and otherwise overcoming such barriers.
Second, issues in relation to end-user requirements can be
resolved when core platform partners increase awareness of
Smart Home functionalities by better communication of the
benefits of Smart Homes. Also, early user involvement in the
development of this configurational technology would lead to a
better user experience. Additionally, training would very much
benefit especially the elderly and improve their self-efficacy in
the use of these technologies (Venkatesh et al., 2003). Obviously,
reliability of the Smart Home is key in obtaining and sustaining
end-user trust.
Third, for value creation and capture, attempts at decreasing
cost are important and cost can be expected to decrease when
technology becomes more mature but increasing revenues
for end-users or platform providers could have a far stronger
effect. One way of directly increasing revenues is by creating
more value in the form of complementary services such as
additional apps or training particularly when directed at the
higher segment of the market. Furthermore, platform providers
could offer an evidence-based business case to for example
housing corporations or care homes detailing how investments in integrated Smart Home technology up front would
lower 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 Home
technology will have a lower risk of fire or burglary or care
services can be less intensive. Additionally, platform markets
are often two sided so a firm can subsidize one side of the
market with profits from the other side (see also Casey and
Toyli, 2012). For instance, service providers could pay for access
to the platform. Also, despite the obvious privacy issues, user
data could be sold to service providers for better marketing
purposes.
Fourth and final, government needs to have a keen eye for
privacy concerns of its citizens related to Smart Home technologies. Likewise, government could subsidize Smart Home
technology training for the elderly. Government can increase
awareness of the benefits of Smart Home technology by targeted
communication campaigns. Such a campaign could for instance
make clear that Smart Homes enable the elderly to stay
independent longer in their own homes. Similarly, elder workers
might be enabled to work longer or more cost-effectively.
Government could for example campaign for, subsidize, or
regulate Smart Home energy conservation initiatives in an effort
to overcome oil and coal addiction or security and safety
initiatives to decrease the financial and social cost of crime.
5.3. Limitations
First of all, we conducted our studies within a time frame of
about one year. Although market adoption may seem to be
close even for the more complete systems we might be
proven wrong considering the development trajectory of Smart
Homes so far. Moreover, if market adoption is indeed close,
some of our findings could be outdated soon. Furthermore,

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M. Ehrenhard et al. / Technological Forecasting & Social Change 89 (2014) 306315

each separate study was conducted within a timeframe of three

weeks; hence we studied Smart Home developments at a
specific point in time. Therefore, we could not study how
certain interventions to overcome barriers actually worked out
over time. Also, despite the importance of two-sided markets
for many platforms, we did not encounter a two-sided market
in our study and therefore have no specific empirical evidence
on this matter.
Second, the generalizability of our findings is limited in a
number of ways despite our research approach. Our case study
was conducted at a care home, which was one of the first to
invest heavily in Smart Home technology. Yet, if more care
homes will choose Smart Home technology due to changed
Dutch regulations is to be seen. Also, a care home acts as a
platform or intermediary and bundles demand for Smart Home
services related to care. This does not mean that the Smart
Home is feasible for individual elderly users. Finally, the
interviews were conducted with a few key stakeholders in
various Smart Home service domains. This means that the value
network for each subdomain was a broad overview, yet we only
used these to develop a generic value network for Smart Homes.
Nonetheless, we will have certainly overlooked some very
interesting business opportunities that could increase value
creation.
Third, a limitation of analyzing service specific business
ecosystems by means of value networks is that the number of
roles is in principle endless. Choices need to be made as to which
roles are most relevant for improving value creation in the
business ecosystem. By making use of the concept of a nodal role
or actor for a specific service offering as well as distinguishing
primary and secondary roles in our second study we accommodated this issue. Arguably, our findings would be more reliable if
we had focused on one specific business ecosystem in our
research step. However, since there are still few if any studies
that analyze service specific business ecosystems via value
networks we chose validity over reliability.
Fourth, Internet service ecosystems and related value
network structures change rapidly. However, we did not pay
attention to how the Trimenzo ecosystem evolved over time
and what the underlying reasons for change are. By combining
insights from ecosystems and value networks with research on
technology and industry evolution further advances could be
made here as well (see e.g. Abernathy and Utterback, 1978;
Tushman and Anderson, 1986; Suarez, 2004).
6. Conclusion
Our study was driven by a desire to understand why market
adoption of smart homes is hampered, especially considering
its benefits to an aging population. First, we derived from the
literature that some general technology barriers exist among
elder users which could be overcome with the proper support
(Venkatesh et al., 2003) and that elderly attitudes towards
Smart Home technology are positive (Demiris et al., 2004). We
therefore focused our study on the organizational and market
aspects of Smart Homes. Many scholars study technology
issues related to service platforms, but organizational issues are
mostly overlooked (Peine, 2008; Solaimani et al., 2013).
Following Cusumano (2010), we therefore studied the organizational and market aspects of Smart Home platform adoption
from a business ecosystem perspective. We analyzed the

business ecosystem of a specific platform service offering

from a value network logic by using concepts like actors, roles
and value added activities. In this way, we were able to perform
a relatively detailed and in-depth analysis of the way value is
being created in a multi-actor constellation typical for
platform based Smart Home service offerings.
We summarize four key findings from our empirical work.
First of all, end-users requirements need to be closely considered
when designing and implementing a Smart Home platform as
end-users determine the value of offered services. Second,
platform management is crucial as fully-fledged Smart Home
platforms can only become viable when standards are set and
systems are reliably integrated. Third, since price has a strong
influence on user behavior costs need to be contained, however
additional value creation via complementary providers could
be more worthwhile in the short run. Fourth, while theoretically not considered part of the value network, our research
confirmed that the role of government is not to be
underestimated (see also e.g. Bouwman et al., 2008). Government can improve Smart Home adoption by, for example,
regulating the market, enforcing standards, safeguarding
privacy, or subsidizing pilot projects or initial investment cost.
Yet, government can also constrain market adoption by
changing funding schemes and accompanying regulation as
evidenced by our case study.
Acknowledgements
We gratefully acknowledge the Netherlands Enterprise
Agency of the Ministry of Economic Affairs for financial support
of this research. Furthermore, we want to express our gratitude
to the students participating in the Advanced Technology
Venturing master course for their help in data collection. We
also like to extend a special thank you to all actors (organisations and individuals) who have participated in this research, in
particular Trimenzo and Henk-Jan van Essen.
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Michel L. Ehrenhard is an assistant professor of Entrepreneurial Leadership at
the Netherlands Institute for Knowledge Intensive Entrepreneurship (NIKOS)
and a fellow of the Institute for Innovation and Governance Studies (IGS), both
at the University of Twente. He is a visiting professor at the Leadership Center of
the 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 and
Nonprot division of the Academy of Management. His research interests and
expertise lie at the intersection of organizational behavior, organization theory
and entrepreneurship, with a focus on decision-making during strategic change
processes, particularly in relation to organizational culture change, organizational design/ performance management, and institutional pressures.
Bjorn Kijl is a research associate in Business Model Innovation and Platform
Markets at the Netherlands Institute for Knowledge Intensive Entrepreneurship
(NIKOS) at the University of Twente. He holds an M.Sc. (cum laude) in Business
Information Technology and is in the nal stage of his Ph.D. research. He is
the operational lead of the European Institute of Innovation & Technology
funded ICT Labs Business Development Accelerator and was a visiting
researcher at ESADE Business School in Barcelona. Additionally, he is a
founding partner of Kingsher Capital, a business model and investment
research boutique that serves tens of thousands of private as well as
professional investors. He is also co-author of the rst Dutch bestseller about
the investor Warren Buffett.
Lambert J.M. Nieuwenhuis is a part-time professor of Quality of Service of
Telematics Systems at the department of Industrial Engineering and Business
Information Systems at the University of Twente. He is managing partner of PBF
Innovation where he advises private and public organizations on bringing
innovations to market 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, he worked more than 20 years for KPN Research, the R&D facility of
KPN, the telephony and Internet market leader in The Netherlands. His main
research interests are business modeling and ICT for e-Health.