Digital platform ecosystems confront critical management challenges as they overcome path dependence amid rapid technological change. This study explores cross-category innovation as a key strategic action, using a longitudinal case study of ByteDance to analyze how digital technology drives ecosystem evolution, and constructs a “technology-driven–strategic action–ecosystem evolution” framework to examine the interplay between technological capabilities and strategic actions. Findings identify two stages: in the category emergence stage, platforms establish a core business ecosystem via identity, legitimacy, and differentiation strategies, leveraging technologies like algorithmic recommendation to shape user cognition and market legitimacy. In the category spanning stage, platforms leverage platform envelopment, open innovation, and status strategies to expand cross-category ecosystems, enabling technological spillover and integrated innovation across new domains. The findings reveal a co-evolution mechanism of cross-category innovation strategy and ecosystems, where the cross-category innovation strategy serves as both a driving force for ecosystem evolution and acquires new strategic opportunities. This study offers insights for building sustainable ecosystems that transcend industry boundaries and enhance resilience.

Cross-category innovation in digital platform ecosystems is increasingly pivotal for competitive reconfiguration, and the value it generates for users primarily stems from the benefits of network effects. By extending the spatial competition framework of the Hotelling model through a four-stage sequential game comprising category competition, we formalize the strategic mechanism for expanding network effects governing benchmark competition and category dynamics. The cross-category innovation strategy proposed in this paper offers valuable insights in three key areas: investment in core technological advantages, reconstruction of user cognitive boundaries, and strengthening ecological dependency within the ecosystem. By transcending the limitations in the explanatory power of traditional management theories for cross-organizational boundary issues, this study integrates digital contexts into its analytical framework, thus providing a novel perspective for understanding the dynamic processes of cross-category innovation in digital platform ecosystems.

Digital platform ecosystems confront critical management challenges as they overcome path dependence amid rapid technological change. This study explores cross-category innovation as a key strategic action, using a longitudinal case study of ByteDance to analyze how digital technology drives ecosystem evolution, and constructs a "technology-driven–strategic action–ecosystem evolution" framework to examine the interplay between technological capabilities and strategic actions. Findings identify two stages: In the category emergence stage, platforms establish a core business ecosystem via identity, legitimacy and differentiation strategies, leveraging technologies like algorithmic recommendation to shape user cognition and market legitimacy. In the category spanning stage, platforms leverage platform envelopment, open innovation and status strategies to expand cross-category ecosystems, enabling technological spillover and integrated innovation across new domains. The findings reveal a co-evolution mechanism of cross-category innovation strategy and ecosystems, where the cross-category innovation strategy serves as both a driving force for ecosystem evolution and acquires new strategic opportunities. This study offers insights for building sustainable ecosystems that transcend industry boundaries and enhance resilience.