Towards an Application-Oriented Understanding of Business Ecosystems in a Management Context
The term “business ecosystems” is not only a term used by the Competence Center Ecosystems of the Business Engineering Institute St. Gallen (CC Ecosystems), but it also attracts a large number of publications in the broader business and academic community. But what does it describe in concrete terms and what basic definition do we refer to when we talk about the development of business models within business ecosystems and the accumulation of “value” among individual actors (value capture)?
Today I would like to present the definition of business ecosystems that we use within the Competence Center. In this context, the definition of ecosystems as an “actionable construct for strategy” (Adner, 2017) represents an important building block on which we build further research in the area of ecosystem values and strategy. In what follows, I first provide an overview of various aspects of ecosystem research. Subsequently, the focus will be on the definition of ecosystems as a specific structure of the organization of interaction in a network. Finally, implications for the work in the Competence Center Ecosystems are described.
For more than a quarter of a century, researchers and consultants have used concepts from nature to describe and analyze how different organizations work together (Bogers et al., 2019). The starting point for analyzing companies not as individual organizations but as part of a larger environment in which they operate was set by Moore in 1993 with a widely acclaimed article in the Harvard Business Review – this was the birth of the ecosystem concept (Moore, 1993).
Much has happened since then, but one important sticking point has also emerged – there is a lack of a unified definition that manages to bring together the various streams of inquiry that have developed over the years (Bogers et al., 2019). On the one hand, there are a variety of other value creation constructs besides ecosystems that jointly create value and are characterized by interdependence among actors, such as alliances and networks (Adner, 2017). On the other hand, there are also a variety of evolving strands and research foci in the ecosystem literature itself (Cobben et al., 2022). This can be attributed, in part, to the fact that the phenomenon seems to be growing primarily out of practice, thus influencing research (Altman et al., 2021). Thus, the ecosystem phenomenon represents a distinctive feature that is diametrically opposed to the “usual” paths (Altman et al., 2021).
While Moore in 1993 sees an ecosystem as a kind of action space in which a company should analyze its actions, Adner (2017) takes a different perspective and describes an ecosystem as an organization of different actors to achieve a certain value proposition – a more manageable construct from a management perspective. He sees an ecosystem as
[…] the alignment structure of the multilateral set of partners that need to interact in order for a focal value proposition to materialize […]
(Adner, 2017, p. 40)
Adner further identifies two basic views of ecosystems, which are contrasted in the following diagram:
| Ecosystem as affiliation | Ecosystem as structure | |
| Basis | Community of connected actors. Defined by membership in networks and platforms. | Configuration of activities based on a value proposition |
| Starting point | Actors and connection between them | Starts with the value proposition as a basis |
The first view, “ecosystems as affiliation,” focuses primarily on the relationship between actors who create value together and are distinguished primarily by their affiliation to a common center. The second describes what configuration of actors is needed to create shared value. Overall, it can be said that viewing ecosystems as an “alignment structure” (Adner, 2017, p. 40) allows us to model the constructs associated with a core value proposition, such as the business models of the participating companies or the functions they perform in the ecosystem. Since our concern in the CC Ecosystems is to understand how value can be generated and accumulated by leveraging ecosystems, this structural definition seems to provide a useful focus.
An example of a case-based analysis of a business model, which is based on Adner’s (2017) basic definition of ecosystems, is offered to us by Stonig et al. (2022) with their recent analysis of a Swiss machine manufacturer. Further, Adner’s definition also seems to find broad appeal in other articles of the Strategic Management Journal (one of the leading publications in management science) (e.g., Special Issue 2022; 43;3). Furthermore, his ecosystem definition is used, among other things, in the idea of the ecosystem as a “meta-organization” (an organization of organizations) and can be found accordingly in a further selection of publications on this topic (Kretschmer et al., 2022; Stonig et al., 2022).
In the CC Ecosystems, we will base further research on the definition of the “ecosystem as a structure”, since by focusing on the value proposition and including the various actors as separate entities, a modeling of, among other things, business models in the ecosystem as well as an analysis of the value flows becomes possible.
In the research, there are a variety of different descriptions of ecosystems, e.g., entrepreneurial ecosystems (Spigel, 2017), platform ecosystems (Jacobides et al., 2018; Schreieck et al., 2021; Tiwana, 2015), data ecosystems (Oliveira & Lóscio, 2018), innovation ecosystems (Jacobides et al., 2018; Nambisan & Baron, 2013) to business ecosystems (e.g., Jacobides et al., 2018) and identity ecosystems (Crossler & Posey, 2017). This multitude of currents suggests that the term ecosystem requires a clear delimitation and that a conceptualization in the direction of “[descriptive addition] ecosystem” is currently very popular. This may well be seen as problematic, as the different terms are used, but often lack a clear definition, resulting in overlaps (Autio & Thomas, 2021). In our context, we use the addition of “business” to denote the economic purpose behind the considerations of the individual actors in the ecosystem and to distinguish it from ecologically oriented constructs. Researchers, such as Jacobides et al. (2018) suggest to us that there are different types of ecosystems that require their own labeling. They recommend that we divide them into platform ecosystems, innovation ecosystems, and business ecosystems (Jacobides et al. 2018). From our point of view, however, this classification has a problem regarding the delineation of the individual “types”. It remains open why a business ecosystem cannot also be a platform ecosystem. Guggenberger et al. (2020) offer us a different classification of different types of ecosystems. Using the classification factors “organization” (central – decentral) and “focus layer” (social – objective) (p. 10) they describe five different basic types of ecosystems: sociocentric ecosystems, symbiotic collective ecosystems, centrally balanced ecosystems, orchestrating actor ecosystems and structured resource sharing ecosystems. Since this classification originates from the information systems domain and accordingly no complete consistency with other research strands can be ensured, it will not be described in more detail at this point. However, there is reason to believe that these types can also be applied to Adner’s ecosystem concept with a few adjustments. This is one of the research projects we will be working on in the area of business ecosystems over the next few months.
That there is reason to believe that the findings from the information systems domain can be applied to the management context can be demonstrated using the set of 5 mandatory ecosystem characteristics identified by Guggenberger et al. (2020). Indeed, when compared to the six ecosystem characteristics identified by Betz et al. (2021) which are no longer specific to the information systems domain, the parallels are easily observable (see Table 2).
| Mandatory Characteristics | (Guggenberger et al., 2020, pp. 12–13) | Ecosystem Characteristics | (Betz et al., 2021, p. 7) |
|---|---|---|---|
| Distinct Roles | Actors in different roles. | Alignment with a shared value purpose | Different actors are involved in value creation and are connected by a common vision. The interaction develops over time. |
| Innovation | Innovation as the main focus for achieving competitive advantage. | Multilateral relationships | There are connections to different partners; actors have a high dependency on each other. |
| Value Creation | Co-creation of value. Highlighting network effects. | Value Co-Creation | Beneficiaries of services are an active part of service creation; performance consists of complementary and modular components. |
| Interaction | Interaction between actors in mutual dependencies. | Actors in different Roles | There are different roles that are characterized by certain interests. |
| Co-Evolution | Actors develop together and are interdependent. | Non hierarchical control | Actors remain autonomous in the execution of their activities; no single actor has complete hierarchical control. |
| Shared rules & infrastructure | There is a common infrastructure as well as standards and rules. |
We will also look at further developing and consolidating ecosystem characteristics in the future, as they help us identify when a network can be considered an ecosystem.
Ecosystems – especially according to the approach of Adner (2017) – can basically be viewed in the context of other forms of cooperation between several actors. Even though ecosystems seem to be the talk of the town, they are by no means the only viable new phenomenon to which everything else should be subordinated. Rather, executives should consider whether an ecosystem is really the best way to efficiently deliver the offering to the customer. Further, it seems valid to assume that within an ecosystem there may be various other types of relationship, e.g., alliances, joint ventures, or the like. All types of collaboration fundamentally bring their own challenges that need to be addressed and weighed in the context of selecting the most suitable form of collaboration.
Ecosystems present us with difficulties in the context of how we can delineate them as objects of analysis. Even though there are already first approaches towards analyzing which metrics to look at depending on the phase of the ecosystem (e.g., Pidun et al., 2021; Workshop CC Ecosystems 2022), it is difficult to determine the boundaries of an ecosystem. In his current book, Adner (2021) makes it clear that it is important to identify individual partners with whom you want to start an ecosystem – but a clear definition of the “boundaries” of an ecosystem is missing. Different business models can develop within an ecosystem. Depending on the definition, a business model describes different areas. According to the widespread definition of Osterwalder and Pigneur (2010) a business model describes “[…] how an organization creates, delivers and captures value” (p. 14). Zott and Amit (2010) describe a business model as a “[…] template of how a firm conducts business, how it delivers value to stakeholders (e.g., the focal firm, customers, partners, etc.), and how it links factor and product markets.” (p. 222). Companies pursue their own goals in an ecosystem within the framework of their individual business model. In addition to “classic” business models that can also be found outside of ecosystems, business models can also develop that offer particularly positive prospects in ecosystems.
In the context of my further research, we want to develop a clear delineation of ecosystems and will investigate how individual actors in a business ecosystem can accumulate value. Crucial to this are further questions, such as what value means in the first place, what values there are besides direct/monetary values, what it takes to create value and how one can accumulate value.
Finally, here are the key takeaways we should keep in mind:
- There are different perspectives on the topic of ecosystems, to model these we will use Adner’s (2017) definition of ecosystems as “structures” to guide us
- An ecosystem does not represent a business model. The business model results from the function (here we do not focus on the generic role archetypes) that a company wants to fulfill in a business ecosystem.
- We investigate how actors in ecosystems can accumulate value. To this end, we shed light on further issues related to value creation as well as mechanisms for distribution and accumulation in the business ecosystem and among the respective actors. Furthermore, it is important for us to identify which values can be achieved in an ecosystem (e.g. pecuniary value, strategic value, other values).
Sources
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Adner, R. (2021). Winning the Right Game: How to Disrupt, Defend, and Deliver in a Changing World (Management on the Cutting Edge) (1st ed.). The MIT Press.
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