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Business ecosystem as a perspective for studying the relations between firms and their business networks

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In this paper we try to mature the business ecosystems concept as a research perspective for studying the relation between firms and their business networks. As economic activities are changing from dominantly stand-alone to networked, new perspectives are needed to study these relationships. The business ecosystem metaphor provides an interesting starting point for such a perspective. We provide an overview of current research on business ecosystems and we define the aspects that are core to a business ecosystem perspective, namely, the firms, the network, performance and governance. We examine how these core aspects can be further developed building on (social) network theory, biological ecosystem theory and complex adaptive system theory. Finally, we proposed to integrate these core aspects into a comprehensive complexity logic.
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ECCON 2007
Business ecosystem as a perspective for studying the relations
between firms and their business networks
Elisa Anggraeni, Erik den Hartigh and Marc Zegveld
Delft University of Technology, Department of Technology, Strategy and Entrepreneurship
PO Box 5015, 2600GA Delft, The Netherlands
Elisa Anggraeni: +31 15 278 2464 e.anggraeni@tudelft.nl
Erik den Hartigh: +31 15 278 3565 e.denhartigh@tudelft.nl
Marc Zegveld: +31 15 278 4711 m.a.zegveld@tudelft.nl
Abstract
In this paper we try to mature the business ecosystems concept as a research perspective for
studying the relation between firms and their business networks. As economic activities are
changing from dominantly stand-alone to networked, new perspectives are needed to study these
relationships. The business ecosystem metaphor provides an interesting starting point for such a
perspective. We provide an overview of current research on business ecosystems and we define the
aspects that are core to a business ecosystem perspective, namely, the firms, the network,
performance and governance. We examine how these core aspects can be further developed building
on (social) network theory, biological ecosystem theory and complex adaptive system theory.
Finally, we proposed to integrate these core aspects into a comprehensive complexity logic.
Contents
1. Introduction.............................................................................................................................2
2. The need for a new perspective ...............................................................................................2
3. Current research on business ecosystems.................................................................................3
3.1 Overview of the literature ................................................................................................ 4
3.2 Definition of business ecosystem..................................................................................... 9
3.3 The use of business ecosystem as a metaphor ................................................................ 11
4. Business ecosystem as a perspective...................................................................................... 14
4.1 Aspects to be developed ................................................................................................ 15
4.2 The firm ........................................................................................................................ 16
4.3 The network .................................................................................................................. 17
4.4 Performance .................................................................................................................. 19
4.5 Governance ................................................................................................................... 20
5. A core logic of business ecosystems......................................................................................22
6. Conclusion, limitations and further research.......................................................................... 23
References ....................................................................................................................................25
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1. Introduction
The purpose of this paper is to take a step in maturing the business ecosystems concept as a
research perspective for studying the relation between individual companies and the business
networks around them. In section two of this paper we will argue the need for a new perspective.
Until now, research in business ecosystems has taken different approaches, the main ones being the
metaphorical approach, which uses natural ecosystems as a metaphor for understanding business
networks, and the reality-based approach which regards business ecosystems as a new
organizational form. We will discuss these approaches in the section three of this paper and we will
argue that, while both approaches have their merits, they still fall short in explaining the reality of
the relation between individual companies and the business network, in terms of strategic behavior,
dynamics and performance.
In section four of this paper we will therefore examine how the metaphor can be strengthened and
develop it towards a research perspective. We will do this by first defining the aspects that are core
to the study of the relation between individual companies and their business networks. We will
draw upon different existing research streams, namely (social network) theory, biological
ecosystem theory and complex adaptive system theory, to see how those core aspects could be
further developed.
In the fifth section of this paper, we will attempt to integrate these core aspects into a
comprehensive business ecosystem logic. The sixth section of the paper contains conclusions,
limitations and suggestions for further research.
2. The need for a new perspective
As economic activity is changing from stand-alone to interconnected economic agents forming a
network economy as it is today, research on business strategy evolves or includes more dimensions
to better understand the continuous interaction and behavior of interconnected organizations
(Nohria and Eccles (1992) in Ghisi and Martinelli (2006). The paradigm of atomistic actors
competing against each other in an impersonal marketplace is becoming less adequate in a world in
which firms are embedded in networks of social, professional, and exchange relationships with
other economic actors (Granovetter, 1985; Gulati, 1998; Galaskiewicsz and Zaheer, 1999; Gulati,
et.al, 2000). The environment should no longer be seen as faceless, atomistic, and beyond the
influence of the organization, as assumed by the current strategy management doctrine (Hakansson
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and Shenota, 2006).
As proposed by Hoskisson et.al (1999), rapid change in technology, the rise of information age and
an increased level of globalization significantly change the competitive landscape, i.e., the nature
and pace of competition between firms. This consequently influences the nature of research in
strategic management. Research in strategic management will likely experience increased
integration of multiple theoretical paradigms which provide a balance between internal and external
explanations of the complex relationships in the new competitive landscape. Ritter and Gemünden
(2003) point out that, in the network economy, the firm's competitiveness does not only depend on
its internal competence but also on its ability to interact with its environment. Failure in establishing
and maintaining this external competence will limit the firm's strategic flexibility to its in-house
resources.
Given the increasing pace of today's markets and the complexity of today's technologies that ask for
interconnected webs of actors (Barabasi, 2002), firms should be able to effectively use their
relationships with customers, partners or competitors. This can only be obtained by understanding
such interconnected business models, and by understanding the factors and mechanisms that govern
such networks. As strategy research shifts from individualistic and atomistic explanations towards
more relational, contextual and systemic understandings, the study of strategic management from a
network perspective has become a major issue. Borgatti and Foster (2003) found that the literature
in social networks (including business networks) shows an exponential increase.
Still, despite the abundant literature on networks and inter-organizational relationships, this
research remains fragmented. At least it can be observed that different pieces of theory do not seem
to fit together due to the very different backgrounds from which inter-organizational relationships
are addressed, that different trends are followed and different methods are used, and that different
aims and objectives are addressed in different studies (Ritter and Gemünden, 2003). This situation
causes several challenges for studies of inter-organizational relationships to move further in
conceptual development and empirical investigation (Ritter and Gemünden, 2003). Another
challenge for scholars studying networks and alliances is to bridge the chasm between theory and
practice and translate some of their important insights into useful policy recommendations for the
practitioners (Gulati, 1998).
3. Current research on business ecosystems
Considering the challenges described above, it is interesting that Moore (1993; 1996a) used the
analogy of business ecosystems to study interconnected organizations, to understand the dynamics
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resulting from it and to find explanations of the observed phenomena. The use of analogy and
metaphor have since long been a source of enlightenment for scientists to understand the
phenomena they study (Hannon, 1997). Business researchers have begun to adopt a biological
ecosystem models in the analysis of business relationships and strategic decision making (Iansiti
and Levien, 2004a; 2004b). Managers and academics are coming round to recognizing the value of
the ecological metaphor for understanding the complex network of business relationships within
and across industries (Harte et.al, 2001 in Adomavicius et.al, 2006).
The terminology of business ecosystems was initially used by Moore (1993; 1996a) and then was
developed by several other researchers with different focus and approaches. Definitions of business
ecosystems mainly stress the interconnectedness of economic agents, and the fact that they depend
on each other for their success and survival (Peltoniemi, 2005; Den Hartigh and Van Asseldonk,
2004). When Moore (1993; 1996a) and Iansiti and Levien (2004a; 2004b) introduced the concept of
business ecosystems, it provided a way to enrich the study of business network by considering the
firm as an interconnected part of its larger environment, by emphasizing the role of individual firm
and by stressing the importance of collective health of the system in which the firm is embedded.
Iansiti and Levien (2002; 2004a; 2004b) developed the concept further by operationalizing the
concepts of ecosystem health measures (2002) and by describing the generic strategies that can be
taken by firms depending on the different roles they have in the ecosystem (2004a; 2004b).
Although Moore claims that the business ecosystem concept could overcome the weaknesses of
previous frameworks such as strategic alliances and virtual organizations (1996a), some important
issues need to be addressed. For some time, business ecosystems has been among the hot concepts
in strategy research (Beckam, 1997), but while it is evident that the ecological analogy is important
in business literature, there has been a lack of analytical tools so far that provide value to the
practitioners (Adamovicius et.al, 2006).
3.1 Overview of the literature
Business ecosystem is still a relatively new field of study, with different use of the terms,
perspectives, and goals by the different researchers. In table 1 we provide an overview of studies on
business ecosystem that shows the definitions as used in these studies. The table also contains a
description of the research conducted (unit and type of analysis) and a remark concerning the use
and depth of the business ecosystem metaphor. It should be noted that there are several other ways
in which ecosystem in business related terms, such as digital business ecosystem, social ecosystem,
economy as an ecosystem, industrial ecosystem, ecosystem model of technology evolution, and
value ecology. These are out of the scope of this study, however.
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Table 1. Overview of business ecosystem research
Article Publication Definition used Unit of
Analysis
Type of
Analysis Remark
Moore
(1993)
Paper The term circumscribes the microeconomics
of intense co-evolution coalescing around
innovative ideas. Business ecosystems span
a variety of industries. The companies
within them co-evolve capabilities around
the innovation and cooperatively and
competitively support new products, satisfy
customer needs, and incorporate the next
round of innovation (p.15).
Business
network
Conceptual Try to understand the
underlying strategic logic of
change by using the
language of a biological
ecosystem or logic in it.
Moore
(1996a)
Book As in Moore (1993).
Business
ecosystem
Conceptual Try to use analogy from a
biological ecosystem to
describe how a firm fails or
leads a business ecosystem.
There is still little
explanation of the
underlying mechanism in
this complex relationship.
Moore
(1996b)
Paper No definition provided. Conceptual Discuss framework for
strategy making.
Innovation requires
coevolving with other
contributors through
partnerships, alliance and
standards. Bargaining
power is key to becoming a
winner and a leader. Source
of potential sources of
bargaining power,
continued innovation,
criticality, and
embeddedness.
Iansiti and
Levien
(2004a)
Paper Basically, a business ecosystem is a business
network. Business ecosystem are formed by
large, loosely connected networks of entities,
that interact with each other in complex
ways, and the health and performance of a
firm is dependent on the health and
performance of the whole.
Firm in
relation to its
business
network
Conceptual Offer a framework for
assessing the health of
company's ecosystems,
determining the place in it
and developing a strategy
to match the role
Iansiti and
Levien
(2004b)
Book As in Iansiti and Levien (2004a). Business
networks;
relations;
structure
Conceptual
& empirical
Although there were efforts
to go beyond a descriptive
metaphor, by providing
health measurements,
generally this study is still
in the stage of descriptive
metaphor. The underlying
mechanism is not
extensively established.
Peltoniemi
(2004)
Conference
paper
Business ecosystem concepts can be
beneficial in analyzing systems and their
features and will contribute in providing a
holistic or system view of modern
interconnected business
Business
ecosystem
Conceptual The objective is to define
business ecosystem by
comparing cluster, value
network and business
ecosystem.
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Article Publication Definition used Unit of
Analysis
Type of
Analysis Remark
Peltoniemi
and Vuori
(2005)
Conference
paper
A business ecosystem is a dynamic structure
which consists of an interconnected
populations of organizations, be they small
firms, large corporations, universities,
research centers, public sector organizations
and other parties which influence the
system. It is defined that business ecosystem
contain a population of organizations.
Business
ecosystem
Conceptual Try to define business
ecosystem by also
elaborating the complexity
logic in it.
Peltoniemi
(2005a)
Report Business ecosystems consist of a large
number of participants that can be business
firms and other organizations. They are
interconnected in a sense that they have an
affect on each other. This interconnectedness
enables various interactions between the
members. These interactions can be both
competitive and cooperative. This
interconnectedness leads to a shared fate.
The members are dependent on each other,
and the failures of other actors can result in
failures of a certain firm.
The members of business ecosystem are
capable of conscious decisions on their own
part. The firms are aiming at innovations
and commercial success and hope to take
advantage of other members and their
capabilities. This is challenging since a
business ecosystem is coupled to its
environment that may change rapidly and
unpredictably. Thus, business ecosystem is
fundamentally a dynamic structure that
evolves and develops in process of time.
Relationship
of
organization
population
both at
organization
and
population
level
Conceptual Provide a theoretical
framework for the study of
behavior and development
of an organization
population.
Peltoniemi
(2005b)
Discussion
paper
Business ecosystem consists of a large
number and interconnected participants that
can be business firms and other
organizations which interact to each other
both competitively and cooperatively. .
Business
ecosystem
Conceptual
at
ecosystem
level
Peltoniemi,
Vuori and
Laihonen
(2005)
Conference
paper
A dynamic structure which consists of an
interconnected population of organizations.
A business ecosystem develops through self-
organization, emergence and co-evolution,
which help it to acquire adaptability.
business
ecosystem
internal and
external
diversity
Conceptual Discuss the point of view of
an organization that
operates in business
ecosystem. The conscious
decision about its internal
structure and aims to adjust
its internal diversity to its
environment.
Vuori
(2005)
Conference
paper
A dynamic structure which consists of an
interconnected population of organizations.
Knowledge
intensive
organization
as part of
business
ecosystem
and is relation
Conceptual
at
ecosystem
level
Discuss knowledge
intensive organization as
part of business ecosystem
and try to develop
conceptual model for
construction of agent-based
model.
Den
Hartigh
and Van
Asseldonk
(2004)
Discussion
paper
Network of suppliers and customers around
a core technology, who depend on each other
for their success and survival.
Firm in
relation to its
business
network
Conceptual Provide research framework
for investigating the relation
between network structure,
firm strategy, and the
pattern of innovation
diffusion.
Den
Hartigh
et.al (2006)
Conference
paper
Network of suppliers and customers around
a core technology, who depend on each other
for their success and survival.
Firm in
relation to its
business
network
Empirical Provide analysis of Dutch
IT ecosystem using network
modeling technique.
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Article Publication Definition used Unit of
Analysis
Type of
Analysis Remark
Quaadgras
(2005)
Conference
paper
A set of complex products and services made
by multiple firms in which no firm is
dominant.
Alliance or
firm relation
Empirical at
conceptual
level
Ecosystem is only used as
terminology of network.
No concepts on business
ecosystem as developed by
previous researchers is
used. She uses network
modeling technique to
define RFID business
ecosystem and predict firm
participation.
Foer (2006) Book review No definition provided. - - Discuss business ecosystem
ideas proposed by Iansiti
and Levien from antitrust
point of view. Business
ecosystem will no doubt
provide solace to those who
would replace antitrust
with what will be presented
as more efficient regime.
Gossain
and
Kandiah
(1998)
Paper No definition provided. - Conceptual Business ecosystem is more
than another way of doing
business. It is a paradigm
shift in order to understand
the organization's core
competencies and
reinventing the way an
organization do business.
From the table we can conclude that business ecosystem study is still in the early phase of
development as a promising strategy making tool. The definitions of what being studied are still
widely varying, i.e., there is no consensus even on what a business ecosystem is. Most of the
studies are also at conceptual level and are rarely followed by empirical studies. Most of the
research still deals with developing the concept of business ecosystems by using the metaphor of a
biological ecosystem.
Moore (1993; 1996a) developed the business ecosystem concept and together with Iansiti and
Levien (2004a; 2004b) his book has become the most cited work in the study of business
ecosystems. They all argue that a new concept is needed to shape strategy in the interconnected
business by using metaphor from biological ecosystem to communicate the insights on the working
of business ecosystem and create strategy out of it. Following this concept, several other uses of
ecosystem terminology have emerged, such as digital ecosystem (De Tommassi, 2005; Seigneur,
2005; Zhao, 2003), entrepreneurial ecosystem (Cohen, 2006), social ecosystem (Mitleton-Kelley,
2003) and technology ecosystem (Adomavicius et.al, 2006).
Iansiti and Levien (2004a; 2004b) extend the concepts of Moore by defining the role of actors in
the business ecosystem and relating these roles to the collective properties of their ecosystem.
Using the analogy of a biological ecosystem, these roles are defined as keystone, dominator and
niche player. Iansiti and Levien show that business networks are rarely homogenous and there are
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members perform distinct and unequal roles.
Iansiti and Levien (2004a; 2004b) define the network as loosely coupled system, which requires
only interoperability and extensibility based on satisfying just sufficient protocols for interaction
and leveraging. They identify that the highly distributed and networked structure in industries today
is a relatively recent phenomenon requiring a new framework of thinking about industry health and
what constitutes an industry in the first place. There are a large number of distinct organizations
involved in delivering a product to the consumer which makes them share a common fate which
could be tied to the fate of the product. This kind of network resembles a biological ecosystem.
The effort to understand the underlying mechanism in business ecosystem is done by Peltoniemi
(2004; 2005a; 2005b), Peltoniemi and Vuori (2005), Peltoniemi, Vuori and Laihonen (2005) and
Vuori (2005). Yet, the results are still in the conceptual stage, as a base for a theoretical framework
and as a concept for developing a simulation model. Several empirical studies, which are based on
the developed concept, have also been conducted by Den Hartigh and Van Asseldonk (2004) and
Quaadgras (2005). These studies take the business ecosystem as an object of study and use network
techniques to analyze business ecosystem such as the influence of network structure to the
performance of the firm and network. Later on during 2005-2006, a different focus of study is also
presented by Moore (2006), Foer (2006) and Gundlach (2006) by using this concept to discuss
issues in antitrust cases. Den Hartigh et.al (2006) use network theory to develop measures of
ecosystem health and empirically analyze and measures it in Dutch IT ecosystem.
Quaadgras (2005) uses network theory to empirically explain the behavior of large, diverse firms
with respect to joining the network based on the model of absorptive capacity and
exploration/exploitation. To some extent, this model can also be further developed to analyze firm
performance in the network.
An effort has been done by Jimenez (2007) who uses network theory to assess network health in a
less complex way. He approaches two of the three measures as defined by Iansiti and Levien (2002;
2004b), i.e., productivity and robustness, by using a structural approach in which attributes of
relationships between actors are the focus of analysis. Yet, his study has not touched on the third
measure as mentioned by Iansiti and Levien (2002; 2004b), i.e., niche creation.
Studies in business ecosystem have not said much on the governance. Moore (1996) mentions that
the most used ways of governing business ecosystem relationships are community governance
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systems and quasi-democratic mechanisms. Moore’s idea on governance is by comparing
ecosystem governance to markets and hierarchies. He mentions that the ecosystem internalizes the
systems of firms and the markets that connect them under the guiding hands of community leaders
(2006). Iansiti and Levien (2004b) mention that business ecosystems are governed by shared fate,
but they do not intensely discuss this guiding mechanism. Vos (2006) describes business ecosystem
governance as providing network members with an incentive and vision to strive for a common
goal, giving them the freedom to reach that goal on own initiatives so that their motivation is not
hampered by obstruction, while using steering mechanisms to ensure that their activities will reach
this common goal, in an effort of improving the business ecosystem’s capability of coping with
exogenous changes and the internal pace of innovation.
Despite the fact that many studies have been conducted into business ecosystems, there are still
many important issues that need to be addressed. Among these are the definition of business
ecosystems and the use of metaphor as a research instrument.
3.2 Definition of business ecosystem
One of the issues to be discussed in this concept is related to the definition of a business ecosystem.
In network studies, there have been discussions about the ontological status of network
organizations (Borgatti and Foster, 2003). A similar discussion can apply for business ecosystems:
“Is the business ecosystem a metaphor of a business network or a description of an organizational
form which is bigger than a business network?”
Moore (1993; 1996a) regards a business ecosystem as a perspective to understand how an
economic community works. He calls an economic community a business ecosystem and suggests
that this term replaces the term industry. Moore starts by defining a business ecosystem as an
object (see figure 1) and based on this object, develops the appropriate strategy framework to
analyze strategy making.
As a form bigger than a business network, we could ask whether a business ecosystem is a new
kind of organizational form with unique characteristics and relationships which exists in reality or it
is just a reification of a business network. As shown in figure 1, a business ecosystem as proposed
by Moore includes more than the network (or extended enterprise in Moore's terminology). It also
includes the owners and other stakeholders as well as powerful species such as governmental
bodies, associations and standardization bodies. Since organizations are already thought to be
embedded in a network of economic and social relations (Borgatti and Foster, 2003), we can ask
whether such a new organizational form is needed to build the concept and find explanations on this
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loosely coupled system of interconnected networks.
CORE
CONTRIBUTIONS
DISTRIBUTION
CHANNELS
DIRECT
SUPPLIERS
SUPPLIERS OF
MY SUPPLIERS DIRECT
CUSTOMERS
CUSTOMERS OF
MY CUSTOMERS
SUPPLIERS OF COMPLEMENTARY
PRODUCTS AND SERVICES
STANDARD BODIES
Government agencies and other quasi-
governmental regulatory organizations
Stakeholders, including investors and
owners, trade association, labor unions
Competing organizations having shared
product and service attributes, business
processes, and organizational arrangements
EXTENDED
ENTERPRISE
CORE BUSINESS
BUSINESS
ECOSYSTEM
Figure 1. Business ecosystem ( Moore, 1996a)
As a metaphor, the business ecosystem concept can enhance understanding and provide creative
thinking when studying business networks. Regarding a business network as an ecosystem opens
up a new way of looking at the structure, interaction and exchanges among organizations. It moves
the analysis to the system level in which many sectors and industries behave like a massively
interconnected structure of organizations, technologies, consumers and products (Gundlach, 2006).
Within this context, the focus of the analysis will consequently be on the relations, interactions and
dynamics at the system level. As part of larger system, firms can play different roles to increase
their performance, but since the system involves interconnected firms, those roles could propagate
throughout the system influencing the system fitness and through this again the firm fitness.
Iansiti and Levien (2004a; 2004b) do not pay much attention to defining the business ecosystem but
rather develop a perspective to understand business networks. This provides a source of vivid and
useful terminology and powerful insights for studying strategy in business networks. They seek to
develop a concept that borrows the terminology and insights from biological ecosystems. They
believe that in many ways biological ecosystems are simply a point of departure for analogies and
metaphors as well as for theoretical foundations to understand the challenges and opportunities for
formulating strategies in a networked world (p.37). Starting from the needs to understand and
11
manage business networks, Iansiti and Levien used the biological ecosystem as an analogy (p.8-9).
They believe that a particular powerful way to conceptualize business networks is to compare them
to biological ecosystems (p.35) because specific features of these ecosystems, like the structure, the
relationships among members, the kinds of connection among them, and the differing roles played
by their members, suggest important analogies for understanding these business networks (p.9).
Iansiti and Levien also explicitly mention that they do not argue that industries are ecosystems or
even that it makes sense to organize them as if they were (p.9). They also state clearly that they do
not claim that business networks are ecosystems (p.37).
Thus, Iansiti and Levien (2004a; 2004b) use the business ecosystem as metaphor for business
networks while Moore defines a business ecosystem as more than just business network. As shown
in figure 1, the boundary of business ecosystem is actually hardly different from that of a (strategic
or business) network. Several studies of business networks have already included, besides the
organizations that are directly connected to the core business of firms, indirectly related
organizations or individuals, dynamic relations, cooperative and competitive relations and relations
with common objectives.
The difference between a network and a business ecosystem is therefore not in the object of study,
but in the perspective that is used to analyze interconnected businesses. In other words, in the way
we look at the relationships or interactions among the members and their environment, at the roles
and interests of the members of the system, and at the mechanisms guiding these interactions
toward the achievement of shared goal.
We therefore think that it will be most interesting and useful to use the business ecosystem concept
as a perspective to understand business networks, rather than as a new organizational form. Such a
perspective will provide a logic, different from the current logic of understanding inter-
organizational relationships from the network perspective. The business ecosystem perspective
offers a new way to obtain a holistic view of the business network and the relationships and
mechanisms that are shaping it, while including the roles and strategies of the individual actors that
are a part of these networks.
3.3 The use of business ecosystem as a metaphor
Analogies and metaphors have been used in art and science for a long time, and nature has often
been a rich source of such inspirational analogies (Hannon, 1997). A useful role for analogy in
academic research is to provide an intuitive understanding of how a problem can be approached
12
(Foster, 1997). The natural ecosystem as a metaphor drives business studies to go beyond the
atomistic and internal view of the firm, since a natural ecosystem is a complex, self organizing
system. We could ask ourselves in how far this metaphor and analogy can be used to study business
reality? This question emerges since natural ecosystems as an analogy and metaphor are systems
without the capability for intentional and planned behavior and action (Korhonen et.al, 2004; Iansiti
and Levien, 2004b). Iansiti and Levien (2004b) also realize the danger of using the analogy and
metaphor from biological ecosystems for understanding business networks, and they point out three
critical characteristics that business networks have while biological ecosystems do not, namely
innovation, competition for members, and intelligent actors. Iansiti and Levien (2004b) answer this
limitation by extending the metaphorical foundation from ecosystems as narrowly defined in
ecology to a much wider universe of evolved biological ecosystems, arguing that for business
networks, too, the choices available to decision makers are limited and shaped by the forces
governing the entire (economic) system. While it is well-understood that decision makers may have
limited choices due to environmental forces, it could also be argued that intelligent (human) actors
will always be able to proactively anticipate changes, or even initiate them.
There is little doubt that the natural ecosystem metaphor has increased the understanding of
business networks and has promoted creative thinking in this field. Yet, despite of this, the question
of the appropriateness of using the metaphor should be resolved. Korhonen (2005) mentions that a
metaphor cannot be wrong or inaccurate, that it can only be useful or not useful, and that its
usefulness is to be determined in terms of its contribution to the real world. This suggests that we
should go beyond the metaphor and reveal and empirically test the underlying mechanisms and
relations to determine the degree to which metaphor is appropriate.
To proceed from the current situation, we see two directions that could be followed to increase the
depth and practicability of the concept. We use the categorization as developed by Eoyang (2004)
to map the current position of the study of business ecosystem and the direction to go (see table 2).
Table 2 Categorization of phenomenon of interests and available tools for understanding and
intervention (adopted from Eoyang, 2004)
Tools for understanding and intervention
Phenomena Practice Weak Metaphors Strong
Metaphors
Mathematics
Surface structure
Act in response to
the surface structure
Describe patterns that
emerge in the
business network
with metaphors
drown from
complexity logic
Intervene using tools
derived from
complexity to
influence the surface
structure of business
network
Represent complex
relationship among
variables of the
surface dynamics of
complex business
network
13
Evident deep
structure
Act in response to
the deep structures
of business network
that are evident
when it is known
where and how to
look
Describe subtle
structures that shape
business network
using complexity
metaphor
Influence the self-
organizing process in
business network by
shifting dynamics
that are visible
Represents the more
subtle non linear
dynamics of business
network using tools
of mathematics
Subtle deep
structure
Act in response to
structures that are so
deep within the
nonlinear dynamics
that the analyst
unaware if what the
patterns are
Support system as it
describe for itself the
nonlinear dynamics
that drive its tension,
productivity, and
history
Represents the
system dynamics so
that the subtle deep
patterns are visible
and accessible to
influence
Use mathematical
tools to discover
subtle structures in
complex human
system
In the dimension phenomenon of interest, there are different layers of depth to which we could take
the study of business networks, namely surface structure, evident deep structure, and subtle deep
structure (Eoyang, 2004). Based on the overview of the literature, given the fact that most
contributions to date are conceptual rather than empirical, we position the current study of business
ecosystems mainly in the first layer. In the dimension tools for understanding and intervention,
there are different levels of abstraction, namely practice, weak metaphors, strong metaphors and
mathematics (Eoyang, 2004). Based on our above discussion of the use of metaphor, we position
the current study of business ecosystems mainly in the weak metaphor column. Given this
positioning of the current state of research, we think that the further development of the business
ecosystem perspective should be done through:
1. Enriching current concepts by increasing the level of abstraction of the required tools to
understand and intervene in the system. A first step in this direction would be to develop the
business ecosystems concept towards a strong metaphor by identifying variables and
underlying mechanisms in business network using appropriate theories (such as complex
adaptive system, biological ecosystem, network theory), conceptualizing those variables and
mechanisms in business networks, and finding how the mechanisms influence the working
of the system. A next step would be to represent those complex relationships among
variables and underlying mechanisms into mathematical relationships to uncover the
structures and dynamics of the system.
2. Moving towards a deeper layer of understanding with respect to the phenomena of interest
by empirically testing them. In this empirical testing, the tools developed under (1) should
be used.
In the remainder of this paper, we will make a first effort to mature the business ecosystems concept
into a strong metaphor.
14
4. Business ecosystem as a perspective
In his book, Moore (1996a) explains the basic idea of the business ecosystem perspective in strategy
making. It is a simple guide for firms to understand the economic system evolving around them and
to find ways to contribute to it. It stresses that in an economy of constant change, what a firm does
is not as important as how a firm’s capabilities relate to what others are doing. Strategy making
involves having an awareness of the big picture and finding ways to play a role in it. This simple
statement is no longer simple when it is confronted with the reality of the networked economy,
since awareness of the big picture will require an understanding of how the system behaves, i.e., of
the dynamics and of the mechanisms from which they result.
The differences in scope between a firm, a network and a business ecosystem in strategic
management as suggested by Moore (1996a) are shown in table 3. It is suggested by Moore (1996a)
that the business ecosystem perspective extends the traditional strategic management (core products
and services) and network (extended enterprise) approaches in the sense that a company should be
considered not as member of a single industry but as part of a business ecosystem that crosses a
variety of industries.
Table 3. Increasing Scope of Strategic Management (Moore, 1996a)
Several characteristics found in Moore (1996a) and Iansiti and Levien (2004b) suggest that the
business ecosystem perspective enables us to see different things than we would see from a more
Scope Of Strategic Management
Core Products And
Services
+ Extended
Enterprise
+ Coevolving
Ecosystem
Concept of business
relationships
A portfolio of transactional and
long-term preferred customer
and supplier relationships
Managed system of
relationship
Coevolving, symbiotic, self-
reinforcing system of
strategic contributions
Focus of continual
improvement
Products and processes Organizational
interactions, extended
processes
Investments in innovation
by members of community
Measure of
improvement
Reduction in product defects;
reduction in product deviations
from standard
Rate of progress on
improving products and
processes
Rate of progress on creating
end to end total experiences
of dramatic value to
customers
Most important
contracts governing
the relationship
Product specifications, process
specifications, and TQM
standards
Letters of agreement
among key organizations
Community governance
systems, quasi-democratic
mechanisms
Alignment of the
intentions of key
parties
Alignment on the importance
of consistency of
customer/supplier satisfaction
and performance on
benchmarks
Alignment of the parties’
strategic direction and
investments
Alignment of the
community around a shared
vision of a desired future
and the road map and key
contributions required.
15
traditional strategic management or network perspective:
1. It emphasizes the view that the network can be a source of firm renewal rather than being
the external threat that is often the focus of existing frameworks (Iansiti and Levien, 2004b,
p.37).
2. It not only examines the relationships between firms/organizations in the business network,
but it also defines the roles that can be played by firms and the strategies they can follow in
maintaining the health and performance of themselves and their business networks. A
traditional network perspective mostly focuses on the interaction of the network members
but less on the roles they play and the strategies they follow.
3. It recognizes that both cooperative and competitive relationships and their interplays are
important for the survival of firms and their networks (Moore, 1993; Iansiti and Levien,
2004b).
4.1 Aspects to be developed
To mature the business ecosystem perspective into a strong metaphor, we have to identify variables
and underlying mechanisms that will reveal and explain the phenomena of interests and we will
have to provide appropriate tools for understanding and intervention. We will use several theories to
explain, fill in the gaps and enrich the different aspects of the business ecosystem perspective.
Based on its basic characteristics and current study of business ecosystem, four aspects need to be
further developed, namely (1) the firm, (2) the network, (3) performance and (4) governance. An
assessment of the different concepts toward these aspects of the business ecosystem perspective is
shown in table 4.
Table 4. Concepts for the aspects of the business ecosystem perspective
Aspects (Social) Network
theories
Biological
Ecosystem
Complex Adaptive
System
Business
ecosystem
Firm
- Characteristics
Active and Strategic
and posses connectivity
with others
Strategic pursuing
economics interests
- Roles
Actors occupying
certain position in
network
Keystones, Dominator,
Predator & Prey
Keystone, dominator,
landlord, and niche
player
Network
16
Aspects (Social) Network
theories
Biological
Ecosystem
Complex Adaptive
System
Business
ecosystem
- Structure
Network density,
structural holes,
structural equivalence,
and core versus
peripheral firm
Self-organizing loosely
coupled of
interconnected agents
Loosely coupled
system of
interconnected agents
- Dynamics
Endogenous and
exogenous dynamics
resulting in network
effects and social
interaction effects
Co-evolution and non-
linear processes
(adaptation,
emergence, self-
organization)
Performance
Cohesion, connectivity,
density, trust, closeness,
number of ties,
reciprocity
Vigor, organization,
Resilience
Stability, diversity and
productivity
Coherence, Stability,
and
Productivity,
Robustness, Niche
creation
Governance
Price, authority, social
governance (purpose
and trust)
Co-evolution,
emergence, self-
organization, and
adaptation
Community
governance (quasi-
democratic), Shared
fate
4.2 The firm
The business ecosystem perspective emphasizes the role being played by actors in the business
network. Drawing from current works on business ecosystem, there are four different strategies that
can be pursued by firms, reflecting the roles being played in the network. There are still gaps in this
categorization though. The first one is related to the characteristics of the actors: how one can
identify the roles being played by firm in the network (Blackburn, 2005). The second one is related
to the behavior of these actors. It can be further developed using different concepts from biological
ecosystems, network theory, and complex adaptive systems theory.
Characteristics
In complex systems theory, an agent (or a firm in this respect) is an active and strategic one but
with fragmented information. These agents find themselves in an environment produced by their
interactions with other agents in the system (Waldrop, 1994). Agents possess varying degrees of
connectivity with other agents through which information and resources can flow (Choi et.al, 2001)
and they possess schema, which are norms, values, beliefs and assumptions that are shared among
the collective (Schein, 1997 in Choi et.al, 2001). A few dominant schema dictate the majority of
behaviors, which are typically non linear and can lead to complex behavior even if only a few
schemas or rules are being enacted (Choi et.al, 2001).
Agents, as part of the system, learn how to perform tasks by developing their own survival
17
strategies. Their behavior is driven by a set of rules, such as:
A set of operating rules driving the performance of tasks necessary for survival.
A set of rules for evaluating that operating performance.
A set of rules for changing both the operating and evaluating rules, i.e., for learning. These
rules might well involve cross-fertilization between an agent's existing set of rules and the
rules of other agents, a kind of mating between the rules of different agents (Stacey, 1996).
Roles
Building from biological ecosystems, a further characterization can be made of the roles that can be
played by firms in the network. There are several articles that focus on roles, especially on the
keystone role. See, for example, Power and Mills (1995), Brose, et.al (2005) and Power et.al
(1996). Those articles elaborate on the role of a keystone to maintain the health of its ecosystem as
well as on a concept to identify a keystone.
Several studies in networks found that the position of firms in the network influences firm behavior
and performance, see, e.g., Powell et.al (1996), Walker et.al (1997 in Gulati, et.al 2000). Insights
from network theory can also be used to enrich the role and behavior of agents occupying certain
positions or having certain network resources, i.e., network relationships as proposed by Gulati,
et.al (2000). Centrally positioned firms or hubs within network may hold considerable power
access to the ecosystem or networks because of the dependence of niche players in the networks on
the hub firm (Gundlach, 2006).
4.3 The network
As for the network, there are lots of studies in network theory that can enrich the business
ecosystem concept. As agents are interconnected, small changes can propagate through the system
to make it highly dynamic and unstable. Further examination can be done on the structure and
dynamics of business ecosystems.
Structure
It is very important to characterize the structure of complex networks since the structure always
affects the function and the behavior of a dynamical system, especially a complex one, which can
only be understood by looking at the intrinsic interactions among the multiple individual parts.
Although much has been written on the structure of networks, few studies are available on the
structure of business networks from the business ecosystem perspective. Thus, the examination of
18
structure of business network will have to be built on current studies on structure from network
theory and from complex adaptive system theory.
Within network theory, studies on network structure refer to the pattern of relationships within
which the industry is embedded (Gulati et.al, 2000). Various factors have been identified, such as
network density, structural holes, structural equivalence, and core versus peripheral firms which can
influence the profitability of industries and of the firms within them. Building on these insights, the
structure of business network, which is not only limited to industry but goes beyond industries,
could be defined. For example, the existence of structural holes could provide an explanation to the
characterization of the firm occupying this position and its role on influencing its own survival and
the health of the network.
Within complex adaptive systems theory, business network is considered as a self-organizing,
loosely coupled system of interconnected agents. A low ratio of connection between agents
produces order, a high ratio of connections between agents produces chaos. When each agent is
connected to only a low number of other agents, the system exhibits orderly dynamics, and when it
is gradually increased the system passes through several phase-transitions to become, ultimately,
chaotic in the limit of a complete system (Choi, 2002). This level of order is important to the
ability of the network to change and incorporate improvements and co-evolve with other
ecosystem.
Dynamics
In view of the above, because a business network consists of large number of interconnected
agents, network dynamics are an inherently important phenomenon to analyze from the business
ecosystem perspective. Depending on the characterization of the structure, different starting points
are used to discuss the dynamics of the network.
Current research on business networks acknowledges the existence of endogenous and exogenous
dynamics which can have significant consequences for the strategy advantages of actors in the
network. Network theory can provide important insights to better comprehend the dynamics by
explaining why firms get locked-in and locked-out from the dominant design (Gulati et.al, 2000).
From complexity science, dynamics as a result of interconnectedness are discussed based on the
phenomena that arise from such interaction, which are co-evolutionary processes and non-linear
processes.
19
Co-evolutionary process
Within complexity science, networks gradually evolve from random collections of agents to
more structured communities that involve interdependent species of organization in an
endless reciprocal structure. Adaptation and survival are the hallmarks of this process, as are
predatory and prey interactions (Gundlach, 2006). The business network interacts with its
environment which creates dynamics because there is feedback between the network in
terms of cooperation, competition and co-evolution with the environment (Choi et.al, 2001).
Non linear changes
Behavior of a complex system, which shows non-linear behavior, stems from the complex
interaction of many loosely coupled agents (Choi et.al, 2001). Small changes can lead to
different future paths in the form of emergent structures, patterns and properties that arise
without being externally imposed on the system. This emergence is a result of the self-
organizing characteristics of a complex system, in which agents simultaneously and in
parallel react on the changes. The network structure and dynamics are emergent phenomena
as a result of the self-organizing system of firms from which the network is composed.
Changes are constant and interdependent in complex systems (Choi et.al, 2001). Over time,
business networks evolve through different phase which are pioneering, expansion,
authority/leadership, and self renewal or death, as proposed by Moore (1996a). This evolution finds
its roots on biological evolution through mutation, replication, competition and adaptation. In
biology, this is a slow and unconscious process driven by physical phenomena (e.g., mutation) and
implemented by competitive reproductive strategies adapted to specific environmental niches
(Ayres, 2004). Within an economic or business context, this mutation phenomenon is represented
by invention or innovation. Invention and innovation are the results of competitive reproductive
strategies of firms that would like to maintain their continuity in the business. Firms that fail to
perform competitive reproductive strategies will die.
4.4 Performance
Network health is influenced by the strategic actions of firms through a governance mechanism and
through the same governance mechanism the health of the network will influence the performance
of the firms. Iansiti and Levien (2002; 2004b) have already developed some measures of network
health. They define three measures of health, namely productivity, robustness and niche creation.
Yet, there are some issues on the operationalization of these measures due to problems with data
20
availability and access. Other proxies or workable measures can be developed by building on
network theory and biological ecosystem theory.
From biological ecosystem theory, a healthy ecosystem should reflect properties of resilience,
organization and vigor that sustain life systems. Vigor is measured in terms of ‘activity, metabolism
or primary productivity’ which focuses on the existing organic base that helps accommodate
disturbance. Organization can be assessed as the diversity and number or interactions between
system components. It gives emphasis on structure and diversity. Resilience is measured in terms
of a system’s capacity to maintain structure and function in the presence of stress. When resilience
is exceeded, the system can ‘flip’ to an alternate state. These measures are similar to ones
developed by Iansiti and Levien (2002; 2004b).
From network theory, network health can be assessed through network measures, as was done by
Jimenez (2007). He operationalizes two measures as defined by Iansiti and Levien, i.e.,
productivity and robustness, by using structural approach in which attributes of the relationships
between actors are the focus of analysis. Robustness is defined as the ability of business network to
face and survive technological perturbation by means of the resilience of the network and the
complexity of its internal structure. It is measured through the network measures of cohesion,
density and connectivity. Productivity is defined as the ability to transform resources into value-
creating activities or products. It is measured through the network measures strength of ties (i.e.,
trust and closeness) and embeddedness (i.e., number of ties and reciprocity). As this study has not
touched on the third measure mentioned by Iansiti and Levien, niche creation, it would be useful to
proceed developing niche creation measures using the same approach.
4.5 Governance
Although it can be argued that it is impossible to manage a network, managers have do it on day-to-
day basis (Ritter and Gemünden, 2003). It is related to what a firm can really do to influence the
network and how it can do this. Managing the network is an interesting issue considering that a
firm can influence the network only to a certain extent. A lot depends on the behavior of the other
actors in the network, see, e.g., Ritter and Gemünden (2003), Jones et.al, (1997), Den Hartigh and
Van Asseldonk, (2004) and Van Asseldonk et.al, (2002). Den Hartigh and Van Asseldonk (2004)
therefore propose to use the term governance instead of management because here the firm tries to
influence a networked system of which it is not the ‘boss’.
The works on network governance is developed based on different theories such as transactions cost
21
economics and social network theory. Jones et.al (1997) mention that network governance is
increasingly important but poorly understood. Kohtamaki et.al (2006) mention different viewpoints
in network governance studies, which are:
Markets versus hierarchies, a view based on the transaction cost theory which defines price
and authority as the mechanisms of governance.
Networks as an intermediate form between markets and hierarchies. In this interpretation,
partnership is a more integrated form than a market but less integrated than a hierarchy.
Networks as a form distinct from markets and hierarchies. In this view the governance
mechanism of a network is a social one, emphasizing the meaning of shared purpose and
trust between actors.
The simultaneous use of three different mechanisms of governance which are price,
authority and social governance.
Studies in business ecosystems have not said much on the governance. Moore (1996a) mentions
that the most important contracts governing network relationships are community governance
systems and quasi-democratic mechanisms. Moore’s concept on ecosystem governance comprises
markets and hierarchies. He mentions that the ecosystem internalizes the systems of firms and the
markets that connect them under the guiding hands of community leaders (2006a). Iansiti and
Levien (2004b) mention that ecosystems are governed by shared fate. They do not, however,
discuss this guiding mechanism in depth. Vos (2006) formulates business ecosystem governance as:
1. Providing network members with an incentive and vision to strive for a common goal,
2. giving them the freedom to reach that goal on own initiatives so that their motivation is not
hampered by obstruction,
3. while using steering mechanisms to ensure that their activities will reach this common goal,
4. in an effort of improving the business ecosystem’s capability of coping with exogenous
changes and the internal pace of innovation.
He identified four basic principles, coming from complex adaptive systems theory that can be used
to conceptualize governance mechanisms, namely co-evolution, emergence, self-organization, and
adaptation.
Further investigation of the four aspects and the relationships among them will enrich business
ecosystem concept and is expected to provide valuable tools for managers or practitioners to
understand and intervene the complex situation in its business network.
22
5. A core logic of business ecosystems
Based on the above theories contributing to the further development of the business ecosystem
perspective, it can be concluded that a business ecosystem perspective will need to be firmly
founded in (social) network theory and complex adaptive systems theory. Biological ecosystems
theory will provide the metaphor that serves as a source of inspiration. For integrating the core
aspects of the business ecosystem perspective based on different founding theories, we draw upon a
concept put forward by Lengnick-Hall and Wolff (1999). A core logic describes the set of
articulated principles that specify strategic goals, frames, competencies, and expectation for
success. Lengnick-Hall and Wolff (1999) distinguish between capability logic and complexity logic
(see table 5).
Table 5. Comparison between capability logic and complexity logic
(summarized from Lengnick-Hall and Wolff, 1999)
Aspect Capability Logic Complexity Logic
Market
condition
Economic setting is equilibrium oriented
where changes can be intentionally
engineered and often designed to reinforce
incumbents who have attained desirable
competitive positions.
Marketplace is a result from cumulative and collective
chains of activity and reactions. Small initial differences
often results in significant marketplace variety so that no
individual or firm is expected to be able to determine or
fully manage market conditions.
Strategic
Purpose
success is achieved when firm is able to
leverage its resources and competencies to
achieve a sustainable competitive advantage
and, thereby, establish an incontestable
position in the marketplace
Success is a network of reciprocal, mutually beneficial
relationships and does not require having an edge over
other firms or extracting disproportionate rents. The
primary strategic purpose is resilience resulting from a
nurturing web of relationships
Competitive
Advantage
competitive advantage is the root of value
creation, is sustainable, and can be achieved
by exceptional scarce, valuable, inimitable,
and non-substitutable assets
Competitive advantage as defining a firm’s potential
relative to the overall processes and resources of the
network. From complexity perspective, a firm’s
competitive advantage is both its contribution to the
systemic enterprise and a potential attractor shaping
large systemic patterns of behavior
Imitability Preventing the imitation or appropriation of
rare, valuable, and useful assets as
cornerstone of creating a sustainable logic
Efforts to protect proprietary resources and knowledge
are counterproductive and work to the detriment of
system-wide accomplishment. Learning organizations
required shared mental models, deep knowledge of
important technologies and a language for sharing tacit
knowledge
Time Horizon Use calendar that reflects market and
product life cycles. A long term planning
horizon is both desirable and feasible
Concentrate on the cumulative effects of multiple life
cycles across network of products and industries and
technologies
Source of
Influence
Influence is derived from controlling
superior resources, or superior resource
combinations that result in superior
capabilities
Influence relies on shaping the system architecture which
is done by triggering relationships and interactions that
serve as catalysts to increase and reduce system
regularity. Power comes from understanding patterns,
and then intervening to change fundamental systemic
attractors and processes
Nature of
relationship
Relationships are built around power
derived from the control, protection and
appropriability of resources and assets. Key
Relationships are long-term and collaborative out of
interdependence. Influence comes from developing
relationships noted from reciprocity, stable patterns, and
23
Aspect Capability Logic Complexity Logic
relationships are often built around specific
ways to leverage resources
common interests. Relationships are deterministic, but
non linear and dynamic
Stakeholders’
focus
Concentrates on creating value for investors
by enhancing the firm’s stock of assets and
capabilities
Dominant stakeholders is the business ecosystem
community with the primary emphasize is to ensure a
healthy and well-nourished ecosystem
Boundary roles Boundary spanners act as police, shielding
resources and guarding the firm’s borders
from inappropriate activity
Boundary spanners as ambassadors and bridge builders.
Under complexity logic, every individual in the firm has
important boundary-spanning responsibilities both inside
a firm and beyond its borders
Interpreting this table, we propose that the business ecosystem perspective could best be classified
as complexity logic. This means that strategic success is a function of a firm’s talent for thriving in
dynamic nonlinear systems that rely on network feedback and emergent relationships (Lengnick-
Hall and Wolff, 1999). Thus, by taking complexity logic as its core logic, the business ecosystem
perspective is represented by the following basic characteristics as suggested by Lengnick-Hall and
Wolff (1999):
1. Individual unit or organizational success requires a healthy ecosystem.
2. The importance of unpredictable, nonlinear, and natural consequences is underscored.
3. Influence is achieved by managing initial conditions and the underlying forces, or attractors,
which organize the system.
4. Systemic change is a continuous, relentless process.
5. Self-organization triggers transformation.
6. Cultural integrity is the basis for establishing relevant boundaries. Given the emphasis on
community and the recognition of attractors, complexity-based strategies rely on shared
values and common purposes, rather than procedures to guide behavior.
Having complexity as its core logic, the business ecosystem perspective can play an important role
in the study of the relation between firms and their business networks, a field of study is which
currently mainly capability logic is used. Based on differences in the aspects of strategic
management between those two logics, as shown in table 5, the business ecosystem perspective can
contribute by providing researchers with a broader view on the relationships between the firm and
its environment and by providing practitioners with useful insights for strategy making in networks.
6. Conclusion, limitations and further research
In this article we took a step to mature the business ecosystems concept as a research perspective
for studying the relation between individual companies and the business networks around them. We
showed that, as economic activities are changing from dominantly stand-alone to networked, new
perspectives are needed to study the relationships between companies and their business networks.
The business ecosystem metaphor provides an interesting starting point for such a perspective.
However, in its current state of development, research on business ecosystems is still lacking
24
consistency in definitions provided, approaches taken and aspects addressed. There is therefore a
clear need to develop the business ecosystem concept from the weak metaphor it is now to a strong
metaphor, or a genuine research perspective. Doing so will enable us get a better insight into the
roles and strategies of companies in networks, into the nature of cooperative and competitive
relationships between the companies and into the governance of business networks.
By making an overview of current research on business ecosystems, we were able to define the
aspects that are core to a business ecosystem perspective, namely, the characteristics and roles
(strategies) of the firms in the network, the structure and dynamics of the network, the performance
of the firms and the network and, finally, the network governance. The possibility to further develop
these core aspects was examined using (social) network theory, biological ecosystem theory and
complex adaptive system theory. Finally, we proposed to integrate these core aspects into a
comprehensive complexity/ecosystem logic by examining distinctive characteristics of a core logic,
i.e. market conditions, strategic purpose, competitive advantage, imitability, time horizon, source of
influence, nature of relationship, stakeholders’ focus and boundary roles. In doing this, it is
expected that the study of business ecosystem will create additional insights and explanatory value
in strategy making.
The research in this paper has a few limitations, which provide opportunities for further research. A
first limitation is that a limited number of underlying theories was used to found the core aspects of
the business ecosystem perspective. In this paper we used network theory, social network theory,
biological ecosystem theory and complex adaptive system theory. While we think these theories
together will cover important parts of the business ecosystem perspective, it might well be worth
extending the set of theories with evolutionary economics and game theory. Game theory, especially
in its evolutionary variant, is a perspective to analyze how interactions between individual players
affect collective outcomes of this interaction. As such, it is linked explicitly to the actions of
individual players (company strategies) and to the consequences of these actions at the system level
(business network). In evolutionary economics, processes of evolution of business populations are
studied (business network), including the fitness or adaptability requirements on individual
companies (company strategies) to survive the environmental selection forces. In further research,
these perspectives should be considered to be included.
A second possible limitation is that the approach taken in this paper is essentially eclectic. The
advantage of such an approach is that the broad theoretical underpinnings enable us to cover the
core aspects of the business ecosystem perspective, something that might not be attainable with a
singular underlying theory. A challenge is posed, however, by the necessity to re-integrate the
different core aspects into a comprehensive logic. In this paper, we made a first effort to do this
25
under the label of complexity/ecosystem logic. In further research, this comprehensive framework
needs to be further strengthened.
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... The IM developed in this study models the independent video gaming industry in Kyoto, contextualized in Japan and internationally. An IM is based on input from participants who define the industry (Porac et al., 1995) as well as rivalry, supplier and customer relationships (Porter, 1998), production of goods and services (Wirtz, 2019), and shared values (Anggraeni, Hartigh, & Zegveld, 2007). ...
... Sustainability in an ecosystem can refer to its robustness or ability withstand technological challenges (Iansiti & Levien, 2004), and is paralleled by the system's resilience (Anggraeni et al., 2007) to continue functioning when stressed. Accordingly, we can expect organizations to survive, resources to be saved, and even to expand a sustainable ecosystem. ...
... The firms interviewed in this study were selected based on their central position in the ecosystem, knowledgeability, and accessibility to the researcher. The statements of the interviewees were matched to the concepts, constituents (Moore, 2016), and boundaries (Anggraeni et al., 2007) of ecosystems and the relevant concepts of topical space (Brinkhoff et al., 2016;Suwala, 2014) around industry segments. Cognitive maps were created to manage and reduce the complexity of the raw data. ...
Chapter
Business ecosystems, in which firms create value as they move and share resources, are of interest due to their sustainability, robustness, and structure. An Industry Model is a Business Model at the level of an industry rather than within a single organization. Regarding a business ecosystem, an Industry Model can reveal the structures of that system including pathways of interaction, mutual interests, strengths, and gaps in the functions of the ecosystem. This work models the independent video gaming industry in Kyoto and finds dual business ecosystems linked by common products and events, but separated by language and experience. The Industry Model described here is based on interviews with participants who define the industry as well as public sources. Analysis of the Industry Model shows that the ecosystems are sustainable and internationalized, but lacking in coordination and communication.
... Esta teoría ofrece una visión interdisciplinaria y sistémica de los intercambios socioeconómicos entre diversos actores (Letaifa, Gratacap & Isckia, 2013). El concepto de ecosistema de negocios es una perspectiva de investigación para estudiar la relación entre las empresas y sus redes de negocios (Anggraeni et al., 2007). Se trata de una comunidad de organizaciones interdependientes con productos o servicios relacionados (Desai, Mazzoleni & Tai, 2007). ...
... La lógica actual de los mercados, desde la perspectiva de los ecosistemas de negocios, apunta a un conjunto más amplio de jugadores y el estudio de la sostenibilidad (Prahalad & Ramaswamy, 2004;Crittenden, Ferrell, Ferrell & Pinney, 2011). Los participantes del ecosistema pueden ser organizaciones privadas, públicas y no gubernamentales, que pueden fungir como actores principales, jugadores de nicho e intermediarios (Anggraeni et al., 2007). Incluso se puede agregar que los ecosistemas de negocios desarrollan relaciones simbióticas proactivas -entre los actores individuales o grupos de actores-, para obtener beneficios propios, alcanzar objetivos compartidos y co-crear (Romero y Molina, 2011). ...
... Incluso se puede agregar que los ecosistemas de negocios desarrollan relaciones simbióticas proactivas -entre los actores individuales o grupos de actores-, para obtener beneficios propios, alcanzar objetivos compartidos y co-crear (Romero y Molina, 2011). Un ecosistema de negocios puede abordarse desde un cuando se reemplaza el término "ecosistema de negocios" por el de "industria" se amplía la perspectiva de los estudios, son más holísticos, es decir, es posible analizar e incluir pequeños cambios porque estos pueden propiciar efectos sustanciales al entorno físico o a la infraestructura que soporta el sistema (Anggraeni, Den Hartigh & Zegveld, 2007;Moore, 1996). ...
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... Value co-creation is the process by which value is generated through interactions between multiple stakeholder groups (Thomas and Autio, 2012;Hardyman et al., 2015). Ecosystems provide a means of analyzing dynamic and massively interconnected organizations, technologies, and actors through a holistic and multi-actor lens (Anggraeni et al., 2007). Understanding multiple stakeholder ecosystems and how the process of value creation takes place is an important enabler of a holistic view of the system (Pinho et al., 2014). ...
... This study adopts and ecosystem perspective that has become progressively common in both research and in practice. It draws on the concept of natural ecosystems to provide a way of looking at a business' structure, interactions, and exchanges, and achieves this by shifting the analysis of a business network to the systems level by focusing on the relations, interactions, and dynamics of massively interconnected organizations, technologies, and actors (Anggraeni et al., 2007). The attractiveness of the approach and the driving force behind selecting the ecosystem perspective for this study lies in its ability to provide a lens that focuses on self-organization, coevolution, adaption, and co-creation of value (Peltoniemi and Vuori, 2004;Thomas and Autio, 2012). ...
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Performance improvement in any field depends on establishing goals that align the interests of relevant stakeholders, which may be defined as creating value for stakeholders. In the healthcare context, the concept of value creation and its analysis from an ecosystem perspective has been neglected and is hard to achieve in practice. This research adopts an innovation ecosystem perspective to develop and evaluate a practical framework to guide value creation for healthcare settings in a developing country context. The resulting framework serves as a tool that can guide stakeholders to co-create value by defining the inputs, activities, and outputs/outcomes to enable the process of value co-creation through a heath information system. Design Science Research Methodology (DSRM) was followed to develop the framework (artifact); it entailed the evaluation of the preliminary framework through a range of cycles. A relevance cycle was completed through a literature review. Since the investigation was done from an ecosystem perspective, it provided an understanding of the core characteristics of ecosystems, information systems, and value to inform the development of a preliminary framework. The preliminary framework was evaluated through two design cycles: the first was based on in-depth semi-structured interviews with six industry experts, and the second comprised a framework ranking exercise. The observations from the two stages informed the modification and refinement of framework items. The evaluated framework provides practical and actionable elements of a value creation system based on three canvasses: (1) the pre-use canvas defines the healthcare system and its stakeholders; (2) the tool guideline provides an overview of the development of ecosystem canvas elements; and (3) the ecosystem canvas represents the process of value creation along with a conceptual canvas with descriptions or implications of each of the framework’s concepts.
... INJECT was organised according to action research principles in that it attempted to improve the quality and profitability of journalistic practices in collaboration with local stakeholders in an open-ended design process (Wagemans & Witschge, 2019); and it was transdisciplinary in that it involved local newspapers, research institutions, and tech companies. The core presumption of INJECT was that new designs are more likely to be successfully implemented if there is collaboration in ecosystems rather than competition between individual companies (Anggraeni et al., 2007;Moore, 2006). The structure of the media markets within the different member countries of the European Union is highly diverse. ...
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This article considers the extent to which action research can help local stakeholders tackle the permanent technological disruption in the media sector by reshaping journalistic production practices with original design by examining a specific case. The INJECT Norway (Innovative Journalism: Enhanced Creativity Tools) project was part of an EU Innovation Action with partners that included universities, technology companies, business consultancies, and local newspapers. The objective was to design a new tool for creativity support in journalism and stimulate innovation competence through a business ecosystem. The article evaluates the collaboration between academics and local partners in the Norwegian ecosystem regarding the workability of the new designs and the credibility of the approach. The evaluation is written as a chronological narrative of the project's collaboration from optimistic beginnings to eventual failure. The main findings reveal a tension between the academic researchers and the local project partners. Despite these tensions, the article concludes with a hopeful note about the current action research ecosystem: harnessing the power of students to mediate the relationship between academics and local partners.
... In addition, many smaller entities have it more difficult to get access to EU-funded projects and networks. These are sometimes represented, at EU project level, by associations or "business ecosystems" 45,46 understood here as structures around which large companies co-evolve their skills together with academic partners and smaller, more agile companies. ...
... Later, many scholars put forward their own opinions. For example, Anggraeni, E. et al. proposed to study the characteristics of the business ecosystem from six aspects: corporate characteristics, corporate roles, network structure, network dynamics, network performance, and network governance [21]; Tian Et al. proposed a business ecosystem model which mainly includes seven elements of resources, activities, decisions, standards, roles, business entities and business models [22]. Adam M. Brandenburger and Barry J. Nalebu, in "A Revolutionary Mindset That Redefines Competition and Cooperation; the Game Theory Strategy That's Changing the Game of Business", analyzed the cooperation of enterprises from the perspective of the game and the three points to be considered in the competition, namely Value Net, PARTS, Role-Playing [23]. ...
Chapter
Circular economy (CE) aims to create a sustainable economy while keeping economic growth intact, by internalizing negative externalities, such as waste. Research on this subject has come far on the macro level (e.g., legislative recommendations) and the meso level (e.g., life cycle engineering (LCE), circular supply chain (CSC), and circular value chain (CVC)), but less so on the micro level (i.e., the level of the individual firm). The issue this creates is that the businesses (which are the very basis of the economy) do not have clear frameworks, guidelines, or tools to reshape their own business in such a way that they can participate in a circular economy, hence hampering the development of a circular economy. In this research, we have created a circular production chain (CPC) that takes into account the resources, production process, product, and waste a company produces, through three aspects: imput, design, and output, but also places the company in the bigger picture, that is, the economy, and shows how CE is achieved by multiple companies working together, highlighting the importance of tactical management. In the process we uncover three main influences that facilitate or inhibit the implementation of CE practices in a single business.
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The COVID19 pandemic has disclosed the compelling necessity for businesses to develop and maintain a high resilience to survive the constantly changing environment they operate in and the rising number of crises they face. Our study sheds light on the resilience of owner-managed family businesses, with a special focus on different levels within and beyond the organization, by analyzing digitalization efforts as one form of strategic response to a crisis. More precisely, building on an extensive explorative multiple case study, we explore how and why owner-managed family businesses differ regarding their resilience and the implications this has for their crisis management. We contribute both to the literature on resilience and to research on family business strategies by showing differences in crisis response related to different levels of family business resilience and the special role of the owner-manager.
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Globalization has driven organizations to innovate rapidly by impelling lower entry barriers. As a result, or-ganizations adopt new business models that value interconnectedness and complement partnerships. Simultaneously, business ecosystems enable dynamic networks and creative cultures by integrating a variety of innovation stakehold-ers. The research explores the business model of organizations within the Ülemiste City ecosystem to understand the conceptualization of business models and the factors leading them to create or transform the business models based on ecosystem perspective and a conceptual framework is developed to reinforce the participation and value processes of an organization within the ecosystem. Through semi-structured interviews and thematic analysis, the study revealed that the business model concept is perceived differently by organizations as an abstract idea of the business’s inputs, op-erations, activities, and output. Product or service differentiation, market needs, value creation, and a continuous im-provement process were a few factors that influenced a business model transformation. The influence of the ecosystem in the business model pertained to the infrastructure and value-added services offered, with a networking opportunity of partnerships within the community.
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This research investigates how employer branding can be strengthened by taking a business ecosystem approach that encourages and leverages indirect social exchanges, such as the behaviour of paying it forward. This work is founded on extant literature and exploratory interviews with individuals from firms seeking to strengthen their employer brand by interdependently operating in a business ecosystem. A model is developed that proposes how indirect social exchanges can occur in an ecosystem, and what types of outcomes it can lead to for the individuals, firms and the ecosystem as a whole. As far as can be ascertained, this is the first study that combines these perspectives. The work suggests that there is value for firms in taking an ecosystem-focused approach to employer branding. The findings highlight that indirect or generalized social exchanges can provide value for individual firms when they form a group of interdependent collaborators rather than simply being competitors. Further, this work adds to the literature related to employee and partner extra-role behaviour by proposing the perspective of an Ecosystem Citizenship Behaviour. Ecosystem Citizenship Behaviour is an extra-role behaviour that occurs in the business ecosystem and as such can be beneficial for joint employer branding initiatives of participating firms.
Technical Report
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This paper introduces a social network perspective to the study of strategic alliances. It extends prior research, which has primarily considered alliances as dyadic exchanges and paid less attention to the fact that key precursors, processes, and outcomes associated with alliances can be defined and shaped in important ways by the social networks within which most firms are embedded. It identifies five key issues for the study of alliances: (1) the formation of alliances, (2) the choice of governance structure, (3) the dynamic evolution of alliances, (4) the performance of alliances, and (5) the performance consequences for firms entering alliances. For each of these issues, this paper outlines some of the current research and debates at the firm and dyad level and then discusses some of the new and important insights that result from introducing a network perspective. It highlights current network research on alliances and suggests an agenda for future research.© 1998 John Wiley & Sons, Ltd.
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An array of complexity-based tools and techniques are available today, but how does the practitioner select a particular approach to respond to a particular need? We present a simple taxonomy to describe the landscape of complexity-derived methods for human systems dynamics. Practitioners can use the landscape to understand the diversity of tools and techniques, to foster respect for approaches different from ones' own, to build an understanding of the field as a whole, and to select specific techniques to apply in specific situations.