As a consequence of the importance of technology platforms, it is almost impossible for firms to engage the competitive battle on their own. We therefore see patterns of competition emerge that do not match the economic models of perfect competition or even of oligopolistic or monopolistic competition. Rather, competition takes place between a few large coalitions, or networks, of firms around a common technological platform. Such networks, consisting of multiple firms performing different roles, are not unlike biological ecosystems. For such networks, therefore, the term business ecosystem is increasingly used (Den Hartigh & Van Asseldonk, 2004; Iansiti & Levien, 2002, 2004a, 2004b; Moore, 1993, 1996; Witte, 2004). The term business ecosystem was coined by James Moore in his 1993 Harvard Business Review article Predators and Prey. Moore (1996, p. 15) defines a business ecosystem as “The term circumscribes the microeconomics of intense coevolution coalescing around innovative ideas. Business ecosystems span a variety of industries. The companies within them coevolve capabilities around the innovation and cooperatively and competitively to support new products, satisfy customer needs, and incorporate the next round of innovation.” There is a strong analogy between business ecosystems and biological ecosystems, as implied by the “ecosystems” terminology.
Key Terms in this Chapter
Business Ecosystem: A network of suppliers and customers around a core technology, who depend on each other for their success and survival.
Dominator: A firm that tries to manage a large proportion of the business ecosystem relations directly and/or tries to internalize the larger part of the added value created in the business ecosystem.
Shaper Strategy: Sponsoring an own proprietary technology that will generate high returns when it becomes dominant in the market (and yields high cost upon failure).
Follower (or Adapter or Niche Player) Strategy: Joining the dominant technology by acquiring a license for developing products based on this technology.
Health of a Partner in the Business Ecosystem: Represents partners’ financial well-being and partners’ impact in the network.
Health of a Business Ecosystem: Represents the ecosystem’s longevity and propensity for growth.
Species (in a Business Ecosystem): Types of companies, each performing their own unique functions, having their own unique needs and wants and each delivering a unique contribution to the survival and growth of the business ecosystem as a whole.
Keystone: A firm that provides a common technology platform, is an important hub in the network, performs the task of connecting network participants and continually tries to improve the business ecosystem as a whole.