Current research and development in ICT has opened new opportunities and threats for both large corporations and SMEs alike. Many SMEs see the new Digital Ecosystem as a new open frontier where they can enter, innovate and compete with large corporations on an equal footing. This chapter examines the role of the large corporations (the keystones) in the digital ecosystem and presents solutions about the emergence of two major problems that if left unanswered will result in the creation of major entry barriers for SMEs. The authors’ proposed distributed coordination and high connectivity between SMEs can provide a more appropriate business environment for fair competition and collaboration.
Introduction
The aim of this chapter is to introduce the concept of Digital Ecosystems, analyse the challenges, and then discuss some of the proposed solutions and ongoing research in this domain. Our main thesis is that current digital infrastructures for collaborative working introduce serious barriers to adoption of, and innovation within, the digital economy by Small to Medium-sized Enterprises (SMEs) and micro-enterprises. Using the ecosystem metaphor, this implies that currently Digital Ecosystems favour “keystone species”. Yet it is the long tail of less-dominant “species” that typically provides the pool of innovation and response diversity (in cases of external shocks to the system) in healthy ecosystems. To address this bias, we will argue that advanced Peer-to-Peer architectures are critical in order to fully realise the potential of the World Wide Web to collaborative business and knowledge sharing.
We will discuss these risks in more detail in the next section. Since 2002, the EU funded DBE and, subsequently, OPAALS projects have been developing approaches to addressing these risks and empowering SMEs in the digital economy. Following the review section, we will then progress with discussion of the architecture, formal framework, detailed design and implementation of a digital infrastructure that supports collaboration and service innovation amongst enterprises, without violating the “local autonomy” of the participants.
The concept of “business ecosystem” appears to have been first introduced in a well-cited article of James F. Moore in 1993 (“Predators and Prey: The New Ecology of Competition” (Moore, 1993)), where he compared the business environment to an ecological system. The metaphor “business ecosystem” is used to describe the business environment as an economic community, which “is supported by a foundation of interacting organizations and individuals – the organisms of the business world” (Moore, 1993). This comparison of economy to biology has been seen as extremely relevant and useful, not only because it improves our understanding of the roles and interconnectedness of various actors in the business ecosystem, but also because it explicates the increasing connectivity and complexity of these systems.
Of course, one can consider an economy to be a national business ecosystem (Rothschild, 1995) composed of many smaller systems, all of which are directly or indirectly interconnected. What many call an industry can now be considered to be either an ecosystem in itself or part of a larger one. These business ecosystems are populated by (some loosely) interconnected organisms: businesses, consumers, the government and other stakeholders.
As far as the business population of each business ecosystem is concerned, the majority is composed of Small and Medium size Enterprises (SMEs) along with a few large ones, the so-called keystones. Marco Iansiti and Roy Levin compare the role of these keystone companies to those of keystone species in nature (Iansiti & Levien, 2004). They argue that we live in an interconnected world, the landscape of which is made of a network of networks, with keystones at the hubs and niche players surrounding the hubs.
In nature a Keystone species is defined as “a species whose effect is large and disproportionately large relative to its abundance” (Power et al., 1996). It is also argued that Keystones help in determining or regulating the number and type of other species in their communities. The keystone concept has been adopted in both computer and business literature but recently the correctness of the analogy has been questioned. As an example, Payton et al. (Payton, Fenner, & Lee, 2002) provides some of these arguments on the concept in its original context, namely the definition and role of keystones in ecology.
Technological innovations have always led to the creation of new companies by entrepreneurs who have tried to take advantage of those innovations to create a competitive advantage for themselves in the marketplace; which in turn necessitated the adaptation of those innovations by the older established companies.