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Business Ecosystems

Constructs, Configurations, and the Nurturing Process

  • Ke Rong 0 ,
  • Yongjiang Shi 1

Bournemouth University, UK

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University of Cambridge, UK

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Table of contents (12 chapters)

Front matter, introduction.

  • Ke Rong, Yongjiang Shi

Background Exploration of Business Ecosystem

Industrial challenges, literature review, research design, case observation of business ecosystems, arm nurtures the business ecosystem from the beginning, intel re-enters the mobile computing business ecosystem, mtk enhances the business ecosystem efficiency, theory construction of business ecosystems, the business ecosystem life cycle and its phase-ending status, business ecosystem constructive elements, business ecosystem configuration pattern, business ecosystem nurturing process, conclusion and discussion, back matter.

Yongjiang Shi

Book Title : Business Ecosystems

Book Subtitle : Constructs, Configurations, and the Nurturing Process

Authors : Ke Rong, Yongjiang Shi


Publisher : Palgrave Macmillan London

eBook Packages : Palgrave Business & Management Collection , Business and Management (R0)

Copyright Information : Palgrave Macmillan, a division of Macmillan Publishers Limited 2015

Hardcover ISBN : 978-1-137-40590-6 Published: 28 November 2014

Softcover ISBN : 978-1-349-48782-0 Published: 28 November 2014

eBook ISBN : 978-1-137-40592-0 Published: 02 December 2014

Edition Number : 1

Number of Pages : XV, 263

Topics : International Business , Management , Business Strategy/Leadership , Innovation/Technology Management , International Economics , Industries

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Business Ecosystems and Innovation

The potential downsides of shared value creation.

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The concept of business ecosystems has become a topic that has received increased attention within management literature and amongst practitioners. This concept refers to the idea that the nature of competition within our contemporary economy has fundamentally changed. No longer do organizations compete with one another in a zero-sum game. Today, organizations are simultaneously collaborating and competing with one another in order to co-create value, co-evolve capabilities with one another, and develop innovations in a more effective, timely, and efficient manner. Although this concept has been praised for its ability to create value and share that value amongst ecosystem members, including customers, little research has been conducted to investigate the potential drawbacks of this new form of competition. This article identifies that business ecosystems can have negative effects on innovation and competition as they develop oligopolistic market structures.


thesis business ecosystems

There are many advantages of business ecosystems as mentioned in the literature. Co-opetition Theory suggests that firms add value to consumers by working together to find complementary products and services. [4] For example, applications developed to work on the IOS operating system add value to iPhone customers by increasing the amount of features that can be used on the phone. This can also be seen within the Google and Amazon ecosystems, including the voice assistant devices—Google Echo and Amazon Alexa. These devices have become popular among consumers as companies seek to integrate their products and services into the network of devices that parallel to the voice assistants. Although consumers benefit from the wide range of products and applications within each ecosystem, they cannot mix ecosystems, forcing them to choose one or the other.

Paradoxically, the forces that create shared value among businesses operating within the ecosystem may actually reduce innovation and consumer choice due to increased switching costs and the potential for oligopolistic market structures to develop. According to the Merriam-Webster’s Dictionary , the legal definition of an oligopoly is a situation where a few sellers control a particular market to the detriment of competition by others. [5] For example, airlines and oil companies are often considered oligopolies because they operate without an abundance of competitors. This type of market structure occurs when there are high barriers to entry. This article identifies that business ecosystems can create barriers to entry as companies co-evolve capabilities around specific technologies and platforms. The outcomes suggest some potential damaging effects to consumer markets and innovation that business leaders should consider.

Business Ecosystem’s and Oligopolistic Market Structures

Although the classical view of competition is that organizations compete with one another based on their products, numerous factors—mostly associated with technological advancements—have changed the nature of competition in the 21 st century. No longer do companies compete based on who has the best products, but rather companies now compete based on their ability to construct the best “platforms” and cultivate innovative ecosystems around them. Business ecosystems generally begin by structuring themselves around a platform. A platform is an asset that provides an infrastructure of reusable common components that can take the form of a product, service, tool, or technology. [6]

As a result of the value it creates for others, platforms have the ability to foster and incentivize a significant number of other firms to build and contribute complementary innovations to the core components. Organizations that are able to successfully accomplish this and share the platform’s value with its contributors are able to establish themselves as Keystones within their respective ecosystem. [7] The ability to successfully execute a platform strategy can provide Keystones with a sustainable competitive advantage over competitors and other smaller ecosystems, because the whole is able to create synergy while simultaneously erecting barriers to entry.

Throughout the literature, many companies including AT&T, Verizon, Hewlett-Packard, Dell, IBM, Walmart, Microsoft, Apple, Intel, Google, and Facebook, have been used as examples of organizations that have effectively developed successful platforms, cultivated ecosystems around those platforms and, therefore, have become Keystone organizations. Although these firms have been championed for their ability to succeed in today’s increasingly volatile competitive environment, it is clear that when looking deeper, many of these organizations are leaders in industries that are significantly consolidated or structured as oligopolies, where a few companies dominate the vast majority of the industry’s market share. Below are some examples of Keystone organizations that utilize platforms in their industry.

It can be seen from the information above that there is a connection between business ecosystems, keystone organizations, platforms, and oligopolistic market structures.

Potential Drawback of Oligopolistic Markets on Consumers

Impact on innovation.

Characteristics associated with platform ecosystems, such as network effects, have the potential to erect many barriers to entry. These barriers to entry, whether they are a result of network effects, switching costs, or path dependency, act as a deterrent to innovative or creative new entrants from competing within the industry. As a result, in the industries where platform ecosystems and network effects are present, oligopolistic market structures generally are as well. Although this market dominance can be attributed to the effective development and implementation of platform strategies by industry leaders, this market concentration results in large and powerful companies almost completely controlling the market. Therefore, this makes it extremely difficult, and sometimes nearly impossible, for new entrants to break into the industry and effectively compete and survive amongst incumbents.

As can be seen in the diagram below, business ecosystems progress through four stages within a life cycle: birth, expansion, leadership, and self-renewal, with each stage presenting its own unique characteristics, features, and challenges. [14] [15] As ecosystems progress through these stages, the collective evolves from, “…random collection of elements to a more structured community.” [16]

Figure 1: Ecosystem Development Cycle

thesis business ecosystems

In the Self-Renewal stage, ecosystems face threats from new innovations or rival ecosystems or changes in economic conditions, consumer needs, and governmental regulations. [17] [18] [19] Markets also become concentrated during this stage as organizations erect barriers to entry to avoid competition. According to the Population Ecology perspective of inter-organizational relationships, this development of concentrated industries that are protected from new entrants has the potential to limit innovation and, therefore, negatively affect consumers. [20] Firms often become very large and control a large amount of resources in markets dominated by a few players. For example, as of 2009, Walmart’s revenue exceeded the annual GDP of countries, such as Greece and Egypt. [21] However, as organizations grow larger, they become more mechanistic and lose the flexibility needed to quickly and effectively adapt to changes in the external environment due to the phenomenon known as organizational atrophy. [22] It is also politically less risky to maintain the status quo rather than attempting to identify and fix new problems. [23] As a result, these industries that become oligopolistic are characterized by large, archaic organizations that are unable to innovate and adapt to changes in consumer needs effectively due to large investments in fixed assets, limited information, and the bounded rationality of organizational decision makers. [24]

When companies work together by using a shared platform, it becomes easier to collaborate, allowing for incremental innovations. For example, programmers developing applications for Windows need to work within the requirements of the operating system. In this way, application companies and Microsoft are working together to create additional shared value. However, the Windows platform also has some constraints that limit the ability of software developers to innovate. For example, Electronic Arts may wish to develop a game that requires a faster operating system than what Windows can handle. Because of this constraint, they may delay any major improvements to the software until the Windows operating system gets an upgrade.

Pioneering innovations are regarded as projects that develop specific new technologies, market categories, or products. [25] These projects typically take a long time to develop, but are expected to bring high returns. Incremental innovations, on the other hand, are product modifications developed to meet a specific market need. [26] Because companies that operate within an ecosystem often use a shared platform, they may be limited in their ability to develop pioneering innovations that drive the market forward. This problem is compounded by the fact that organizations sharing a common platform need to all make adjustments at the same time as Keystone. In other words, organizations operating in a platform ecosystem can only move as fast as the Keystone, which may be slow and arduous due to its large size and market share.

Less Consumer Choice

Another potential drawback of platform ecosystems and the resulting concentrated industries that are associated with these ecosystems is that consumer choice can be limited. Due to the numerous barriers to entry that are constructed by platform ecosystems, only a small number of organizations are truly competitive within the industry. As a result, consumers can potentially suffer from the concentration of the ecosystem industries, because it limits their choice of products to satisfy their needs. For example, if individuals need to purchase a cell phone, they are able to choose from only a handful of network providers to make the phone work. This may negatively affect consumers, because since these large organizations are less able to successfully adapt their offerings to satisfy changing consumer’s needs, individuals may find it difficult to find products or services that adequately satisfy their needs and wants. As a result, in order to satisfy needs associated with the need for communication (network providers and cell phone software), entertainment (social media sites, video game consoles, and Mp3 players), or sustenance (Walmart), consumers may be forced to choose the lesser of two evils rather than the product or service that satisfies their needs optimally.

Collusion and Consumers

Lastly, another major drawback of oligopolistic industries is the potential for collusion amongst the small number of firms that dominate the industry. Generally, when oligopolies collude with one another, they do so in order to keep prices artificially high in order to realize more substantial profits and cement their positions as industry leaders. This collusion either takes that form of colluding to directly keep prices artificially high or colluding to limit the output of their products or services in order to accomplish the same goal.

When examining these platform ecosystem and Keystone organizations, there is evidence that collusion can and has potentially occurred within and between these various ecosystems. An example of covert collusion that negatively impacted Keystone organizations’ employees, rather than consumers, can be seen in recent events. For example, in 2014, a class action lawsuit of 64,000 employees was filed against companies, such as Google, Apple, Intel, and Adobe, for engaging in anti-competitive behaviors. [27] The lawsuit alleges that these four companies formed an agreement with one another to begin implementing and enforcing anti-poaching practices. [28] The four companies mutually agreed that they would cease efforts to attempt to hire one another’s key employees. [29] As a result of this practice, 64,000 programmers are seeking billions of dollars in compensatory damages, because they argue that these anti-poaching practices resulted in their wages being suppressed and kept at artificially low levels. [30] By April 2014, the four organizations agreed to a settlement. [31] As this example illustrates, the potential for anti-competitive behavior and collusion not only exists within ecosystems, but also across ecosystems and Keystone leaders, and has the potential to not only negatively impact consumers, but also many other stakeholders of these organizations as well.

Conclusion and Implications

thesis business ecosystems

[1] Moore, J. F. (1993). Predators and prey: a new ecology of competition. Harvard Business Review ,  71 (3), 75-83.

[4] Nalebuff, B. J., Brandenburger, A., & Maulana, A. (1996). Co-Opetition . London: Harper Collins Business.

[5] Oligopolies. (n.d.) In Merriam-Webster’s Dictionary Online. Retrieved from

[6] Gawer, A., & Cusumano, M. A. (2014). Industry platforms and ecosystem innovation.  Journal of Product Innovation Management ,  31 (3), 417-433.

[7] Iansiti, M., & Levien, R. (2004). Creating value in your business ecosystem. Harvard Business Review , 3.

[8] Linshi, J. (2015, July 29). Here’s the Most Surprising Fact About Microsoft Windows. Retrieved April 13, 2016, from

[9] Weissman, J. (2013, April). The Return of the Monopoly: An Infographic. Retrieved April 13, 2016, from

[10] Orland, K. (2015, July 30). Analysis: Sony pushes past 50 percent of the worldwide console

market. Retrieved April 13, 2016, from

[11] Linshi, 2015.

[12] Cole, S. (2013, December 19). Apple’s iPod continues to lead an ever-shrinking market of portable media players. Retrieved April 13, 2016, from

[13] Ovide, S., & Wakabayashi, D. (2015, July 12). Apple’s Share of Smartphone Industry’s Profits Soars to 92%. Retrieved April 13, 2016, from

[14] Moore, 1993.

[15] Moore, J. F. (1996).  The death of competition: leadership and strategy in the age of business ecosystems . HarperCollins Publishers.

[16] Moore, 1993, p. 76.

[17] Moore, 1993.

[18] Moore, 1996.

[19] Peltoniemi, M., & Vuori, E. (2004, February). Business ecosystem as the new approach to complex adaptive business environments. In  Proceedings of eBusiness research forum  (pp. 267-281).

[20] Hannan, M. T., & Freeman, J. (1977). The population ecology of organizations. American journal of sociology , 82 (5), 929-964.

[21] Daft, R. L. (2013). Organization Theory and Design (11th ed.). Mason, OH: South Western Cengage Learning.

[22] Levine, C. H. (1978). Organizational decline and cutback management. Public Administration Review , 38 (4), 316-325.

[23] Harraf, A., Soltwisch, B. W., & Talbott, K. (2016). Antecedents of Organizational Complacency: Identifying and Preventing Complacency in the Work Environment. Managing Global Transitions , 14 (4), 385.

[24] Daft, 2013.

[25] Ali, A., Kalwani, M. U., & Kovenock, D. (1993). Selecting product development projects: Pioneering versus incremental innovation strategies. Management Science , 39 (3), 255-274.

[27] Streitfeld, D. (2014, February 28). Engineers Allege Hiring Collusion in Silicon Valley. Retrieved April 22, 2016, from

[31] Rushe, D. (2014, April 24). Apple and Google settle antitrust lawsuit over hiring collusion charges. Retrieved April 22, 2016, from

[32] Luo, Y. (2007). A coopetition perspective of global competition. Journal of World Business , 42 (2), 129-144.

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Strategic Business Model Development in Ecosystems

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thesis business ecosystems

How business ecosystems can drive sustainability

Gabriele rosani and elisa farri.

The call for a more sustainable economy has become even more urgent during the COVID-19 pandemic.

Looking forward, this trend will strengthen as governments and institutions announce ambitious investment plans, such as the NextGenerationEU , in which sustainability constitutes a central pillar of the recovery initiative. In addition, investors and shareholders have become more serious about sustainability in recent years, carefully evaluating the impact of ESG (Environmental, Social and Governance) issues on their investment portfolios.

In this context, companies will be increasingly held accountable for embedding sustainability into the heart of their strategy. Several firms have already taken their first steps in this direction. For example, is not uncommon to find annual reports explicitly linking strategy to the UN Sustainable Development Goals and tracking ESG metrics. Although sustainable reporting and other actions show companies’ commitment and ambition in addressing sustainability, real progress requires not just better measurement and reporting practices but also fundamental changes in the industry ecosystems and business models.

This is easier said than done. Sustainability is a systemic concept: in most cases, one company alone cannot change the industry’s value model. Companies must join forces, but how? Compared to traditional strategic approaches based on head-to-head competition, the novel concept of business ecosystems better serves the goal of driving new systemic collaborations to create sustainable value for different parties and actors.

At ECSI, we have extensively researched and directly witnessed first examples of such a shift of perspective in making traditional industries more sustainable. Farming is a case in point. With a growing population, the agricultural food system is expected to provide enough access to healthy and affordable food over the next decades. At the same time, there is an urgent need to mitigate its impact on our planet in terms of fewer carbon emissions, soil and water conservation, and reduced food waste. This is a daunting challenge for a single company. It demands a strong coalition of dedicated partners to help farmers achieve more sustainable and better yields while scaling down the environmental footprint.

With this ambition in mind, the agriculture division of the chemical company BASF started a transformational journey towards a more sustainable farming. Over time, BASF created and orchestrated an ecosystem of partners and complementors that support farmers worldwide in making decisions along the entire crop cycle to ensure efficient use of resources and reduced waste.

Shifting from the traditional product view (i.e. “farmers want insecticides to protect their crops”) towards a more systemic view (i.e. “farmers want to get better yields with less footprint”), BASF has successfully built a win-win coalition with more than 25 partners to provide holistic solutions. Starting from the company’s traditional chemical products (e.g. insecticides, herbicides, fungicides), BASF has gradually integrated complementing products and services to monitor soil and crop conditions, assist with disease and pest recognition, and tailor recommending precision treatments with herbicides or fungicides based on in-field conditions.

Farmers can customize their solution by choosing from a basket of crop protection products and agronomic services offered by the ecosystem, which include among others: agronomic data (including weather forecasts, agronomic advice, soil data detection, mapping tools), machine connectivity (provided by leading players such as Agrirouter, John Deere, Nevonex), and equipment tools (like the smart sprayer -- developed together with Bosch -- that with the help of camera sensors differentiates between crops and weeds while crossing the field).

Partnering models entail different agreements: for example, BASF entered commercial agreements with local digital providers (like ULink AgriTech in India), product co-development (like Bosch for the smart aprayer or EZ Lab for IoT and blockchain), distribution partners (like Nutrient and Agrostar).

With the potential to enable 625 million farmers to recognize what is happening in their fields, optimize accordingly and at the same time, act in a more sustainable way, the BASF ecosystem serves more than 1.2 million users in over 120 countries. Compared to 2018, the user base has more than quadrupled. At the core of the ecosystem’s success is the ability to continuously nurture and improve a basket of services offered to the farmers via the xarvio TM digital app, as more partners join the Currently xarvio TM offers three main categories: Scouting, Field Manager and Healthy Fields, each one with several subcategories. As more and more farmers use the app and submit images of their crops, weeds and pests, the AI-powered app’s accuracy improves continuously, thus enhancing the scope of identification.

What is the economic model for a similar ecosystem? Compared to the profit formulas of a traditional business model, ecosystems have a higher degree of complexity as multiple parties are involved – including strategic partners with whom to share value. BASF offers customers (farmers) premium subscriptions to the solution sold at a “ dollar per farm ” The value exchange with partners varies based on the signed agreements. As the network effects strengthen, the ecosystem grows as a self-reinforcing system, thus attracting both new farmers and new partners to join.

BASF’s agriculture ecosystem illustrates how sustainability can be integrated systematically in a business model that glues together a selected group of committed partners around a shared mission and value -- “better and more sustainable yields along the farmer cycle”. By using data and receiving advice for making decisions, farmers can better manage frequency and dosing (when to spray, how often and where exactly) for a more precise resource utilization with less pollution and higher yield. The benefit is both environmental (more sustainable use of resources), economical (efficiency of production factors for farmers and their families that can earn more thanks to better marketability of healthier crops) as well as social (higher yield per hectare to feed the growing world population).

The main elements of BASF’s ecosystem are summarized in the Business Ecosystem Canvas, an ECSI framework (Figure 1).

thesis business ecosystems

BASF is not an isolated example. Other incumbents are building ecosystems to drive sustainability. A leading company in the water and waste sectors, Suez has launched Organix ® , a waste management ecosystem helping organic waste producers find new channels for converting waste into energy (e.g., biogas companies). Traditionally the waste-to-energy supply chain has suffered from two main problems. On one hand, organic waste producers face difficulties in finding the right recovery channel. On the other hand, operators of methanation units sometimes experience inconsistent quality, unreliable sources and traceability issues with their organic material supply.

Organix ®   is a good example of how a business ecosystem approach can overcome such traditional inefficiencies by changing the rules of the game in traditional value chains and creating value for all the parties involved. To start, Suez has put together a coalition of partners including organic waste producers (like food industry manufacturers and cooperatives), methanation unit operators who transform it into energy, a network of logistics and transportation partners, and local governments and municipalities with a stake into a more sustainable waste collection and management. Not only a direct contributor to the ecosystem, Suez acts also as a guarantor of the material quality, the application of the regulations and the traceability of flows along the entire chain. Over time, Organix ®   has created a virtuous cycle that makes it easier for producers of organic waste to find waste-to-energy operators, and for the operators to access directly the offers.

Launched in 2018 in three French regions (Brittany, Normandy and Pays de la Loire), Organix ®   now covers the entire French territory and will gradually be enhanced with new functionalities and complementing services.

BASF and Suez offer two important lessons for companies willing to make a significant contribution to reshape their industry to achieve sustainability and systemic change.

  • Shift from your company’s product view to more holistic thinking. To achieve sustainability, ‘system’ is the key word. Traditional product thinking shows that a narrow focus is not enough to achieve sustainability goals related to broad structural changes. Moreover, it aims to create value for company’s shareholders, often at the expense of other stakeholders. BASF’s sustainable agriculture ecosystem demonstrates how the single improvement of herbicides by one company alone could fail if it was done without considering the entire system (products, services, tools and digital infrastructure). Similarly, Suez’s Organix ® provides a comprehensive business case for sustainability, as it builds a waste-to-energy ecosystem that creates value for all stakeholders, including shareholders, supply chains, civil society, and the planet.
  • Evolve from ad hoc commercial partnerships to ecosystem business models. As companies are on an accelerated course to show their contribution to sustainability goals both to their shareholders and local communities, they need to apply more systemic approaches to fuse sustainability with their business strategies. The Business Ecosystem Canvas is a powerful tool to help companies ask the right questions and design an ecosystem strategy that truly embeds sustainability into the business.

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Sustainability will soon simply be how business is done. Many industries will require fundamental transformation to meet long term sustainability goals. One company alone can make limited impact. A sustainable economy needs a village: companies should join forces, architect, and orchestrate business ecosystems where many parties cooperate to create more value for customers and simultaneously reduce systemic waste and promote efficient use and recovery of resources. Better business for a better planet.

Gabriele Rosani is a senior manager at ECSI Consulting ( based in Milan, Italy.

Elisa Farri is an associate partner at ECSI Consulting.

thesis business ecosystems


Privacy overview.


Leveraging Embedded Factors of Business Ecosystems. A Potential Driver for Business Model Innovations

Master's thesis, 2020, 183 pages, grade: 1,00, table of content.





I. INTRODUCTION I.1 Motivation and problem definition I.2 Research question and objective I.3 Thesisstructure

II. THEORETICAL BACKGROUND II.1 Methodology for the literature research II.2 The business ecosystem concept II.2.1 Emergence and evolution of the ecosystem concept II.2.2 Roles in an ecosystem II.2.3 Characteristics of the ecosystem concept II.2.4 Clarifying the innovation ecosystem concept II.3 Business Model Innovation II.3.1 Business Model II.3.2 BMI status quo II.3.3 Drivers of the Level of BMI II.3.4 Business model innovation in business ecosystems

III. ANALYSIS OF ECOSYSTEM'S EMBEDDED FACTORS THAT DRIVE BUSINESS MODEL INNOVATIONS III.l Methodology III.1.1 Feasibility of the desired object of investigation III.1.2 Research Design III.1.3 Data collection III.1.4 Analysis and interpretation III.1.5 Reliability, validity, and limitations of the study III.2 Discussionoftheresults III.2.1 Results of the individual case analysis 1. Case 1: Case Alpha 2. Case 2: Case Beta 3. Case 3: Case Delta 4. Case 4: Case Gamma 5. Case 5: Case Epsilon III.2.2 Results of the cross-case case analysis III.3 Evaluationoftheresults III.3.1 Theoretical contributions III.3.2 Practical contributions

IV. FINAL EVALUATION IV. l Summary IV. 2 Limitations IV. 3 Further research and outlook



Innovations within the value chain of a single company can no longer fully satisfy new and dynamic customer needs. It Is, therefore, appropriate to Intensify the network of relationships outside the company. This Is remedied by the value contribution result­ing from the companies' ecosystems, which Is higher than that of Individual companies. However, In the ecosystem's environment, the success of a company Is strongly depend­ent on the success of Its diverse and changing collaborations with other companies of different sizes and types. Due to the embedding In different ecosystems, the under­standing of a company as an Independent strategic actor Is no longer appropriate In every case.

This thesis aimed to Identify business ecosystem's embedded factors as potential drivers for business model Innovations, and thus to contribute to an expansion of Inno­vation opportunities. In the context of the consideration of different ecosystem con­cepts, first, their characteristics and roles were presented, to make a precise distinction related and traditional structures (e.g. value network, supply chain). Innovation ecosys­tems, business ecosystems, and platform ecosystems were considered In the study and empirically examined employing a multiple case study. To ensure the value of the study, only companies that have Implemented a business model Innovation within one of the defined ecosystems were Included.

Findings of the study could prove that the business model Innovations could not have been Implemented without the surrounding ecosystem. However, the factors re­sponsible for this varied with regard to the ecosystem role and their resource depend­ence on other actors In the ecosystem. If the situation of the BMI and the ecosystem concerned were similar, the factors overlapped and thus, the study could make a scien­tific contribution. Furthermore, the considered cases revealed different strategic ap­proaches for different roles to place the business model Innovation In the ecosystem. In that matter, the thesis Identified multl-homlng, ¡.e. the placement of a BMI In several ecosystems, and the targeted development of Innovations that Increase the ecosystem­output, as potential strategies. In this way, the results of the study can promote both the development of new as well as expanding the possibilities of Innovating a business model.

List of Figures

Figure 1-1 Frequency ofsearch terms I BMI AND Ecosystem concepts

Figure 1-2 Structure of the thesis

Figure ll-l Frequency of the terms business and innovation ecosystems

Figure 11-2 Archetypal Business Model

Figure 11-3 Business ecosystem J. Moore (1996)

Figure lll-l Alpha as actor in the mobility ecosystem

Figure III-2 Beta's subsidiary extends Beta's ecosystem

Figure III-3 Traditional value preposition and emerging Delta ecosystem

Figure III-4 The platform ecosystem of Gamma positioned in Gamma's large enterprise structure

Figure III-5 The platform ecosystem embedded in Epsilon's enterprise structure

List ofTables

Table ll-l Search criteria for BE and BMI in the literature

Table 11-2 Selected definitions of ecosystems

Table 11-3 Conceptualizations of ecosystem roles

Table 11-4 Differences between value chains, supply chains and ecosystem concepts...

Table 11-5 Ecosystem compositions of different ecosystems

Table 11-6 Selected definitions ofbusiness model innovations

Table 11-7 BMI in BE: Identified issues by Rachinger et al. (2019)

Table ill-1 Relevantsituationsfor different research methods

Table 111-2 Types of interview

Table ill-3 Overview of cases and sources

Table ill-4 Relevant ecosystem roles for the BMI ofAlpha

Table 111-5 Ecosystem roles relevant to Beta's subsidiary (BMI)

Table 111-6 Ecosystem roles relevant to the Start-up Delta (BMI)

Table 111-7 Individual ecosystem roles relevant to the Gamma platform (BMI)

Table 111-8 Individualecosystem roles relevant for the Epsilon Platform (BMI)

List ofAbbreviations

BE Business Ecosystem

BMI Business Model Innovation

BM Business Model

Fig. Figure

e.g. Forexample

B2C Businessto customer

B2B Customer to customer

C2C Customer to customer

i.e. This means

CEO Chief executive officer

RQ Research question

I. Introduction

"In a world of ecosystems, as industry boundaries blur, strategy will require a much broader frame of reference. In other words, CEOs will need to use a wider lens when assessing would-be competitors—and would-be partners. Indeed, in an ecosystem envi­ronment, today's competitor may turn out to be tomorrow's partner or "frenemy". Fail­ure to grasp this may cause you to miss opportunities and underestimate threats.” (Hirt, 2018)

In recent years, there has been an increase in market participants within an ecosys­tem 1 radically changing BMs of industries. The analysis of these new BMs, and especially the role of ecosystems, are the focus of this master's thesis.

1.1 Motivation and problem definition

The factors required for the economic success of a company have changed signifi­cantly with the transition to digitization and the age of acceleration, which reflects the general understanding of how technology has transformed both society and economy (Xiang, 2018, p. 147). The triumphal procession of the internet and the rapidly increasing networking of the most diverse IT systems today enable access to information independ­ent of location, time, and device, as well as the rapid dissemination of new technologies and innovations. The resulting market transparency, the increasing expectations of cus­tomers, and blurring between products and services are forcing companies to constantly adapt their own business model and react to these complex challenges. BMI could be either adapted to its existing core business model, or a new business model adjacent to the core business (SCHNEIDER & Spieth, 2013, p. 4). In both cases, BMI requires compa­nies to adapt, renew, acquire, or develop new and (re)combined resources and skills in novel ways (Saebi et al., 2017; Zott & Amit, 2007).

Understanding the role of the products, services, and innovations in their ecosystem is crucial for organizations that want to make the most of their BMI. Innovation ecosystems concentrate on the convergence of new offerings and services from other companies that together create cohesive consumer solutions (Adner, 2006, p. 99). To­day, according to BCG Global (2020), dlsruptors are often orchestrating ecosystems that bring together the strengths of multiple actors In a new network or service offering. One prominent example Is automotive Industry's shift towards autonomous driving and a mobility model, as exemplified by automotive companies such as Tesla, Volkswagen, and Bosch. For Instance, In contrast to traditional automakers that simply produce cars, Tesla controls Its ecosystem by producing Its car, the Powerwall home charger, and su­percharger refueling stations. As a consequence, Tesla Is the world's most valuable car company based on Its $373 billion market capitalization (Adeslna, 2020), almost the combined value of BMW and VW. These numbers Illustrate the size and Importance that BEs have now reached for new BMs.

In the scientific literature, an Increased Interest In BMI viewed through the lens of different ecosystems as a niche field has become apparent In the last three years, as Illustrated In Fig. 1-1.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1-1 Frequency of search terms / BMIAND Ecosystem concepts Source: EBSCO database; search criteria see table ii-1; own representation

The literature suggests that the concept of a BM Is primarily focused on the concep­tion of BMs from a "focal company" perspective and therefore, the BM of multi-actor activities cannot be explicitly explained. For Instance, systematic Innovation requires the coordination of different actors and Interrelated changes In product design, supplier management, and so on (Chesbrough, 2003). A number of contemporary systemic Inno­vations are too large and complicated to be governed by just one company, even forthe largest enterprises (Markku V.J. Maula et al., 2006). As a consequence, existing BM literature focusing mainly on a focal company - marginally related partners - does not supply lenses or explanations that are adapted to such multi-actor contexts. While busi­ness networks are based on people-to-people relationships, the ecosystem Is centered on the goods, services and technologies that companies sell on the market, and how other models can be complemented to provide consumers with the Integrated solutions they want and need. Obtaining a holistic view of the ecosystem will help to recognize unexpected risks and delays, Identify Innovative risk reduction strategies, and eventually contribute to the Integration of Innovations Into the ecosystem (Adner, 2006). A more recent scientific contribution from Rong et al. (2018, p. 238), suggests that the structure of BEs Influences the scalability, flexibility, and extensibility of BMs. The Investigation of ecosystem factors and their contribution to BMIs can lead to new Insights for this re­search area as well as support practitioners In exploiting new ecosystem potentials.

1.2 Research question and objective

The literature In BMI Is still In Its Infancy and continues to develop. Most early BMI publications are conceptual or case-based studies focusing on the meaning, distinction or relationship between BMI and related concepts and the BMI method (Chesbrough, 2007; David Teece, 2010). Further research on BMI emphasized the Importance of causal analysis of BMI antecedents and effects (Bouncken & Fredrlch, 2016; Guo et al., 2015) and crucial success factors such as creativity, Innovation, networks, and the ecosystems (Chesbrough & Bogers, 2014; Neumeyer & Santos, 2018) In which they function are be­ginning to be highlighted. Despite many emerging BMI studies, the field Is still young, abstruse, and Incomprehensible (Bocken et al., 2014; DaSilva &Trkman, 2014). BMI lacks theoretical and empirical support, leaving basic unanswered questions about back­ground conditions and BMI outcomes that are non-trivlal, complicated and not well known In the literature (Foss & Saebl, 2016; Zott & Amlt, 2007).

A field of research In connection with BMI that has barely been considered to date is the analysis of how an Innovation ecosystem might enable transformations of BMs. Therefore, there Is a lack of Investigations that conduct a structured analysis focused on ecosystem-influenced BMIs and enable an Initial Insight Into ecosystem's embedded fac­tors as drivers for BMIs. An Investigation Into this topic, could support firms In recognizing and capturing resources2 on the ecosystem level (Jacobides et al., 2018, p. 2270), and, more importantly, how to attain advantage by using ecosystem resources for their BMIs. Therefore, this thesis uses real cases to answer the following research questions.

Research question 1 (RQ1): How does an innovation, business, or platform ecosys­tem enable business model innovation? Research question 2 (RQ2): Which ecosystem roles had an influence on the investi­gated business model innovation?

The focus is on the consideration of real BMI cases embedded or surrounded by an ecosystem. On the one hand, real cases have a significant practical benefit, as they rep­resent the real world and support managers of BMIs in extending possibilities at the ecosystem level. On the other hand, it is essential for companies to find out if resources and capabilities that are beyond their control could help to innovate their business model with assistance of ecosystem interdependencies. In addition, the investigation enables a comparative analysis of different cases embedded in defined ecosystems, thus expands the scientific knowledge and to gain ab better understanding in this young field of research.

1.3 Thesis structure

The structure of the present work consists of four parts, as outlined in Fig. 1-2. In this introductory part, the background and motivation for the choice of topics for this thesis were presented and the research questions and objectives explained. In the following section, an overview of the structure of the thesis is provided.

The following main part of the thesis is divided into two main topics. In the second part, the scientific literature on business models and their innovations in general and ecosystems in particular is reviewed, with a focus on the latter. Section 11.2 introduces the concept of the ecosystems, roles, explains its origin and evolution, and presents var­ious approaches to its definition and demarcation. Subsequently, the applied ecosystem characteristics, roles, and structure are explained. Building on this, section 11.3 presents the theoretical foundations of BMs and their innovations and reveals linkages to the developed ecosystem concepts. To bridge the gap between BMIs and ecosystems, the external environment as a driver of BMI is summarized in the same chapter. In the sec­ond step (section III), the research questions are investigated through expert interviews and real cases to verify the scientific and practical application. Section lll.l first describes the procedure for conducting the expert interviews and for data evaluation within the multiple case studies. Subsequently, an analysis of the BMIs of five selected companies is presented to elaborate ecosystem's embedded factors as driver for BMIs. Within the framework of the study, ecosystem factors were assigned to ecosystem roles in order to be able to draw conclusions about possible dependency relationships. Finally, the results were critically evaluated, summarized and their contribution to theory and practice clas­sified.

The fourth and final part of the work includes a final summary the thesis, starting points for future research and an outlook. Fig. 1-2 provides a graphical illustration of the structure of the work.

Figure 1-2 Structure of the thesis Source: Own representation


Research on the business ecosystem and Its contribution to business model Innova­tion is an emerging but vibrant field. However, attempts to combine linkages between BMI In BEs are ambiguous (Rachlnger et al., 2019, p. 2). In this chapter, finding a balance between providing general theoretical principles Is discussed and those aspects that are relevant for the remaining sections of the thesis are examined. In doing so, this chapter provides the methodology for the literature research (ll.l), the evolution, characteristics and demarcation of business ecosystems (11.2), as well as an Introduction to business model Innovation (11.3) and Its link to the ecosystem concept.

ll.l Methodology for the literature research

To present the theoretical foundations of the ecosystem concept and business model Innovation, a comprehensive literature research was conducted. First, suitable articles were searched for In various literature search engines and databases using a keyword search. Since Järvi and Kortelalnen's (2017) review provided search terms for business ecosystems and search criteria for BMI were extracted by Foss and Saebl (2016), I had a foundation to build on. The expansion of search terms can be attributed to new Insights In the literature and to the slightly different research area of this thesis. Table ll-l lists all the terms applied In the Web of Science search template to collect articles and reviews with foci on BMIs and BEs. Subsequently, the sources cited In the found articles were checked for relevant articles In a reverse search with Google Scholar. In general, journals with a rating of A+, A, B and C were considered In the VHB ranking. However, the research on BEs also Includes discussion papers not published In trade journals, such as working papers and conference papers. This was considered appropri­ate since the research In this area Is still In Its Infancy.

Table II-1 Search criteria for BE and BMI in the literature.

The search terms used listed In table ll-l, separated according to the respective search context. The list of search terms was continuously updated during the processing and the search process was therefore repeated In several Iterations.

11.2 The business ecosystem concept

11.2.1 emergence and evolution of the ecosystem concept.

Before elaborating on business ecosystems, It Is worthwhile to gain an understand­ing of the ecosystem concept Itself. 2 3 The ecosystem, as a concept In research, emerged as analogous to biology and generally relates to a group of Interacting enterprises that depend on each other's activities (lansiti & Levlen, 2004; Moore, 1993). Since then, It has been "Increasingly used In management and business to describe collectives of het­erogeneous, yet complementary organizations who jointly create some kind of system- level output" (Thomas & Autlo, 2020, p. 1). Adner (2006, 106), also strengthened the Importance of building an ecosystem for the strategy and practice of organizations.

The pioneer of the term "business ecosystem" Is Moore (1993, p. 76), who revealed that In a business ecosystem, companies co-evolve capabilities around an Innovation. Moore (1993, p. 76) further suggests that businesses "work cooperatively and competi­tively to support new products, satisfy customer needs, and eventually Incorporate the next round of Innovations." Another well-known contribution to the literature was com­piled by lansiti and Levlen (2004, 5), who also applied the biological ecosystem analogy to characterize "the large number of loosely Interconnected participants who depend on each other for their mutual effectiveness and survival." Thus, lansiti and Levlen (2004) broaden the understanding of a business ecosystem by stressing that actors within this environment share a common destiny. This approach met with broad ap­proval but also some criticism. A counter argument released by Phillips et al. (2016, p. 4), stated that while Moore was clear In extending the concept of the ecological system to Industry, he did not create strict rules of Interaction between natural and company en­vironments. Phillips et al. (2016, p. 4) further Indicated that Moore's (1993) work was a generalized but persuasive metaphor. Nonetheless, It did not stop researchers from ap­plying the ecosystem concept to explain strategic Issues such as firm behavior, value creation, and value capture. While the business ecosystem concept helps to break down traditional Industry boundaries, this view provides Insights on a macro level by describ­ing a certain level of Interdependencies between ecosystem members. Conslderthe Chi­nese tech giant Alibaba, which created a set of connected ecosystems to span multiple Industry sectors such as a C2C marketplace, a flntech firm, and a marketing platform (Jacobldes, 2019).

Moore (1993), and lansiti and Levlen's (2004) contributions to the literature were later extended to Innovation management (Adner, 2006) and some scholars reflect upon the business ecosystem as a synonym for an Innovation ecosystem (Gawer & Cusumano, 2014; Igwe, 2016; Overholm, 2015). Although the concept of business ecosystems first appeared at the beginning of the 1990s, It was not until 2012 that the concepts gained In Importance, resulting In a sharp Increase In publications on the topics of business and Innovation ecosystems. Fig. 11-1, Illustrates this development by means of a graphic representation of the number of annual publications containing the terms business and Innovation ecosystems.

Figure II-1 Frequency of the terms business and innovation ecosystems Source: Web of Science

Jacobldes et al. (2018, pp. 2256-2257) distinguish between three types of ecosys­tems presented as units: a business ecosystem unit, which centers a firm and Its envi­ronment; an Innovation ecosystem unit, focalized around a significant Innovation or new value proposition and the configuration of actors that support It; and a platform ecosys­tem unit, which describes how actors organize around a platform. Additional literature reviews, published In this research area, broadly echoed Jacobldes et al.'s (2018) classi­fication by using almost the same terminology. For Instance, Scarlngella and Radzlwon (2017, p. 3), examined four different types of ecosystems (business, Innovation, entre­preneurial, and knowledge ecosystems). In a slmllarveln, Katri Valkokarl (2015, pp. 20­21) describes three different concepts of ecosystems, namely business, Innovation, and knowledge ecosystem.

However, regardless of focus, all scholars fundamentally agree on four components and describe an ecosystem as "an Interdependent network of self-interested actors jointly creating value" (Bogers et al., 2019, p. 2). 4 Table 11-2 presents a selection of fun­damental definitions of ecosystems that have contributed to this research area. In gen­eral, most of these definitions follow the four components discussed above.

Taken together, these definitions represent the view that the value proposition for the end-user is the focus of attention rather than a central actor. Consequently, the cus­tomer benefits from the consumption of the final product and/or service. Conversely, the value proposition derived for the end customer governs the composition of the nec­essary actors, whose joint interactions and structures will bring the proposition to frui­tion. In other words, the boundaries of the ecosystem are determined by the value prop­osition and contain only those elements that are necessary to fulfill the promise. One of these elements is the composition of different companies, which by their very nature create interdependencies. These can only be studied if one understands the different roles in ecosystems. Therefore, the next section deals with the roles in ecosystems that appear literature.

11.2.2 Roles in an ecosystem

Dedehayir et al. (2016), define an ecosystem role as "a characteristic set of behaviors and activities undertaken by ecosystem actors [...]" (p.l). This definition allows Im­portant conclusions to be drawn that can be helpful In answering the research ques­tions. In particular, the role In an ecosystem can be clearly distinguished from the eco­system actors. In every ecosystem there are certain roles, whereas actors In an ecosys­tem are constantly changing and therefore actors are not suitable as comparison factors for scientific research. Furthermore, the definition also Implies that an ecosystem role is underpinned by a certain set of activities and behaviors. Activities express the discrete actions that an actor undertakes In relation to the value proposition that forms the basis of the ecosystem (Adner, 2017), while behaviors refer to the tactics and strategies of ecosystem actors (Jacobldes et al., 2018). In this study, no distinction Is made between activities and behavior. Rather, both are considered as factors If they have contributed to the business model Innovation considered In one of the multiple case studies.

Many scientists have contributed to a better understanding by conceptualizing eco­system roles. Table 11-3 lists the most Important roles and their characteristics, which provided further support In guiding my study. The role of the leader (Dedehayir et al., 2016), or often called the keystone (lansltl & Levlen, 2004), Is undisputed among scien­tists. Other contributors use the terms "hub" or "platform leader" to refer to the eco­system leader. Regardless of the name, they all describe a role that Is located at the core of the ecosystem and Is best connected among all the other actors. Activities and be­haviors that consist of ecosystem governance, platform management, value manage­ment, or forging partnerships are often assigned to this critical position. In this context, Bosch-Sljtsema and Bosch; lansltl and Levlen (2015; 2004), explicitly refer to the provi­sion of a platform as the critical factor of an ecosystem leader.

Other ecosystem roles described In the literature are more fragmented and defined more diversely. Besides the leader ofthe ecosystem, researchers often refer to a group of positions as "complementors" (Bosch-Sljtsema & Bosch, 2015)or as "niche actors" (lansltl & Levlen, 2004). "Complementors" Include the supply, production, or addition of components that characterize the ecosystem (Adner & Kapoor, 2010). They adhere to the rules laid down by the ecosystem leader (Adner, 2017). The literary analysis of ecosystem roles, conducted by Dedehaylr et al. (2016), provides an overview of the roles that actors can play In an ecosystem. Following this execution, an ecosystem can be sketched on the basis of the roles as follows: (1) the leader, (2) direct value creators, (3) value creation supporters and (4) entrepreneurs.

Table 11-3 Conceptualizations ofecosystem roles

Behavior and activities that directly contribute to the value proposition are often performed by suppliers, assemblers, complementors and consumers and are therefore assigned to role of the direct value creator. Examples Include the distribution of key ecosystem components, the processing of knowledge provided by others, and the spec­ification of needs and requirements. In contrast, activities and behaviors that Indirectly provide added value by supporting the primary value creators are classified as value creator supporters. Experts, champions, and niche players with special skills are often classified In this context. The final division of roles Includes all actors, such as regulators and sponsors, who help to keep the ecosystem alive and running. The so-called entre­preneurs provide supporting elements to encourage ecosystem growth, such as finan­cial support and the easing of regulatory constraints.

Depending on the chosen ecosystem leader, the assigned positions In the ecosystem will be different as this depends on the concept of the explicit ecosystem. However, to better understand the Interdependencies In the ecosystem, this approach can be used from the perspective of a specific role. The consideration of cases makes clear that Dedehaylr et al.'s (2016) classification Is a useful way to characterize different ecosys­tems and their functions. In addition, this approach can also serve as a powerful tool for structuring scientific analyses that consider Interdependencies between the different roles In an ecosystem, and therefore contributes In answering one of my research ques­tions. Once the roles within an ecosystem provide Information about certain activities and behaviors, the ecosystem concept needs to be better differentiated from other con­cepts, such as value networks and supply chains. For this reason, the following two sec­tions contain characteristics of ecosystems and their delimitation with respect to my research focus.

11.2.3 Characteristics of the ecosystem concept

Although the concept of the ecosystem generally lacks In providing precise terminol­ogy and consistent scope of application, Its describing characteristics has led to contours that make the ecosystem concept Itself distinguishable. The four distinct commonalities of different ecosystem concepts are a system-level output, the nature of Interdepend­ence among ecosystem actors, heterogeneity, and the nature of ecosystem governance challenge. 5 Thus, these features are quite similar to the four components described by Bogers et al. (2019) In their review. A detailed elaboration of those elements In the fol­lowing section will further Increase the demarcation level of the ecosystem concept.

While digitization has revolutionized how firms can serve customers, the blurring of separation between services and products has Increased customer needs fundamen­tally. As a result, a single firm Is not capable of offering all the elements a customer requires. An ecosystem is specially designed to create, a so-called system-level output, facilitated by a heterogeneous group of firms that jointly create output more significant than any single actor could deliver alone. One factor that adds value Is the compatibility of products and services by enabling a modular product composition across multiple Industries to fulfill a complex customer desire. Consider, for Instance, Google's Nest, which Initially produced a remotely controlled thermostat. By teaming up with LI FX and Fitbit, they designed a system whereby a red light flashes If smoke Is detected and the Fitbit tracker recognizes If someone Is awake. 6 This new ecosystem offers a higher value proposition than Nest could have offered on Its own. Scholars also emphasize the mod­ularity and compatibility of products and services where actors "Interact In order for a focal value proposition to materialize" (Adner, 2017; Jacobldes et al., 2018). Supply chains also create a system-level output only limited by the diversified extent of output offered through ecosystems. For example, value chains cannot provide the tens of thou­sands of applications hosted by the open-source android network. According to Järvi et al. (2018), another contribution to this characteristic Is the collaborative exploration of new knowledge to facilitate generic knowledge production. This ecosystem output Is generated by distinctive Innovation activities from ecosystem participants and possibly leads to new products, services, or even business model Innovations. The latter can be an ecosystem-output on Its own, where companies seek to build new ventures by pur­suing entrepreneurial opportunities through consultation (Autlo et al., 2019).

One of the most frequently mentioned traits of all ecosystem types Is the presup­posed high levels of participant heterogeneity. Again, ecosystems aim to span multiple Industries to fulfill complex customer needs; hence, It Is most feasible through the col­laboration of firms with a diverse focus and Industry. This heterogeneity has already been described by Moore (1993) and was further specified by lansiti and Levlen (2004), as the loose networks "of suppliers, distributors, outsourcing firms, makers of related products or services, technology providers, and a host of other organizations - affect, and are affected by, the creation and delivery of a company's own offerings." As a result, and In contrast to supply chains, roles In ecosystems are not defined by formal supplier contracts. Jacobides et al. (2018, p. 2255) stress that contracts are obsolete because ecosystem members face the same rules and are bound together through their collec­tive Investment rather than through managed hierarchies or contracts. 7 Yet another sci­entist emphasizes that ecosystems consist of a multilateral set of partners (Adner, 2017), while others such as Frankort (2013) and Järvi et al. (2018), Include competitors and public-sector participants In their ecosystem concept. These extensions to and more participants, fall back to the different thematic foci In the ecosystem literature and pro­vide a foundation for comprehensive ecosystem analysis.

Participant interdependence is possibly the most widely employed ecosystem com­ponent. In the literature, scientists examined Interdependencies between heterogene­ous ecosystem actors from three different angles: cognitive, technological, and eco­nomic. The first perspective Is evident as diverse ecosystem actors are equipped with different knowledge, skills, and levels of motivation that results, In consideration of more heterogeneous actors Involved, In a higher cognitive distance among participants (Wareham et al., 2013). Conversely, Gawer and Phillips (2013) argue that ecosystem participants are bound together through a collective Identity that encourages collabo­ration rather than fostering the negative effect of cognitive distance. This makes sense as In the matter of economic perspective, ecosystem Interdependence advantages each actor without exceptions only, If the embedded ecosystem resources are generally ac­cessible for each participant. Thus, In the deliberate act of Increasing the cognitive dis­tance, firms could contribute to their detriment.

Most recently, Jacobides et al. (2018) observed the emergence of economic Interde­pendencies In relation to ecosystems that enable economies of scope and scale. Another perspective of participant Interdependence Is defined as technological, In that hetero­geneous actors co-speclallze within the ecosystem. Co-speclallzatlon occurs when co­dependence between entitles arises, which emanates from the need to provide mutu­ally compatible Inputs Into the ecosystem and can thus provide for a consistent, but customizable, system-level output (Jacobides et al., 2018; D. Teece, 1986).

Distinctive governance is the component that allows both scientists and practition­ers to differentiate ecosystems from other constructs. As mentioned earlier, the char­acteristics built a foundation to describe ecosystems, and they are also applied In other concepts such as open markets, supply and value chains, and open Innovations. As a result, distinctive governance In ecosystems, In that participant relationships and Inter­dependencies are not entirely defined by contracts or hierarchies, Is the complete dif­ferentiation criterion (Gulati et al., 2012; Jacobldes, M. G., Sundararajan, A., & Van Alstyne, M. W., 2019). Conversely, Adner (2017) argues that the governance rules are set by an ecosystem leader "to whose vision of structure and roles others defer." Adner's (2017) view Implies some kind of hierarchy and matches Jacobldes et al.'s (2018) state­ment that there Is a lack of knowledge In the sense of how ecosystems are structured and governed. Nonetheless, both researchers follow the prevailing view In the literature of distinctive, governed ecosystems, where an ecosystem participant co-alignment structure enables ecosystem actors to specialize In specific roles, preferably through re­lation-specific contracts that define each relation In the community uniquely. For In­stance, Järvi et al. (2018) stress the Importance of economic or cognitive co-alignment structure within ecosystems that nurture the existence of an ecosystem collective Iden­tity mentioned by Gawer and Phillips (2013).

This mutual Identification of ecosystem actors shifts the perspective from Individual to collective. Thus, ecosystem participants face challenges and address risks of mutual Interdependence, which go beyond their Immediate responsibilities, together. Although both the power relations between actors and the Interdependencies are factored by the ecosystem co-alignment structure, managing these tensions Is difficult and often de­pends on the participation of much larger firms (West & Wood, 2013). In addition to community size dependence, ecosystem management could Involve a number or com­bination of mechanisms that provide for a balance of control and coordination, such as employing self-regulation, social governance, contract, standards, and markets Imply­ing, to a greater or lesser extent, openness across ecosystems (Jacobldes et al., 2018).

As these four characteristics of the ecosystem concept provide guidance In distin­guishing It from other concepts, Table 11-4 presents an overview presented by Gomes et al.'s (2016) overview of differences between value chains, supply chains and the ecosystem concept. The great demarcation level Is achieved through the emergence of dynamic dependencies between ecosystem actors and the absence of hierarchies and formal contracts In determining these dependencies.

Table 11-4 Differences between value chains, supply chains and ecosystem concepts Source: Gomes et al. (2016)

11.2.4 Clarifying the innovation ecosystem concept

Systematic processing revealed two Issues that affect the clarity of the Innovation ecosystem concept: (1) Its ^comparability given the range of different ecosystem out­puts and settings; and (2) Its Inconsistent use of terminology. In this thesis, a further differentiation within the ecosystem concept Is necessary to prevent flawed results In answering the research question. The presented characteristics of participant heteroge­neity, system-level outputs, participant Interdependence, and distinctive governance as­sists researchers as well as practitioners In distinguishing the ecosystem from other con­cepts but fall to provide a limited research focus that makes results comparable. In this section, these Issues will be addressed by excluding ecosystem concepts that are differ­ent In structure and outcome to arrive at a clearer picture of the Innovation view.

According to Autlo et al. (2018), BMI Instantiated In new ventures Is the outcome of an entrepreneurial ecosystem. Entrepreneurship ecosystems are also distinguishable by their operating agents, such as new ventures, established Incumbents, and business ac­celerators. Besides, entrepreneurial ecosystems exist, for the purpose to reveal BMIs. Therefore, the concept Is fundamentally different to business and Innovation ecosystems, both in strategy in desired outcome. Another ecosystem concept that has a distinguishable structure and aims to achieve an outcome other than the concept of the business or innovation ecosystem, is the knowledge ecosystem. Knowledge ecosys­tems consist of research institutions, entrepreneurs, and universities; hence, according to Katri Valkokari (2015), the main objective is co-exploration of new knowledge in de­centralized networks. Furthermore, the dynamics between ecosystem actors is different in knowledge ecosystems as there is no direct competition within, which leads to a linear process of knowledge flow moving from upstream to downstream (Clarysse et al., 2014). An analysis of BMI insights for innovation ecosystems while using entrepreneurial and knowledge ecosystem logics will lead to significantly flawed results. As a consequence, both the entrepreneurial and the knowledge ecosystem concepts are excluded in this thesis while the ecosystem characteristics remain the same.

Delimitation of the knowledge and entrepreneurial ecosystem concepts compared to the business or innovation ecosystem concept is common practice (Katri Valkokari, 2015; Scaringella & Radziwon, 2017). In contrast, there is widespread disagreement in the application of the concepts of business, innovation, and platform-based ecosystems. The business ecosystem (lansiti & Levien, 2004; Moore, 1993, 1996) as a fundamental basis evolved overtime to become the distinguishable concept of the innovation eco­system (Adner, 2017; Adner & Kapoor, 2010). Due to technological progress, the plat­form-based ecosystem has arisen, to some degree an extended version of the business ecosystem. Researchers such as Katri Valkokari (2015) and Scaringella and Radziwon (2017) refer to the platform-based ecosystem as one of several traits of the business ecosystem, whereas the most recent contributions from Jacobides et al. (2018) and Ceccagnoli et al. (2012) recognize the platform-based ecosystem as an independent con­cept. I follow the latter view in this paper since the most successful ecosystems, such as Apple's app store or Alibaba's ecosystem, are platform-based and have evolved from technological progress and a shared set of technological infrastructure. Apart from four common characteristics and value offering as desired ecosystem output, the three eco­system concepts are different in the composition of involved actors, resource availabil­ity, interdependencies, geographical proximity, and type of value offering. The interac­tion between the types of ecosystems and their relationships varies depending on each individual player's point of view. Therefore, leaders, platform owners or direct value creators are examples of actors enhancing Interactions between the different ecosys­tem types'. Conversely, an Interconnecting element between ecosystems may be a plat­form, an organization of Items such as technologies and complementary properties. All of these channels and actors of Interconnected ecosystems communicate, and so evolve and emerge side by side. Thus, these three types of ecosystems are, to some extent coherent, and are therefore, all relevant In this study.

A summary of summarizes the differences between the three types of ecosystems Is presented In table 11-5. The examination results are classified and Interconnections between and differences In the structure of ecosystems are highlighted.

Business ecosystem communities also take the form of co-created but still evolving and unpredictable value offers and are characterized by greater fluidity, growth, and co­creation. As players' positions are often less defined than for other Innovation ecosys­tems, there Is also generous room for Innovation, which may alter the positions and connections between the ecosystem actors. In this type of ecosystem, Interactions be­tween participants are non-linear and not limited to geographical boundaries, and therefore, comprise a broad scope. Contrary to the scope of Innovation ecosystems con­sisting of focus firms and neighboring suppliers and complementary companies In the Immediate vicinity, business ecosystems are comparatively restricted.

The principal building blocks of Innovation ecosystems are actors and their Interde­pendencies, activities, positions and linkages (Adner, 2017). Furthermore, the focal firm does not necessarily have privileged access to resources compared to complementors. Participants' Interdependencies, as depicted In the characteristics of an ecosystem con­cept, are more Important. Platform ecosystems organize their Internal Interactions by co-alignment of a common architecture with Interfaces that allow the platform's eco­system to be divided Into a relatively stable framework and a complementary collection of modules generated by participants of the ecosystem (Tlwana et al., 2010). This eco­system structure ensures a network of locational complements can provide Improve­ments to the platform's ecosystem-level value, particularly when there Is a platform owner who can also act as an adjudicator of platform-based Interactions without having to resort to formal contracts (Ceccagnoll et al., 2012). The technological Interdependen­cies, connectivity Interfaces and the shared set of technological architectures within platform ecosystems are most Important.

In this study, all ecosystems with the value of proposition-based, system-level out­put, are called as Innovation ecosystems.9 This follows the typology of Jacobldes et al. (2018), who suggest the three types of Innovation ecosystems described In Table 4. De­spite the fact that the three ecosystems have different actors and structure, they have role dependencies that can be analyzed and compared due to similarities In the system- level output. This representation of Innovation ecosystems and the exclusion of the en­trepreneurial and knowledge-based ecosystems leads to consistent terminology and In­creases the comparability.

11.3 Business Model Innovation

11.3.1 business model.

It is vital to develop a fundamental understanding of the business model Itself before Implementing Innovation. Historically, the business model originated In the late 1990s and has Increased In Importance for both academics and practitioners. In Its most basic 9 While labelling value proposition-based, output-focused innovation ecosystems is perhaps confusing, I believe I am following the current trend in labelling all such ecosystems in this way..

form, the business model elucidates howthe business of a firm works using specific units of analysis. This phenomenon was formulated by Magretta (2002), who states that "business models describe, as a system, how the pieces of a business fit together." Alt­hough this definition leads to the assumption of a uniform understanding, studies sug­gest the contrary: the lack of a standardized explanation of terms (David Teece, 2010; Zott et al., 2011, p. 1034). Regardless of definition, business models are characterized by a high degree of complexity, often caused by the application of different perspectives, namely economic, strategic, and operational (Morris et al., 2005, p. 726). Thus, It Is not surprising that the business model, as an extensive theory, has been used across many academic disciplines and across multiple strategic Issues, and thus, has not yet agreed on a common terminology.

Despite the lack of literature on the topic of business models, the highly Influential literature review by Foss and Saebl (2016) reveal that the latest elaborations are close to or In accordance with David Teece's (2010, p. 172) definition of a business model: the "design or architecture of the value creation, delivery, and capture mechanisms" of a firm. According to Foss and Saebl (2016, p. 202), scientists agree on the components that form a business model, In particular, "the firm's value proposition and market seg­ments, the structure of the value chain required for realizing the value proposition, the mechanisms of value capture that the firm deploys, and how these elements are linked together In an architecture." Business models offer an Insight Into and a framework tool for businesses to recognize and resolve new-tech problems, Identify key strengths, and shift existing operations to achieve the economic benefit they want to gain. In this con­text, as a significant benefit, the business model enables the consideration of factors that lie Inside and outside the company, and therefore takes a holistic view of the firm (Zott et al., 2011). Both Morris et al.; David Teece (2010) describe the business model as a concept spanning Industry boundaries, which explains how the focal firm Interacts with and Is embedded In Its surrounding ecosystem. 8 Another convergence between the business model and the ecosystem concept Is the fact that both aim to capture the reasons for value capture and creation of the focal firm and Its various stakeholders.

The BM literature has not yet agreed on a common opinion with regards to which components form a business model. Given the diverse approaches to business models, It is evident that certain repetitive elements remain but are labeled differently (Frankenberger et al., 2013; Magretta, 2002). Components of BMs that are used as a conceptualization In this thesis, consist of four central dimensions (fig. 11-2): The "who” answers the question about the served customer group, the “what” Is commonly re­ferred to as the customer value proposition, the “how” discusses the value chain neces­sary to achieve the value proposition , and the “why" clarifies the revenue model and Its economic efficiency.

Figure ll-2Archetypal Business Model Source: Gassmann et al. (2014)

While this model Is simple to use, It Is sufficiently comprehensive to provide a clear picture of the business model architecture due to the reduction In four dimensions. The main virtue of the business model Is that It gives a holistic Image of the organization through a combination of factors Inside and outside the firm (David Teece, 2010; Zott et al., 2011), which Figure 4 Illustrates. Given the vast scope of applications, It Is clear that, In practice, a company's BM Is a complex system with Interdependencies and spin-offs. The Intention to reinvent the business model, or to Innovate It, may thus be thought of as an Immense operation that can become rapidly more complicated than a process or product Innovation.

11.3.2 BMIstatusquo

Although the business model concept continues to evolve, the Innovation attached to the BM has recently attracted considerable Interest as a new and growing field. As business models typically deal with the creation and capture of company values, Innovation raises additional complex and challenging questions. Evaluated Inter alia by Schallmo (2014), the concept attempts to deepen the understanding of transformations from one business model to another and facilitates analysis and planning them. Further­more, the ability to Innovate regular and effective business models will Improve the re­silience of a company to environmental changes and their ability to present a sustaina­ble competitive advantage (Chesbrough, 2010; Lecocq & Demll, 2010). The research sub­ject has been revised and augmented by two comprehensive literature reviews by Foss and Saebl; Schallmo (2016; 2014). Table 11-6 presents an overview of selected definitions of business model Innovation. In general, these definitions refer to the developments of the business model as a shift In the structure of either the entire business model or Its components, whether as a reaction to opportunities or as an Instrument for diversifica­tion and Improvement In the organization's environment.

More specifically, the contributions outlined In table 11-6 Imply different conceptu­alizations of business model Innovation. 9 On the one hand, scientists highlight the active exploitation of combinations of resource capacity that Increase competitiveness and outermost profitability, defined as a resource-based view (Markldes, 2006; Sorescu, 2017). On the other hand, researchers address the Importance of entrepreneurial op­portunity-seeking and strategic benefit-seeking from the unique viewpoint of a focal firm, recognized as a strategic entrepreneurship perspective (Cucculelll & Bettlnelll, 2015). Consequently, the uncertainty that occurs regularly In the last perspective could potentially lead to opportunities for firms to explore and exploit effectively within their environments (Hitt et al., 2001). 10 In addition, Cucculelll and Bettlnelll (2015) and Zott and Amit (2010) emphasize the need for businesses to respond to volatility by reorient­ing conventional and emerging business strategies to adjust to changing Innovative value sources. Spleth et al. (2014) capture both views by describing the resource-based view as the companies use of existing resources and skills to gain competitive advantage and profits while specifying the other view as the firms' exploitation and exploration of potential environmental opportunities.

In the literature, researchers present different approaches to measure BMI compo­nents. One contribution to this topic from Santos et al. (2009), regards BMI architectural change as a BMI predictor. In their review, Foss and Saebl (2016) suggest that BMI liter­ature gives two separate views of BMI, one on BM architecture changes and the other on BMs In one or more components. Therefore, two dimensions of BMI are proposed: novelty and scope. The novelty dimension defines BM as unique for a company or In­dustry, while architectural and structural adjustments by BM describe the scope dimen­sion. Another useful conceptualization by Clauss (2017) provides a validated scale for BMI. He presents ten multi-item scales that represent an Innovation In the business model for relevant substructures. Each of these sub-constructs comprises three higher dimensions of the Innovation business model, namely value creation Innovation, value proposition Innovation, and value capture Innovation. These dimensions are quite simi­lar to the value propositions of ecosystems that aim to capture and create value for their participants (Khademl, 2020).

In this thesis, Innovation Is construed as an Improvement In, or an Innovative shift within, at least one component of the BM to Incorporate and maximize opportunities In Its strategic entrepreneurial context. This Is because the already well-established mar­ket's traditional business model operates seamlessly with the complex shifts In Its envi­ronments. Therefore, businesses need to Identify potential opportunities In their Indus­try as well as emerging risks, early to make themselves more competitive and more able to foresee possible future changes.

11.3.3 Drivers of the Level of BMI

Researchers have widely acknowledged the primary source of competitive ad­vantage In business model Innovation (Chesbrough, 2007; David Teece, 2010), and therefore, as a promising solution for businesses In times of volatility to react and adjust to changing value creation sources. With a sense of the value of business model Innova­tion with companies and the rapid market change In today's fast-paced business climate, several Investigators have Investigated how businesses can effectively evolve their busi­ness models. It Is particularly Important to Identify the drivers for BMIs.

Many contributions have been made In the Investigation BMI drivers with a particu­lar Interest In areas such as technology Innovation, sustainability, external stakeholders, or Internationalization. However, according to Foss and Saebl (2016), this research Is still In Its Infancy. To date, the research Is typically a post-analysis rather than a theoretic and predictive approach. In a similar vein, Zott et al. (2011) and Spleth et al. (2014) re­quested large-scale Investigations and analyses of antecedents and effects of business models that should result In more generallzablllty. There Is agreement, however, that drivers affecting BMI can be diverse In nature, at various rates, and can be external or Internal to the organization (Dasplt, 2017; Foss & Saebl, 2016).

Since this study deals with factors located In the sphere of ecosystems, the external environment Is of special significance. For Instance, according to Ferreira et al. (2013), a critical factor Is shifts In the demand of stakeholders. In the context of Innovation ecosystems, stakeholders can appear In different ways and Interdependences; hence, a more In-depth analysis of the Impact of each Individual stakeholder would enlarge this research field. In addition to stakeholders, Voelpel + et al. (2004) and Reuveret al. (2009) reveal that competitive environment changes are an additional driver for BMI. Baldwin (2012) also highlights the competition - In this case within an ecosystem - as an Im­portant factor that can result In the opening of countless opportunities for recombina­tion. This Insight serves as another supporting starting point for the purpose of this the­sis In examining BMI within an ecosystem setting. The third external driver for BMI to the organization Is the opportunities presented by new communication technologies and new Information (Bouwman et al., 2018; Wlrtz et al., 2010).

Nevertheless, despite the fact that the hypothesis regarding the positive Influence of the business environment on the BMI has been confirmed by Puclhar et al. (2019), further In-depth research Is still required. Scientific efforts to enrich the literature with a focus on factors embedded In Innovation ecosystems and their Influence on the BMI, and also dependence of the actors, could lead to new theoretical and practical Implica­tions for this highly relevant research topic. In doing so, It Is necessary to find (1) linkages between Innovation ecosystems and BMI; and (2), Identify and collect Issues referring to those linkages. Thus, the next section provides a linkage between the ecosystem con­cept and business model Innovations and discusses a literary contribution which, In a broader sense, Is In the Intended direction of this research.

11.3.4 Business model innovation in business ecosystems

To conclude the theoretical background of BMI and to make 11 progress associated with business ecosystems, It could be useful to Investigate current literature contribu­tions that combine both concepts. Although both concepts have failed to agree upon a standardized terminology, scientists Imply the existence of a direct link between busi­ness ecosystems and business model Innovation.

In his contribution, Clauss (2017) stresses that BMI Involves elements that lie outside a firm, such as partnerships and customer segments. Hence, the business ecosystem, as Illustrated In fig. 11-3, Is a theoretical lens to be used In the analysis of Interactions be­tween business models and external actors (Moore, 1996).

Moore (1996) suggests that the business ecosystem can be listed when considering the relationship between suppliers and customers and aspects such as regulators and standardization bodies. This Is particularly Important as players In an enterprise jointly develop their abilities and roles. Until now, only one literature review that provides a detailed review of BMI In the context of business ecosystems has been published. In this review, Rachlnger et al. (2019) analyzed 94 articles on the subject and Identified Issues that combined the topics of BMI and BE. This contribution Indicated the potential of taking a holistic approach that considers the embedded resources of the business eco­system for a business model Innovation.14 Although only one contribution exists, an ex­amination of this review provides Insights that serve as secondary source material that is supplementary to the results of the multiple case study presented In section II 1.2.

The overview of the determining subjects of business model Innovation In a business ecosystem and Insights regarding the frequency of each subject presented In Table 11-7, are particularly relevant In this thesis. Co-evolutlon of the BE and BM, the role of BE resources and capabilities for BMI, the role of BE actors for BMI, the role of technologies As a source for this review, the authors had access to the WoS (Web of Science). The same source was available for this thesis. The WoS supports better comparability and helps to extend the literature.

In the BE and BMI, and role of BE governance for BMI, account for more than 50% of all occurrences.

As Rachinger et al. (2019) only addressed the five Identified Issues with the highest frequency rate In detail, this section only deals with those mentioned. Other elabora­tions that could enrich the results of the multiple case study but have not been men­tioned In this section, are discussed and added In the discussion later In this thesis. The following description consists of the five Issues that were mentioned most In the litera­ture that combined the topics of BEs and BMI (compare Table 11-7).

Co-evolution of the business ecosystem and business model. Researchers broadly agree that BMI Is transcending company limits and connecting the actors In a multidi­mensional, contextual and bidirectional way (D. Dellyana et al., 2018; Velu, 2015). Ac­cording to Glesen et al. (2007), a successful Innovation of a BM, must be, In line with the 15 Sources have been used if they are qualified for more subjects. Essential to remember, constructs out­side the boundaries of the business ecosystems, e.g. value networks, are specified as part of the BE term in their study. Individual actors (e.g. partners or stakeholders,) in a BE were addressed as BE actors.

company's BE and It can be further Improved by Involving business ecosystem actors In the process (Rong et al., 2018). In addition, Simmons et al.; Yderfält and Roxenhall (2013; 2017) state that Innovation of a business model Is highly dependent on the collaboration among business ecosystem actors. In the various phases of the Innovation process, busi­ness model Innovation may promote collaboration among business ecosystem actors, facilitating the Integration of resources, and Innovation of value (Nardelll & Rajala, 2018) . According to Burton et al. (2016), tensions In the BE, can prevent the joint crea­tion of value and also the capture of value activities. To conclude, joint business model Innovation In business ecosystem alliances will benefit from cost, risk and knowledge sharing between companies (Spleth & Meissner, 2018) and requires, as a prerequisite, stakeholder Involvement (Nardelll & Rajala, 2018).

Influence of business ecosystem resources and capabilities on business model in­novation. In general, the literature states that the BMI In BEs often requires the Inter­action of BE actors as Its resources and capacities are necessary (D. Dellyana et al., 2018; Llndgren et al., 2010). Consequently, teaming up to gain easy access to resources for an Innovation of a BM Is commonly seen as a key-driver for BMI In the BEs and therefore, enables firms to bear down constraints In resources (Ayala et al., 2017; Calla et al., 2007; Karlsson et al., 2017). For example, Shelton (2009) emphasizes that the Innovation of a BM requires complementary BE stakeholder support while Matthyssens et al. (2006) highlight the position of business ecosystem stakeholders outsourcing. Moreover, the development of complex products, made possible by shared business ecosystem capa­bilities, facilitate the Innovation of business models.

Role of business ecosystem actors for business model innovation. Scientists em­phasize the critical role of business ecosystem actors, such as customers, suppliers, and distributers, for an Innovation of a business model. Spleth and Meissner (2018) found that BMI frequently expands the core business boundaries, allowing businesses to com­plement Individual business ecosystem actors' capabilities. As a result, firms have the potential to offer products that satisfy the continuously rising demands of customers. To do so, Nardelll and Rajala (2018) presuppose BE actors Involvement that leads ac­cording to Ayala et al. (2017), to an Increased business model Innovation velocity or to a growth In the versatility of business models (Mason & Mouzas, 2012). By Implication, the right choice of appropriate business ecosystem partners Is critical for the success of the business Innovation model network (Karlsson et al., 2017) and therefore, they sug­gest, to the establishment of long-term relationships. D. Dellyana et al. (2018) reveal that If Innovations of BMs link BE actors with a variety of expertise, low BMI rates could lead to high value formation, value supply, and value selection.

Role of technologies in the business ecosystem and for business model innovation.

Technology used In BMIs can be drivers and enablers In business ecosystems (Chapman, 2006). For Instance, Mason and Mouzas (2012) argued that BEs encourage new devel­opment Interventions that result In value and the creation of BMI. Furthermore, actor players may take advantage of technical opportunities through revolutionary Innova­tions of their business models, based on their particular business ecosystem (Autlo et al., 2018). Similarly, Shelton (2009) states that Innovation In technology and BMs will also be collectively embraced and sponsored by capital and strong BE collaborations. By creating a novel technology, new actors can be attracted to the BE and must Involve those that provide Initiatives that complement and compete. Wadln et al. (2017) stress that companies that work together In BMI partnerships are more able to deploy tech­nologies than companies that act Independently. Overall, business ecosystems facilitate the development of new technology Initiatives resulting In value and business model Innovation migration.

1 I am only referring to those ecosystems that were explained and delimited in section 11.2.4, namely business ecosystem, innovation ecosystem, and platform ecosystem.

2 As is usual in the Web of Science, I applied deviations between singular and plural forms and, consid­ered the notation of British and American English, as well as hyphenated forms that were used in the literature. In addition, at the beginning the papers were restricted to the core collection of the Web of Science.

3 I intentionally refer to the term "ecosystem" as a concept for emphasizing the as-yet early stage of theoretical development in the area of business and management.

4 The inconsistent use of divergent ecosystem concepts has led to terminological and conceptual confu­sion between Gomes et al. (2016, p. 1) and Thomas and Autio (2019, p. 2). To prevent incorrect utili­zation of the ecosystem concept, I only take into account those that include all four components and fulfil the characteristics of an ecosystem that will be presented in the next section.

5 The reduction to four components, makes it easy to use but, at the same time, cocooning enough to give a precise picture ofthe ecosystem concept.

6 Fitbit is a wearable fitness tracker and LIFX produces smart light for homes. LIFX builds a system com­patible with the Nest thermostat.

7 Ecosystem partners are dependent on each other to collectively generate a system-level output. Par­ticipants must be interested in the joint success, quite similar to the intrinsic motivation of employees.

8 (2005, p. 202) did not directly refer to ecosystems. In their contribution, they described a value net­work that includes most ofthe elements necessary to be considered as an ecosystem.

9 Another classification was made by Foss and Saebi (2016), who distinguish between the outcome (BMI), and the (re)configuration process of existing business models. Although both approaches are useful, I follow the presented conceptualization due to its greater proximity to the firm environment (e.g. ecosystems).

10 The environment here also includes the perspective of ecosystems and therefore provides a direct link to the ecosystem concept.

11 Rachinger et al. (2019) did not distinguish between different types of ecosystem. The term business ecosystem is equated with the innovation ecosystem concept as described earlier in this thesis.

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Title: Leveraging Embedded Factors of Business Ecosystems. A Potential Driver for Business Model Innovations

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What Is a Business Ecosystem?

Understanding a business ecosystem, ecosystems and competition, what is a business ecosystem and how does it work.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

thesis business ecosystems

A business ecosystem is the network of organizations—including suppliers, distributors, customers, competitors, government agencies, and so on—involved in the delivery of a specific product or service through both competition and cooperation. The idea is that each entity in the ecosystem affects and is affected by the others, creating a constantly evolving relationship in which each entity must be flexible and adaptable in order to survive as in a biological ecosystem.

Key Takeaways

  • A business ecosystem is the network of organizations—including suppliers, distributors, customers, competitors, government agencies, and so on—involved in the delivery of a specific product or service through both competition and cooperation.
  • The idea is that each entity in the ecosystem affects and is affected by the others, creating a constantly evolving relationship in which each entity must be flexible and adaptable in order to survive, as in a biological ecosystem.
  • Ecosystems create strong barriers to entry for new competition as the ecosystem already consists of the players that allow it to function.
  • The theory of business ecosystems was developed by business strategist James Moore in 1993.

In the 1930s, British botanist Arthur Tansley introduced the term ecosystem to describe a community of organisms interacting with each other and their environments: air, water, earth, etc. In order to thrive, these organisms compete and collaborate with each other on available resources, co-evolve, and jointly adapt to external disruptions.

Business strategist James Moore adopted this biological concept in his 1993 Harvard Business Review article "Predators and Prey: A New Ecology of Competition", in which he paralleled companies operating in the increasingly interconnected world of commerce to a community of organisms adapting and evolving to survive. Moore suggested that a company be viewed not as a single firm in an industry, but as a member of a business ecosystem with participants spanning across multiple industries.

Like natural ecosystems, the firms involved in business ecosystems compete for survival with adaptation and sometimes extinction.

Advances in technology and increasing globalization have changed ideas about the best ways to do business, and the idea of a business ecosystem is thought to help companies understand how to thrive in this rapidly changing environment. Moore defined the business ecosystem as follows:

An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders . Over time, they co-evolve their capabilities and roles and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments and to find mutually supportive roles.  

In effect, the business ecosystem consists of a network of interlinked companies that dynamically interact with each other through competition and cooperation to grow sales and survive. An ecosystem includes  suppliers , distributors, consumers, government, processes, products, and competitors. When an ecosystem thrives, it means that the participants have developed patterns of behavior that streamline the flow of ideas, talent, and capital throughout the system.

Ecosystems create strong barriers to entry for new competition, as potential entrants not only have to duplicate or better the core product, but they must also compete against the entire system of independent complementing businesses and suppliers that form the network.

Being a part of a business ecosystem provides mechanisms to leverage technology, achieve excellence in research and business competence, and compete effectively against other companies. Some other goals of a business ecosystem include:

  • Driving new collaborations to address rising social and environmental challenges
  • Harnessing creativity and innovation to lower the cost of production or allow members to reach new customers
  • Accelerating the learning process to effectively collaborate and share insights, skills, expertise, and knowledge
  • Creating new ways to address fundamental human needs and desires

It is for these reasons that in today's rapidly changing business world, a company creates its own ecosystem or comes up with a way to join an existing ecosystem by providing an advantage that is currently lacking in that ecosystem.

Harvard Business Review. " Predators and Prey: A New Ecology of Competition ." Accessed June 16, 2021.

TCI Management Consultants. " A TCI Book Review. The Death Of Competition - Leadership And Strategy In The Age Of Business Ecosystems. James F. Moore ." Accessed Jan. 20, 2021.

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Pioneering the Business AI Revolution

Pioneering the Business AI Revolution

“The only constant is change.” This has always been true for enterprise software. And agility, especially when it comes to the ability of software architecture to create and respond to change, is at the heart of reinventing business processes.

But one type of technology — machine-generated text, images, and media that mimic human creativity — is introducing an entirely new era of transformation. Known as generative artificial intelligence (AI) , this technology has set off a wave of innovation that will dramatically change how businesses run. And at SAP, we are perfectly positioned to pioneer this business AI revolution.

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SAP Business AI is deeply embedded into applications and process flows that rely on a veritable treasure trove of decades of relevant business data curated from huge customer data sets. We have agreements with more than 25,000 customers to use their data to train our own models. Using this data to contextualize generative AI models results in very task-specific outcomes for business users.

Without this customer data, generative AI users get results that are more like dinner-table conversation than business-altering insights and responses. The data we use for context for our tenants are protected and used only for that tenant — they are not reused elsewhere.

For more than 50 years, customers have trusted us with their most mission-critical business processes and now that trust is crucial as we deliver business AI with the highest levels of concern for security, privacy, compliance, and ethics, which our customers have come to expect.

SAP Foundation Models: Our Differentiator

It is clear that the emergence of generative AI has completely changed the game. General-purpose foundation models can be adapted to many different tasks in a short time. Users can have simple interactions with models in their natural language, so they don’t need any technical knowledge to use AI. Additionally, large language models (LLMs) have gotten bigger and more accurate, with new versions being released all the time.

These changes have opened up huge opportunities for us to build even better AI for business, especially when we adapt LLMs to the SAP business context and create our own models using our structural data and business process knowledge.

That is why we are investing in building our own foundation models and combining them with our deep understanding of business processes and SAP data. Using our own foundation models, we can create powerful, context-specific outcomes for our customers. Our foundation models, which will also allow for fine-tuning for different scenarios, will further unlock and strengthen our leading position in embedded AI. Customers will benefit from high-performance models trained on rich SAP data, achieving better predictive results.

But customers don’t have to wait for these SAP foundation models to be ready before they can leverage context from business data because we are also using retrieval-augmented generation (RAG) to provide business data context and give customers better results right away.

With these foundation models in place, we will embed business capabilities powered by AI in every solution to enable new business models.

SAP’s Generative AI Assistant: Joule

The vision of SAP Business AI is to deliver the first true system of intelligence to fundamentally change the way companies operate, helping them create even more value, faster. Essentially, embedded AI will become the norm for powering business processes .

That’s why we announced that we will embed our new generative AI assistant Joule throughout the SAP cloud enterprise portfolio. Joule will help our customers achieve business results faster by enabling them to access insights that are relevant for their business through natural conversation.

By simply asking a question in plain language, our customers can get smart answers tapped from a pool of data from across the SAP portfolio and third-party sources. Joule will continuously deliver new insights that get even more intelligent over time. Imagine for example, asking Joule to prioritize suppliers based on their average margins and carbon footprint. Joule will handle some tasks completely, like writing job descriptions that are unbiased and compliant, or help to develop relevant interview questions and more.

Applying AI to Solve Specific Business Problems

The true value of business AI comes from knowing how to apply AI to solve specific business problems. Here are some more examples.

Decision-makers need intelligent recommendations based on connecting, understanding, and processing relevant information. Generative AI can produce those intelligent recommendations in seconds, if it is trained on relevant data in a manner equivalent to the ways humans would consider that data.

An HR manager can use generative AI to create a job description or interview questions and do this at scale. Generative AI can create thousands of responses in the time it takes a human to manually create one.

Or take financial reports: they typically require data to be extracted from complex systems. Generative AI can automate this time-consuming process and produce accurate reports quickly and simply.

When booking a trip, employees can receive offerings that are in line with company policies just by describing their travel requirements, such as destination and dates.

But the potential of generative AI extends far beyond content generation. Consider warehouses, where delivery notes need to be matched with orders. Generative AI can automate this process or provide detailed assistance to warehouse workers, reducing manual labor.

AI-optimized business processes can also help companies continuously optimize and improve efficiency. Instead of going through each time-consuming step to analyze, monitor, modify, and automate their processes, process owners can simply describe the type of improvements they want in natural language, removing any need to write code or understand a domain-specific language, and get immediate and ready-to-configure results.

The ultimate vision is to translate all recommended process changes into actual configuration modifications within the source systems, thereby facilitating self-optimizing processes. This ambitious vision is already being realized by incorporating generative AI into SAP Signavio Process Transformation Suite.

Creating an Open Enterprise AI Ecosystem

Creating this evolution in enterprise software requires us to focus on direct investments and undertake a significant increase in research and development as well as third-party partnerships. Most recently, we announced significant partnerships with Aleph Alpha GmbH, Anthropic PBC, and Cohere . These are all generative AI market leaders with unique potential to transform entire industries working with SAP.

These partnerships complement announcements we made in May 2023 about our AI partnerships with Microsoft , Google Cloud , and IBM . We are collaborating with these leaders in the AI market to leverage state-of-the-art technology where it does not make sense for us to build it on our own. That way, we can focus on improving business insight in areas we know best. At the same time, we are doubling down on investing in areas where we have a competitive advantage and can build differentiating capabilities into our products.

At SAP, we are already riding the AI wave. Today, more than 24,000 customers have implemented over 130 AI use cases and there are more than 360 partner apps infused with AI available on the SAP Store.

The moment for organizations to redefine how they work is now. With SAP Business AI, we help our customers benefit from the power of AI by tailoring it to their unique business needs.

Thomas Saueressig is a member of the Executive Board of SAP SE.

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Jonny Evans

By Jonny Evans , Computerworld |

Appleholic, (noun), æp·əl-hɑl·ɪk: An imaginative person who thinks about what Apple is doing, why and where it is going. Delivering popular Apple-related news, advice and entertainment since 1999.

Jamf exec details how the Apple ecosystem will win the business market

Michael covington, jamf's vice president of portfolio strategy, sees a lot of room for growth by apple in the enterprise. in an interview, he spelled out why..

jamf og image

Every business is a digital business, and it's widely known that to truly realize the efficiencies of digital transformation, traditional departmental siloes must be broken down. As above, so below, and IT admins aren't immune to change as different fiefdoms merge.

During last week's  JNUC  event, I caught up with Michael Covington, Jamf vice president of portfolio strategy, to discuss these transformations and the extent to which Apple benefits .

What’s critical to understand is that the divisions between different teams within IT support are eroding as the roles of security, device management, and deployment merge to become a strategically holistic whole. The big idea is to create streamlined workflows that scale for complexity while also being consumer simple. You see evidence of this in every successful service or app, consumer, or enterprise.

Michael Covington, Jamf's vice president of portfolio strategy.

“Organizations have historically had the Mac team, the mobile team, the security team," Covington said. "I'm actually seeing shifts organizationally to bring those together. But what I care about is that the teams are able to get the tools turned on with the policies they need,”

Evidently the built-in support for standards, endpoint protection, and compliance available with Jamf’s ecosystem help, while the continued ascendancy of Apple Silicon pretty much opens the conversation around PC replacement.

Apple’s emerging opportunity

Driven by efficiency, choice, and significantly lower total cost of ownership , we’re seeing increased Mac adoption among business . That’s great for existing companies, but we live in a rapidly changing time in which some of the world’s most rapidly emerging economies are becoming sufficiently vibrant to support a growing number of new business ideas.

Does this suggest those emerging businesses will go Mac from the get-go?

Covington pointed to US start-up culture as a guide to what to expect. He observed that most US start-ups have no legacy equipment they need to keep on board, which means they can and do choose Macs . “They go straight from zero to 100 computers in no time,” he said. “I think you’re going to see something very similar in emerging economies."

It's a prediction that isn’t particularly hard to justify. After all, not only are Mac sales into US enterprises rising rapidly, but in India Apple’s deep commitment to building up its manufacturing base has translated into an 89.5% year-on-year growth in Mac sales.

Why Macs are good for business

Why are Macs, particularly managed Macs, a boon for business? In the olden days of tech, device management and security relied on different teams running different tools, and  endpoint protection wasn’t really a thing as businesses staked security on old models of perimeter protection. Mobile and BYOD changed this structure. Businesses found  they needed solutions to deploy, manage, and protect remote devices — and the continuing COVID-19 plague accelerated those pre-existing trends . Today, IT seeks zero-touch, zero-trust deployment, management, and protection. All are provided within Apple’s ecosystem and by Apple-in-the-enterprise partners such as Jamf.

“I'm amazed that we're at a point now where I'm talking about security or management as a core foundational element of our security narrative, which for me is very exciting,” said Covington. “That is interesting because that's a massive vault even in the last three years, I think, for Jamf itself.”

Your Mac is not a digital island

What is also important is that Macs usually can run the software modern enterprise needs them to run. It’s no longer correct to think that Macs are unfit for business; they even run Windows very well, at a pinch .

“What I'm getting really excited about is the applications that businesses are finally deploying to these devices that are still a little niche in the organization,” Covington said. “They're still not quite 50/50 in most organizations in terms of the split between Windows [and Macs], but Macs, and especially iPads and iPhones, they are now getting business application access.'re able to deliver not only those tools to end users on these devices, you're also able to do it in a way that actually the experience is better than it is on a Windows device….

"That is a really compelling play for more workers, especially in choice organizations, to say, 'Hey, I want a Mac,' or 'I want an iPad,' or whatever it might be,” he said. “I think it also is going to encourage more workers to take advantage of Apple’s platform capabilities."

As an aside, many industry watchers see Windows as a “ declining ecosystem ," with Apple poised to fill that void.

Generative AI for IT

An exciting announcement at JNUC involved the use of generative AI to help Mac admins do their work . The implementations should empower IT, but won’t it also make employees, already anxious at using managed devices, more concerned? Covington pointed out that the focus of the company’s work at the moment is on enabling IT, rather than focusing on end users, but he did speculate a little on the potential for automated, self-aware equipment.

“I think when you have a work-related device that is deployed for a purpose, such as perhaps an airline, where you've got a pilot who's picking up an iPad that might be fresh for that day, they may need to actually have that device configured in a certain way for it to be ready for work,” he said.

“Ready for work is going to vary significantly across those industries. I think in those situations, you can actually use AI as almost a local coach on how that individual can stand in as the role of admin and essentially configure the device if they're given the right permissions to do so.”

You can find out more concerning Jamf’s approach to genAi here .

Reaching the places Apple doesn’t reach

This stuff scales. In the US, Apple Business Manager is enabling small businesses, and once a business grows it can scale up to third-party solutions. Jamf Pro, for example, provides buckets of protection along with the ability to manage and force apps and software upgrades onto remote devices — all thanks to the AP’s Apple provides to partners.

“What's interesting to me now is how integrated the capabilities are to deploy, get people into those devices, the applications installed on those devices for productivity, and then to essentially secure end-to-end the content that is business-oriented for that organization,” Covington said.

In addition, Apple’s work with Gatekeeper and X-Protect means Mac-using businesses, even start-ups, gain pretty good security right from the start.

Building digital business stability

Jamf continues to improve its flagship Jamf Pro 11 offering . The latest iteration boasts a cleaner user interface and powerful new capabilities, such as support for declarative device management, Jamf Cloud app distribution, content distribution, automation frameworks and the ability to force devices to upgrade and get told when they do.

At its root, the company and its products augment the core Apple stack in the enterprise. Smart things Jamf is able to bring include better support for shared devices or enabling access to private clouds.

“There are a lot of capabilities we help business with that go well beyond just configuring the devices that come out of the box and making it so somebody can sign on,” he said.

Slowly but surely, piece by piece, Apple’s ecosystem is becoming the most appropriate ecosystem for any enterprise seeking digital business stability in our choice-driven, hyper-connected age.

Please follow me on  Mastodon , or join me in the  AppleHolic’s bar & grill  and  Apple   Discussions  groups on MeWe.

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Jonny is a freelance writer who has been writing (mainly about Apple and technology) since 1999.

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India's top 20 start-ups to work for, according to LinkedIn — most are new on the list

The days of easy money are over as entrepreneurs face a funding winter amid a slowing global economy — and start-ups in India are not exempt. 

According to a local report, venture funding came in at $2.19 billion from January to March, dropping from the $11.34 billion invested in the same quarter last year.

However, there are sectors that have "demonstrated resilience amid challenging times," said Pooja Chhabria, LinkedIn APAC's head of editorial. 

"Fintech remains a bright spot for investors despite the downturn, especially as we see funding on the recovery path and global tech giants eyeing fintech in India ," she added. 

"The rise of edtech also underscores the continued demand for upskilling among professionals and students, especially with rapid changes due to technologies such as AI."

We're looking at six sectors in these Asian economies, says venture capital firm

This is reflected in the "LinkedIn Top Start-ups 2023″ list for India — which is dominated by fintech-related firms but also includes two new edtech entrants. 

There are 14 new entrants this year, which is "a reflection of a booming entrepreneurial ecosystem and a spirit for innovation," Chhabria added. 

In compiling the list, LinkedIn drew on in-house data, measuring start-ups based on four aspects: employment growth, jobseeker interest, engagement, and ability to attract talent from LinkedIn's top companies.  

To be eligible, companies had to be headquartered in India and have 50 or more employees.  LinkedIn said it also lowered its age criteria from seven years or younger, to five years and below to "feature more companies in their earlier, venture stages of growth." 

Here's the full list of India's top start-ups for 2022, according to LinkedIn:

20. Fasal — IT services and consulting

19. DotPe — Software development 

18. TravClan — Software development 

17. AccioJob — E-learning 

16. Housr — Hospitality

15. Exponent Energy — Motor vehicle manufacturing 

14. StockGro — Financial services 

13. Teachnook — E-learning

12. Shyft — Wellness and fitness

11 . Jar — Financial services 

10. GrowthSchool — E-learning

9. Supersourcing — Software development

8. Sprinto — Software development

7. Fi — Financial services 

6. GoKwik — Software development

5. Skyroot Aerospace 

Industry: Defense and space manufacturing

Headquarters: Hyderabad

Full-time headcount: 260

Most common skills: Machining, aerospace engineering, manufacturing operations

Skyroot Aerospace was founded four years ago by engineers and former scientists from the Indian Space Research Organization. In 2022, it became the first private Indian company to launch a rocket into space. Skyroot Aerospace told Reuters that it's expecting at least two launches in 2024, following the success of India's Chandrayaan-3 mission .

India becomes the first country to successfully land on the moon's south pole

4. Pocket FM 

Industry: Software development

Headquarters: Bengaluru

Full-time headcount: 489

Most common skills: Writing, video, advertising 

Audio series platform Pocket FM offers audio entertainment across multiple genres and Indian languages in its library with more than 100,000 hours of content. According to the company, it serves around 80 million listeners globally.

3. Ditto Insurance

Industry: Financial services

Full-time headcount: 252

Most common skills: Communication, business management, advertising 

Founded in 2018, this fintech start-up helps users compare insurance plans, understand policies and buy insurance through its online platform. According to LinkedIn, Ditto Insurance is looking to hire "hundreds of freshers" in the coming year.

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2. BluSmart 

Headquarters: Gurugram

Full-time headcount: 620 

Most common skills: Development tools, business management, data science

BluSmart offers electric ride-hailing services in Delhi NCR and Bengaluru with its 4,500-strong electric car fleet. Founded in 2019, the start-up said it will be using its latest cash injection of $42 million to expand this fleet to 10,000 cars by the end of this year and invest in more charging stations across India.

Industry: Software development 

Headquarters: Mumbai

Full-time headcount: 1,400 

Most common skills: Business management, data science, development tools

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Antarctic winter sea ice hits 'extreme' record low

Sept 25 (Reuters) - Sea ice that packs the ocean around Antarctica hit record low levels this winter, the U.S. National Snow and Ice Data Center (NSIDC) said on Monday, adding to scientists' fears that the impact of climate change at the southern pole is ramping up.

Researchers warn the shift can have dire consequences for animals like penguins who breed and rear their young on the sea ice, while also hastening global warming by reducing how much sunlight is reflected by white ice back into space.

Antarctic sea ice extent peaked this year on Sept. 10, when it covered 16.96 million square kilometers (6.55 million square miles), the lowest winter maximum since satellite records began in 1979, the NSIDC said. That's about 1 million square kilometers less ice than the previous winter record set in 1986.

"It's not just a record-breaking year, it's an extreme record-breaking year," said NSIDC senior scientist Walt Meier.

NSIDC in a statement said that the figures were preliminary with a full analysis to be released next month.

Seasons are reversed in the Southern hemisphere with sea ice generally peaking around September near the end of winter and later melting to its lowest point in February or March as summer draws to a close.

An iceberg floats near Two Hummock Island, Antarctica

[1/2] An iceberg floats near Two Hummock Island, Antarctica, February 2, 2020. REUTERS/Ueslei Marcelino/File Photo Acquire Licensing Rights

The summer Antarctic sea ice extent also hit a record low in February, breaking the previous mark set in 2022.

The Arctic has been hit hard by climate change over the last decade, with sea ice rapidly deteriorating as the northern region warms four times faster than the global average.

While climate change is contributing to melting glaciers in Antarctica, it has been less certain how warming temperatures are impacting sea ice near the southern pole. Sea ice extent there grew between 2007 and 2016.

The shift in recent years toward record-low conditions has scientists concerned climate change may finally be presenting itself in Antarctic sea ice.

While Meier cautioned it is too soon to say, an academic article published earlier this month in the journal Communications Earth and Environment pointed to climate change as a potential factor.

The study found that warming ocean temperatures, driven mainly by human-caused greenhouse gas emissions, are contributing to the lower sea ice levels seen since 2016.

"The key message here is that to protect these frozen parts of the world that are really important for a whole number of reasons," said Ariaan Purich, a sea ice researcher at Australia's Monash University who co-authored the study, "we really need to reduce our greenhouse gas emissions."

Reporting by Jake Spring Editing by Bill Berkrot

Our Standards: The Thomson Reuters Trust Principles.

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Thomson Reuters

Jake Spring reports primarily on forests, climate diplomacy, carbon markets and climate science. Based in Brazil, his investigative reporting on destruction of the Amazon rainforest under ex-President Jair Bolsonaro won 2021 Best Reporting in Latin America from the Overseas Press Club of America ( His beat reporting on Brazil’s environmental destruction won a Covering Climate Now award and was honored by the Society of Environmental Journalists. He joined Reuters in 2014 in China, where he previously worked as editor-in-chief of China Economic Review. He is fluent in Mandarin Chinese and Brazilian Portuguese.

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