advantage of both economies of scale
Why do we need the notion of “
ecosystems,” when “clusters” or their
close cousin “networks” capture
much of the phenomenon? Why are
people finding it more useful to talk
in terms of “ecosystems” rather than
“clusters” today? Is this just a fad, or
is there something substantive worthy
of attention? James Moore in his 1993
Harvard Business Review article first
popularized the idea of a “business
2 But that was 25 years
ago, and we need to re-evaluate its relevance in the light of technological developments since then.
To define a business ecosystem, we
focus on a value-creating activity, such
as entrepreneurship or innovation,
rather than an industrial sector. A business ecosystem therefore tends to cover
a variety of industries. There are three
meta-characteristics of business ecosystems which, taken together, distinguish
MORE AND MORE people are living and working in business ecosystems. We read and talk about he entrepreneurial ecosystem, the e-commerce ecosystem,
and the mobility ecosystem. But we do
not know enough about the key characteristics of an ecosystem that make
it innovative. For some, any cluster
that involves multiple types of actors—
entrepreneurs, investors, intermediaries such as incubators and accelerators—constitutes an ecosystem. For
others, it is a biological metaphor that,
when applied to manmade systems, is
only partially useful.
Precise understanding of a busi-
ness ecosystem would help startup
entrepreneurs and incumbent busi-
nesses compete and collaborate more
effectively. This column clarifies the
concept in order to identify good use
and misuse of the term “ecosystem.”
It also elaborates its utility when busi-
nesses formulate their strategy, and
when policymakers wish to promote
and regulate business ecosystems.
Ecosystems: What Is
Different from Clusters?
The second half of the 20th century saw
the rise of global value chains in manufacturing covering dispersed production locations. Clusters—networks of
firms co-located in a specific region—
developed in some of these locations,
each specializing in a product. For example, the industrial districts in Emil-ia Romagna, Italy, discovered vibrant
export markets for their textiles, footwear, machinery, and machine tools.
Baden-Württemberg, Germany, has an
automotive cluster, with luxury brands
such as Mercedes-Benz and Porsche
located in close proximity to component suppliers and advanced automotive research institutes. Clusters are
more flexible and agile than vertically
integrated firms because they can take
Business Ecosystems: How Do
They Matter for Innovation?
Considering the significant interrelationship of innovation,
corporate strategy, and public policy for business ecosystems.