Competition and cooperation in a platform-based business ecosystem within complementary partners

Abstract

In today’s competitive business landscape, adopting business ecosystems has emerged as a pivotal strategy to enhance supply chain efficiency. This study employs a game-theoretic framework to investigate the dynamics of a manufacturer establishing a business ecosystem by collaborating with a partner on a supply chain platform. The partner, in turn, offers complementary products to consumers, thereby fostering a symbiotic relationship within the ecosystem. Motivated by the need to understand the implications of such business ecosystems, this study explores their effects on firms operating in the competitive market. Additionally, we examine the impacts of two distinct advertising strategies: product-focused and platform-oriented advertising strategies. Our analytical results reveal several interesting findings. First, forming a business ecosystem based on a supply chain platform increases profits for both the manufacturer and the partner. Furthermore, our findings demonstrate that the manufacturer should selectively adopt a platform-oriented advertising strategy based on the magnitude of the platform advertising effect. Moreover, we uncover that the partner’s product-focused advertising strategy fosters a win-win outcome for all firms in the market, ensuring economic sustainability, particularly in the face of intermediate-level market competition. This research provides insightful recommendations for understanding the dynamics of the supply chain, shedding light on the strategic decisions and advertising strategies that drive efficiency within such ecosystems.