Strategy and the Hybrid Structure of Ecosystems

Purpose: Despite the recent surge of interest in the concept of business ecosystem its nature remains poorly understood, with various conceptualizations developed in separate streams of literature. The aim of the paper is to develop an integrated perspective on ecosystems that would help managers better understand changing organizational landscape and inform strategic decision making.

Design/methodology/approach: The paper is built on a narrative conflict between the conceptualizations of business ecosystem as either firm environment or governance structure, and on discrepancy in treatment of coordination and other strategic interactions. We first map out the conceptual landscape of the topic, comparing ecosystems with alternative arrangements (industries, and markets and hierarchies, respectively). Then we introduce and apply the concept of strategic interactions as a novel theoretical perspective to design an integrated framework of business ecosystems.

Findings: Firm-level strategic interactions (competition, cooperation and coordination) taking place in the ecosystem (viewed as a form of environment) can and should get into strategic interactions with ecosystem-level coordination mechanisms (ecosystem as a governance structure), affecting on the one hand competitiveness of individual members of the ecosystem and the whole structure, and, on the other, boundaries of the ecosystem.

Research limitations/implications: Propositions concerning the interface between firm-level strategic interactions and ecosystem-level governance open up new lines of inquiry for management and organizational scholars and computer scientists, and invite their cooperation, e.g. in algorithmic governance.

Practical implications: Richer understanding of the nature of ecosystems helps managers make better informed strategic decisions concerning the nature of relations with other organizations.

Originality/value: The paper presents new theoretical arguments on the hybrid nature of ecosystems. It emphasizes an increased role of coordination in strategy and ecosystem development and calls for its wider coverage by strategy scholars.