The concept of a Business Ecosystem Study

Business Ecosystem

The concept of a “business ecosystem” sprung from the idea and eventual development of a business environment that is dependent on entities and organizations outside of the business’ structure and systems. It is also inevitably linked with Internet and computer technologies (ICT), as information sharing is the core from which the business and its network of organizations/entities collaborate and work together (Iansiti and Levien, 2004, p. 3). From the same authors Iansiti and Levien (2004), an explanation of the process of linkages among organizations define the nature of a business ecosystem: “the destiny of many organizations is linked together, and interaction between firms has become an increasingly critical and complex phenomenon, sharing elements of both cooperation and competition through a rich network of interrelated products, services, and technologies” (p. 4). Thus, a business ecosystem defines and illustrates how a business thrives and manages to be competitive in the market or industry not only through its own operations and systems, but more importantly and inevitably, with the small and big entities that it needs to ensure that the business operates efficiently daily. A business ecosystem is a linkage of entities sharing information through Internet and computer technologies to ensure the efficient operation of its businesses.

2. In the case study, the existence of a thriving ecosystem in Wal-Mart’s operations developed innovations that ultimately strengthened its position as a dominant player or leader of the retail industry. One of the innovations developed as a result of this ecosystem is Wal-Mart’s RetailLink, which enabled its partner suppliers to determine the movement of its products/merchandise in Wal-Mart stores. Part of this system includes providing suppliers with information on products that are in demand and those that do not move from the shelves at all. From Wal-Mart’s end, RetailLink enabled the company to respond to customer demands for a particular product and/or service, and through this technology, suppliers are duly prompted, creating an efficient mechanism wherein all players in the ecosystem are satisfied: Wal-Mart, the suppliers, and the consumer. Another innovation developed from the concept of business ecosystem is Wal-Mart’s move to develop stores that respond to the demographic profile of its customers. By developing stores that especially caters to a specific demographic through information generated from its procurement system, Wal-Mart can best provide products and services that are needed in the trade area or location of the store. In the same manner, Wal-Mart expands its ecosystem by engaging small- and medium-businesses who could supply the required products and services for its specialized stores.

3. Within a business ecosystem, the opportunity to develop new innovations and creative products and services is increased, with the synergy of all entities/organizations within the ecosystem working together to ensure that these innovative and creative efforts are developed and made into a reality. Big companies benefit from the business ecosystem because it is through the novel ideas of its partners that these ideas are operationalized and marketed effectively. From the end of the small- to medium-partners in the ecosystem, they would benefit through the resources made available to them, making them realize their innovative and creative ideas. However, a disadvantage of working in an ecosystem is that companies and organizations are linked and inevitably, interdependent on each other that when one partner or member collapses, it becomes inevitable that the efficiency of the ecosystem would also suffer. And this is critical, because in a business ecosystem, “efficiency is rewarded by survival. Inefficiencyis punished by extinction” (Peltoniemi and Vuori, 2004, p. 5). Thus, the synergistic effort exerted by the members of a business ecosystem could be an advantage in the development of innovative and creative products, services, and ideas, but it can also be the catalyst that could cause inefficiency and the collapse of a business if one member fails to work efficiently within the whole ecosystem.


Iansiti, M. And R. Levien. (2004). “Framing operating and technology strategy in a business ecosystem.” Proceedings of eBusiness Research Forum.

____. (2004). “Strategy as Ecology.” Harvard Business Review.

Peltoniemi, M. And E. Vuori. (2004). “Business ecosystem as the new approach to complex adaptive business environments.” Harvard Business School (Working Paper).

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