DETERMINANTS OF EMERGENCE AND EVOLUTION OF BUSINESS ECOSYSTEMS

Abstract

The emergence of business ecosystems signifies a pivotal shift in economic value creation and capture, yet existing research has inadequately explained the structural conditions driving this transformation. Building on James Moore’s seminal 1990s work, which conceptualized business ecosystems as networks of interconnected organizations driven by shared purpose and collaborative innovation, this article delves deeper into how the historical evolution of coordination mechanisms, technological architectures, and value appropriation systems necessitated ecosystem structures. We argue that ecosystems represent a distinct coordination mechanism that emerged when traditional structures proved inadequate to manage the increasing complexity of complementarity. Our analysis reveals that ecosystem emergence followed a path-dependent trajectory shaped by three fundamental economic forces: increasing returns to coordinated technological innovation, rising costs of maintaining hierarchical control over complementary assets, and growing value of standardized interfaces for managing multilateral dependencies. Aligned with Moore’s observations of the 1990s’ rapidly evolving technological landscape, we demonstrate that these forces rendered traditional organizational boundaries inefficient for value creation, necessitating new structural arrangements to accommodate complex complementarities without full hierarchical control. Through systematic historical analysis, we identify distinct phases in business ecosystem evolution, each marked by specific coordination challenges that existing organizational forms could not effectively address. From Moore’s emphasis on human relationships and trust-based collaboration, we posit that ecosystem structures emerged not merely as a strategic choice but as an efficient solution to the growing complexity of value creation in environments characterized by strong complementarities and the need for autonomous innovation. This pattern is particularly evident in sectors where technological interdependence created coordination challenges that neither markets nor hierarchies could efficiently resolve, exemplifying Moore’s vision of organizations collaborating to pursue shared dreams and purposes.