Modelling the Emergence and Evolution of
e-Business Ecosystems from a Network Perspective
Ruize GAO1, Zhenji ZHANG1,
Zhihong TIAN1, Xiaolan GUAN2, ANG LI3
1 School of Economics and Management, Beijing Jiaotong University
3, Shang Yuan Cun, Haidian District, Beijing, BJ, 10, China firstname.lastname@example.org; email@example.com; firstname.lastname@example.org
2 Beijing Institute of Graphic Communication
1, Xinghua Avenue (Band Two), Daxing District, Beijing, BJ, 10, China email@example.com
3 School of Business, Renmin University of China
59, Zhongguancun Street, Haidian District, Beijing, BJ, 10, China firstname.lastname@example.org
Abstract: In recent years, we notice that the cooperation and competition among enterprises become much more complicated. Managers have to pay more attention to external cooperation from an ecological view. As e-business adoption becomes more pervasive, business ecosystems are shifting to e-business ecosystems. Because the situation is becoming more serious, in order to control the e-business ecosystem and earn profit from it, it is necessary for us to learn its structure and evolution. From the perspective of network science, this paper tries to connect complex network theories with e-business ecosystem research. We firstly analyse network structure of e-business ecosystem. Then an evolutionary model is proposed to describe the emergence and evolution of it. We finally use simulation and empirical methods to valid the theory we proposed.
Keywords: business ecosystem, e-business ecosystem, e-business, ecological evolution, complex network.
CITE THIS PAPER AS:
Ruize GAO, Zhenji ZHANG, Zhihong TIAN, Xiaolan GUAN, ANG LI, Modelling the Emergence and Evolution of e-Business Ecosystems from a Network Perspective, Studies in Informatics and Control, ISSN 1220-1766, vol. 22 (4), pp. 339-348, 2013. https://doi.org/10.24846/v22i4y201309
Decades ago, managers used to pay attention mostly on external competition. However, information and communications technology has dramatically changed business environment as well as the business models, especially for the last two decades. With the expanding market boundary and the increasingly fierce market competition, it became increasingly difficult for a single firm to succeed and thrive alone. This situation of firms becomes similar to that of individual plants and animals. Therefore, people begin to think deeply about the disadvantages of excessive competition and attach importance to external collaboration. It is proved that collaboration among supply chain partners could reduce inventory levels because of aggregation and that there is generally an overall benefit of collaboration. (Bhoon, & Wadhwa, 2004) The profit levels of the whole supply chain and its companies are found to increase because of exchanging information through collaboration. (Jorge, Josefa, Raul, & Juan, 2011) Also, inter-firm collaboration brings larger potential for knowledge creation especially for alliance networks “exhibit both high clustering and high reach”. (Schilling, & Phelps, 2007) There are positive effects that this kind of collaboration, especially which between users and producers or between competitors, has on company competitiveness and performance. (Álvarez, Marin, & Fonfría, 2009) An example of this kind of collaboration is collaborative filtering recommendation for e-business e-retailers. (Jing, & Liu, 2013)
In 1993, Moore put forward a new concept, business ecosystem. He presented the view that a company should be seen as a part of a business ecosystem instead of a member of an industry. And he indicated that, “in a business ecosystem, companies co-evolve capabilities around a new innovation: they work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations”. (Moore, 1993) The concept of business ecosystem has a great influence on later studies. (Moore, 1996; Levien, 2004; Peltoniemi, & Vuori, 2004; den Hartigh, Tol, & Visscher, 2006; Anggraeni, Den Hartigh, & Zegveld, 2007; etc) There are also several relative concepts, including industrial ecosystem, economy as an ecosystem, digital business ecosystem, etc. (Peltoniemi, & Vuori, 2004).
For the past years, the Internet has had a profound effect on the economy. Firms began to adopt e-business to assist and improve their internal and external business processes. It implies “changes in the firm’s strategy, management and marketing”. (Bordonaba-Juste, Lucia-Palacios, & Polo-Redondo, 2012) E-business adoption impacts performance by promoting both intra- and inter-organizational collaboration. (Sanders, 2007) “The overall intensity of e-business adoption” had a significant influence on measures of performance including efficiency, sales performance, customer satisfaction, and relationship development. (Wu, Mahajan, & Balasubramanian, 2003) With the pervasive adoption of e-business, there was a notable shift from business ecosystem to e-business ecosystem. Nowadays, every firm has inevitably become a part of an e-business ecosystem and occupied a certain status in it. “The concept of e-commerce ecosystem is derived from business ecosystem” and “it is an inevitable form when business ecosystem develops to an advanced stage”. (Liu, Tian, & Guan, 2013) Therefore, it is time to concern on some new characteristics of e-business ecosystem.
We define an e-business ecosystem as an ecosystem in which, through Internet and with the support of ICT, all organizations (including suppliers, customers, logistics companies, financing institutions, certification authority, e-commerce platform providers, software companies, application providers, etc.) and individuals communicate and interact with each other to achieve co-evolvement. The technical environment of an e-business ecosystem weakens time and space boundaries. Enterprises have to enhance core competence and complementary advantages to survive. Conversely, organizations and individuals also influence the environment of ecosystem: they affect policy, regulations as well as social ideology and promote technical progress.
In e-business ecosystem, the ever-intense competition demands enterprises attaching much more importance on external collaboration. This kind of collaboration is to the benefit of mutual assistance, resources reassignment and the evolvement of the community. Competition is more common among communities. As the former president of PayPal, Scott Thompson once pointed out an interesting but universal thing about Internet to be that, in Internet age, two enterprises may cooperate for part of business while competing intensely. In this paper, we call competition-cooperation relationship co-opetition. (Brandenburger, & Nalebuff, 1997) By now, there are few studies on structure and evolution of it from a global view.
But obviously, this kind of study is of great significance in terms of promoting economic achievements and ecosystem evolvement. With the adoption of e-business, business ecosystem has become increasingly complicated. From a network perspective, it is notable that co-opetition in e-business ecosystem has formed into a network instead of simple bilateral relations.
(Ritter, Wilkinson, & Johnston, 2004; Anggraeni, Den Hartigh, & Zegveld, 2007; Battini, Persona, & Allesina, 2007; Braha, Stacey, & Bar-Yam, 2011; etc) However, it has become difficult to accurately and efficiently describe the structure and dynamic changing of this kind of networks.
Meanwhile, complex network theory has been developed rapidly and had numerous theoretical achievements. (Watts, & Strogatz, 1998; Barabási, Albert, & Jeong, 2000; Bianconi, & Barabási, 2001; Li, & Chen, 2003; Barrat, Barthélemy, & Vespignani, 2004; Costa, Rodrigues, Travieso, & Villas Boas, 2007; Liu, Slotine, & Barabási, 2011; etc) Based on complex network theory, real social networks can be quantitatively described and analysed by methods and tools of statistical physics. It has been widely applied in several research fields. Several studies have showed that business network display some general features of complex networks. (Braha, Stacey, & Bar-Yam, 2011; Chen, & Lin, 2012; etc) For example, supply chain network is “with the characteristics of small-world network and scale-free network”. (Chen, & Lin, 2012) Therefore, it might be a practical tool for studying e-business ecosystem from a global view. Important theories of complex networks, like evolution, dynamics of spreading and synchronization, would have much practical significance in this study. By making use of them, it brings convenience to analyse the emergence and evolution of e-business ecosystem precisely. And it may bring new insights in improving the business system.
In section 2, we propose a conceptual network for an e-business ecosystem by setting nodes and edges. In Section 3, the structural characteristics of the network are analysed. In section 4, in consideration of real features, this paper develops a dynamic network model to describe the emergence and evolvement of e-business ecosystems. Following that, there is the simulation work. In section 5, by taking SMEs on the third party e-commerce platform Alibaba.com as an example, we come to some practical implications through an empirical research.
- ÁLVAREZ, I., R. MARIN, A. FONFRÍA, The Role of Networking in the Competitiveness of Firms, Technological Forecasting and Social Change, vol. 73, no. 3, 2009, pp. 410-421.
- ANGGRAENI, E., E. DEN HARTIGH, M. ZEGVELD, Business Ecosystem as a Perspective for Studying the Relations between Firms and Their Business Networks, In ECCON 2007 Annual meeting, 2007, October.
- BARABÁSI, A. L., R. ALBERT, H. JEONG, Scale-free Characteristics of Random Networks: the Topology of the World-Wide Web, Physica A: Statistical Mechanics and its Applications, vol. 281, no. 1, 2000, pp. 69-77.
- BARRAT, A., M. BARTHÉLEMY, A. VESPIGNANI, Modeling the Evolution of Weighted Networks, Physical Review E, vol. 70, no. 6, 2004, pp. 066149.
- BATTINI, D., A. PERSONA, S. ALLESINA, Towards a Use of Network Analysis: Quantifying the Complexity of Supply Chain Networks, International Journal of Electronic Customer Relationship Management, vol. 1, no. 1, 2007, pp. 75-90.
- BHOON, K. S., S. WADHWA, Challenges and Opportunities in Information Enabled Supply Chain Collaboration, Studies in Informatics and Control, vol. 13, no. 4, 2004, pp. 285-294.
- BIANCONI, G., A. L. BARABÁSI, Competition and Multiscaling in Evolving Networks, EPL (Euro Physics Letters), 2001, vol. 54, no. 4, p. 436.
- BORDONABA-JUSTE, V., L. LUCIA-PALACIO, Y. POLO-RRDONDO, Antecedents and Consequences of e-Business Adoption for European Retailers, Internet Research, vol. 22, no. 5, 2012, pp. 532-550.
- BRAHA, D., B. STACEY, Y. BAR-YAM, Corporate Competition: A Self-organized Network, Social Networks, vol. 33, no. 3, 2011, pp. 219-230.
- BRANDENBURGER, A. M., B. J. NALEBUFF, Co-Opetition: A Revolution Mindset That Combines Competition And Cooperation: The Game Theory Strategy That’s Changing, Currency Doubleday, 1997.
- CHEN, H. H., A. M. LIN, Complex Network Characteristics and Invulnerability Simulating Analysis of Supply Chain, Journal of Networks, vol. 7, no. 3, 2012, pp. 591-597.
- COSTA, L. D. F., F. A. RODRIGUES, G. TRAVIESO, P. R. VILLAS BOAS, Characterization of Complex Networks: A Survey of Measurements, Advances in Physics, vol. 56, no. 1, 2007, pp. 167-242.
- den HARTIGH, E., M. TOL, , W. VISSCHER, The Health Measurement of a Business Ecosystem, Proceedings of the European Network on Chaos and Complexity Research and Management Practice Meeting, 2006, October.
- FREEMAN, L. C., Centrality in Social Networks Conceptual Clarification, Social Networks, vol. 1, no. 3, 1979, pp. 215-239.
- JING, Y., H. LIU, A Model for Collaborative Filtering Recommendation in E-Commerce Environment, International Journal of Computers Communications & Control, vol. 8, no. 4, 2013, pp. 560-570.
- JORGE, E. H., M. JOSEFA, P. RAUL, P. JUAN, A Multiagent Negotiation Based Model to Support the Collaborative Supply Chain Planning Process, Studies in Informatics and Control, vol. 20 , no. 1, 2011, pp. 43-54.
- LEVIEN R., The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability, Harvard Business School Press, 2004.
- LI, X., G. CHEN, A Local-world Evolving Network Model, Physica A: Statistical Mechanics and its Applications, vol. 328, no. 1, 2003, pp. 274-286.
- LIU, H. L., Z. H. TIAN, X. L. GUAN, A New Conceptual and Evolution Model for E-commerce Ecosystem, AISS: Advances in Information Sciences and Service Sciences, vol. 5, no. 4, 2013, pp. 630-638.
- LIU, Y. Y., J. J. SLOTINE, A. L. BARABÁSI, Controllability of Complex Networks, Nature, vol. 473, no. 7346, 2011, pp. 167-173.
- MOORE, J. F., Predators and Prey: a New Ecology of Competition, Harvard Business Review, vol. 71, no. 3, 1993, pp. 75-75.
- MOORE, J. F., The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems, New York: Harper Business, 1996.
- PELTONIEMI, M., E. VUORI, Business Ecosystem as the New Approach to Complex Adaptive Business Environments, Proceedings of E-business Research Forum, 2004, pp. 267-281.
- RITTER, T., I. F. WILKINSON, W. J. JOHNSTON, Managing in Complex Business Networks, Industrial Marketing Management, vol. 33, no. 3, 2004, pp. 175-183.
- SANDERS, N. R., An Empirical Study of the Impact of E-business Technologies on Organizational Collaboration and Performance, Journal of Operations Management, vol. 25, no. 6, 2007, pp. 1332-1347.
- SCHILLING, M. A., C. C. PHELPS, Interfirm Collaboration Networks: The Impact of Large-Scale Network Structure on Firm Innovation, Management Science, 2007, vol. 53, no. 7, pp. 1113-1126.
- WATTS, D. J., S. H. STROGATZ, Collective Dynamics of ‘Small-world’ Networks, Nature, vol. 393, no. 6684, 1998, pp. 440-442.
- WU, F., MAHAJAN, V., S. BALASUBRAMANIAN, An Analysis of E-business Adoption and Its Impact on Business Performance, Journal of the Academy of Marketing Science, vol. 31, no. 4, 2003, pp. 425-447.