Business Ecosystem Health and Risks

Business ecosystem theory is closely related to the value network risk management consideration. A business ecosystem can be oirtlined as the enviromnent beyond the core business and the value network. Sometimes the term business ecosystem has been used more as a conceptualization or analogy to value networks. As defined by lansiti and Levien (2004), the business ecosystem can be seen as interdependencies between several business actors and the business environment in which they operate. 

According to lansity and Levien (2004), there are strong parallels between business networks and biological ecosystems. They recommend that companies should systematically identify the organizations with which their future is most closely intertwined and determine the dependencies that are most critical to their business. When a company can be dependent on hundreds or even thousands of other businesses, it is obvious that the members of a network can rise and fall together. The rise and fall of the Internet business can be seen as an example of this kind of a common fate in an ecosystem. 

A business ecosystem should survive unforeseen technological change, just like a biological ecosystem must tolerate environmental changes. The health of the ecosystem is an important indicator of how the ecosystem is able to produce value and share it between the members of the system. From the risk management standpoint, companies should position themselves within the business ecosystem that is most able to generate value now and also into the future, and which is committed to sharing wealth with its members. 

The evolution of the business ecosystem provides a framework for considering the strategies and relationships in the value networks in terms of the business life-cycle. Here the business ecosystem characterizes the opportunity and risk environment which allow different value networks and core businesses to grow and co-evolve. According to Moore (1996), this co-evolution is defined as a 

The focus of the niche strategy is specializing in capabihties needed in the ecosystem domain. Niche player advantage in the ecosystem is created by leveraging and developing the critical assets and capabilities needed in the ecosystem. One example of a niche player is the application developer for a standard platform product. The niche players are dependent on the existing solutions and develop complementary components to support the effectiveness of these solutions. The risk of the niche strategy is that the value of complementary resources and the capabihties of the niche actors depend on the success of the ecosystem platform. 

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