business ecosystem

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The term business ecosystem stands in contrast to the term environment. The term environment technically means anything outside of an organization. Practically, especially in the realm of strategic management, it takes on the connotation of the most powerful frameworks. The most powerful, influential strategic management framework has been Porter's Five Forces Model that essentially defines environment as industry. This definition is not true to the intent of what needs to be considered 'environment' in order to survive, thus the term 'business ecosystem' came to reflect the more expansive view, and correct view, of environment.

The term as used in this strategic management framework --
The term business ecosystem refers to the environment containing a business organization. It is essentially the same as a business environment, ecosystem has a more provocative connotation. This connotation addresses --

  • the systems nature of the environment and the elements making up that environment, the dynamic interactions of these 'external' systems and the business organization,
  • the evolutionary nature of the environment,
  • the adaptation of the organization, and
  • the coevolution of the business organization and its environment.

The ecosystem both sustains and threatens the organization.

An alternative usage of the term --
The term business ecosystem has been used to refer to a specific type of environment where ""...clusters of companies that locate their operations in close geographic proximity to each other with a defined focus on a specific type of business or technology. Within the broader focus, these companies may be quite diverse, but they are brought together by the complementary nature of their activities and, in particular, by the perceived value in accessing shared knowledge. A variety of specialized infrastructure service businesses, including finance, legal, executive recruiting, accounting, consulting, and marketing and public relations firms, help provide some of the networks that link the practitioners in these diverse businesses. In addition, other institutions like universities and government agencies may also serve both as magnets and as network nodes within the local business ecosystem."" (Hagel III, 2005).