The role of IT in business ecosystems
Authors: Kim Hyeyoung , Lee Jae-Nam , Han Jaemin 
Published: April 2010

Introduction

A closer look at the mature networks and ecological behaviors in businesses allows us to appreciate "a business ecosystem." This type of ecosystem is defined as an economic community involving many companies working together to gain comparative advantages as a result of their symbiotic relationships. Ecosystems permit companies to create new values that no company could achieve alone. Likewise, symbiotic relationships provide some benefits for related parties such as consumers and partners, among others. Information, products, and services have become commodities. Value-added and associated service levels have also become key differentiators in ensuring business sustainability. A strategy involving a company attempting to succeed by itself has proven to be limited in terms of its capacity to create valuable products or services. In view of this, it is crucial that businesses collaborate among themselves to survive in a business ecosystem.

From an ecological standpoint, the diverse interrelations among organisms in a natural ecosystem can be understood by looking at the sequence of events in an alliance and cooperation. In a business relationship, this can be seen either as similar or complementary coordinated activities performed by firms to produce superior mutual outcomes or singular outcomes with expected reciprocity over time. Therefore, it is critical to generate positive gains in business ecosystems. Companies that create healthy ecosystems ensure vitality to the business. However, from the perspective of individual companies in an ecosystem, there is no specific guideline that will help them deal with the ecosystems they belong to. There is, however, one approach that highlights the need to understand how companies create symbiotic relationships through information technology (IT). Therefore, this article attempts to provide underlying guidelines in IT which will allow companies to create healthy business ecosystems. This is achieved by conducting several rounds of in-depth interviews with practitioners in two flagship companies in the financial industry.

A business ecosystem consists of a large number of loosely interconnected companies that are dependent on one another. As a decentralized network of various relationships between companies, it shows the vision and proof of multiple contributors. These contributors banded together for a common cause even though they have different interests. This suggests that companies are predisposed to comprehend correct directions and that they work together in a complex business web.

In an ecosystem, a "keystone" is the dominant platform obtaining the greatest advantage from the ecosystem members, similar to predators dominating the highest position of the natural food web. It determines the survival of both the ecosystem and its members. If the keystone company disappears in the business ecosystem, many interrelated members associated with it also disappear because its role cannot be quickly replaced by other companies. However, it is also true that in the complex web of business, we cannot guarantee the survival of the keystone company without flagship companies. Furthermore, keystone companies are rare in a real business setup, as most companies are categorized as flagship companies in a business ecosystem.

As an ecological term, "flagship" refers to the few species that attract the most popular support. It also has a broader support distribution which covers a diversity of organisms. It arises from a few exposed key species. In business ecosystems, the focus is the "company," which means that any company can be a flagship. Furthermore, strategic leadership is mainly provided by a flagship company with closer business relationships with other companies, such as key suppliers, customers, and competitors, than a keystone company. In short, a flagship company plays a critical role as a node located in a hub-position. It links many other nodes in a business ecosystem at the same level. However, despite its substantial role, scant attention has been given to understanding a flagship company's functions in a business ecosystem.

This article intends to correct this by deriving business implications from flagship situations. Although the impact of the flagship company in an ecosystem is less substantial than that of the keystone company (see Figure 1), the flagship's healthiness is proof of its ecosystem's healthiness. Therefore, it leads to better business and ecosystem performance.