Business Ecosystems: How Do They Matter for Innovation?

More and more people are living and working in business ecosystems. We read and talk about the entrepreneurial ecosystem, the e-commerce ecosystem, and the mobility ecosystem. But we do not know enough about the key characteristics of an ecosystem that make it innovative. For some, any cluster that involves multiple types of actors—entrepreneurs, investors, intermediaries such as incubators and accelerators—constitutes an ecosystem. For others, it is a biological metaphor that, when applied to manmade systems, is only partially useful.

Precise understanding of a business ecosystem would help startup entrepreneurs and incumbent businesses compete and collaborate more effectively. This column clarifies the concept in order to identify good use and misuse of the term "ecosystem." It also elaborates its utility when businesses formulate their strategy, and when policymakers wish to promote and regulate business ecosystems.