Resources and capabilities creating competitive advantage in business ecosystems

Abstract

Literature on competitive advantage is highly polarized. Competitive advantage is claimed to stem from either internal or external sources. Resource-based view dominates the internal branch while industry related aspects dominate the other. More recently a business ecosystem view has emerged to examine the external environment. The objective of this research was to combine the two lines of literature. The research questions of the study were: What resources and capabilities create competitive advantage? and What is the business ecosystem’s effect on key resources and capabilities? To answer the questions, a framework was developed based on literature and then tested empirically.

Literature review revealed that discussion on business ecosystem much focuses on company roles or strategies. In addition, the evolutionary stages of an ecosystem are central. Based on the literature review, a framework was developed linking a business ecosystem’s evolutionary stage and a company’s ecosystem strategy to resources and capabilities creating competitive advantage. For the multiple case study, a qualitative approach was chosen. A total of five semi structured interviews were conducted in four case companies to explore their ecosystem structures and competitive advantage. The case companies were to represent two kinds of ecosystem groups but after the inter-views and ecosystem analysis the cases were decided to examine uniquely.

It was discovered that business ecosystems differ on behalf of size and nature of relationships. Only one resource, employees’ skills and experience, was common to all companies. Other resources and capabilities two companies had in common were technology, rapid adaptation and relationships to stakeholders. The only connective feature in the case of technology was a tangible product. Companies having rapid adaptation as a competitive advantage both had a small ecosystem. Companies having relationships to stakeholders in common had no distinct connective feature apart from the small size of the company compared to the customer. Other resources and capabilities were company specific being for example understanding customer need, network readiness, relationships between employees and management, and references. Case companies’ ecosystem strategies or ecosystem’s evolutionary stage did not explain the differences in resources and capabilities. Thus the framework developed was to be abandoned. To fully address the research question, unstructured interviews and a quantitative study with a larger sample size is needed. Additional future research areas are the characteristics of ecosystems and the sources of competitive advantage from the customers’ point of view.