Business Models as Ecosystems' Activity Modules

The conceptualization of two concepts – business models and ecosystems – has been developing independently from one another, while sharing several common attributes. Both have been conceptualized as systems of interdependent activities, both revolve around a particular focal value proposition, and both emphasize the requisite alignment for successful value creation and resilience. Despite evident shared features, there have been no attempts to integrate the two constructs as conceptually common phenomena on two distinct levels.
This paper argues that business models can be seen as activity modules that comprise business ecosystems. In other words, ecosystems are not comprised of firms which are often viewed as bundles of property rights, knowledge structures, or customer portfolios. Rather we should look at ecosystems as comprised of business models of participating firms, as both concepts have value activities as their basis.
This work draws from complexity and modularity theory and develops a framework to argue that a distinct business model is an activity module of an ecosystem, which in turn is a hybrid form between markets and hierarchies that enables greater capacity for simultaneous complementarities and coordination. Modularity as an enabler of mix-and-match configuration and an approach to mitigate complexity, allows for greater economies of specialization, while concurrently coordinating cocreation by means of standardized interfaces. This paper argues that holding other factors constant, technology as the enabler of new means for standardization will prompt further disintegration of industries and ecosystems into more fine-grained activity modules, and enable to embed sustainable values at the core of cocreation.