Knowledge creation gives competitive advantage in modern business
The metaphor “ecosystem” has become increasingly popular in business theory. But what does it actually mean, and how can it be used to achieve competitive advantages? In a new dissertation in industrial marketing, the concept is investigated and empirically evaluated.
The dynamics of competition, as we’ve traditionally come to know it, have changed. Extant theories relating to competitive advantage have at their core, the ownership or exclusive access to assets and certain resources or capabilities. This assumes that businesses operate in a stable environment where asset ownership and firm-managed resources serve as assured capitalizing sources of advantage. In an increasingly unpredictable and fast-changing business environment, these sources of advantage, however, become less effective at building or sustaining competitiveness. Recent events, like the Coronavirus pandemic, have exposed the vulnerabilities of firms and organizations whose competitive advantage is solely nested in the ownership of unique physical assets.
Interdependent actors in collaboration
In this new environment the metaphor “ecosystem”, derived from natural sciences, has become increasingly popular. As popular concepts tend to do, ecosystem runs the risk of becoming watered out, meaning virtually anything. Thus, to clarify the concept, the thesis makes a thorough review of the literature in the field deducing that an ecosystem is an organizational structure of dynamic networks that encompasses interdependent entities/actors that co-evolve and collaborate to create and exchange value for its participants.
An example of a business ecosystem in industrial marketing would be Alibaba, a Chinese cross-border eCommerce technology company.
“It comprises a diverse set of interdependent actors that have coevolved for the sake of a shared business goal: to provide infrastructure to make it easy to do business anywhere. One actor is AliExpress which provides an online marketplace for business to sell directly to customers. Another is Alipay which is an online platform to facilitate different transactions”, says Jeandri Robertson, the author of the thesis.
Knowledge creation is important
Through a theoretical analysis and empirical studies Jeandri Robertson draws the conclusion that knowledge creation plays a key role in attaining competitive advantage in an ecosystem. Furtherly, it is the relationships between the various actors in the ecosystem that drive the knowledge-related advantages of the whole ecosystem. Finally, knowledge seems to best create competitive advantage when shared.
Based on her findings Jeandri Robertson proposes some strategies for businesses to achieve competitive advantages in an ecosystem environment. First, businesses should move away from seeking to establish superiority over other external competitors, towards investing in connections, which serves to build the overall competitiveness of the whole ecosystem. Second, businesses must become aware of the dependency on resources and capabilities outside of the direct control of any one particular entity in an ecosystem. Third, they should move away from creating high barriers to entry – rather, newcomers are welcomed, as long as they can add value and grow the market. Fourth, advantage is achieved by creating value for other actors in the ecosystem as much as seeking to create value for one’s own organization.
“Understanding ecosystem is vital for contemporary companies. In 1980, the average lifespan of a company in the Standard & Poor list of the 500 largest companies on the US stock exchanges was 35 years. By 2025 the lifespan of an average company is projected to decrease to less than 15 years. the performance of firms is derived from something much larger than the companies themselves: the success of their respective ecosystems”, says Jeandri Robertson.