Internal Dynamics of Business Ecosystems: A Network Approach

Abstract

Scholarly interest in business ecosystems has seen a steady increase over the past decades. Surprisingly, while many studies have dealt with theoretical approaches, the architecture or outcomes of ecosystems, literature on their internal dynamics remains scarce. Without understanding these dynamics, however, our understanding of business ecosystems remains incomplete. In this paper, we investigate the dynamics of business ecosystems in the pharmaceutical sector, arguing that firms exhibit different partner selection mechanisms depending on which attribute they choose their partners on. Specifically, we propose that firms will show tendencies for aspiration when considering the size of potential partners, homophily when considering their inventiveness and conformity when considering their profitability. Applying a longitudinal network approach, we empirically test our hypotheses on the business ecosystems of four major US-based pharmaceutical firms, which we observed over a 4-year period from 2016 to 2019. Our results give a nuanced depiction of the mechanisms underlying the creation and dissolution of partnerships in business ecosystems. With the exception of conformity as the dominant mechanism regarding profitability, our results support our predictions.