Strategizing the Co-Developments of Business Models and Ecosystems for Platforms

Abstract

Business Models and Ecosystems represent two important theoretical lenses for understanding value creation (and subsequent value capture). Each perspective brings great insights to understanding platform firms. When explaining platform’s value creation and capture mechanism, strategy scholars tend to focus on just one perspective. While each perspective has usefully explained mechanisms for value creation and capture and acknowledged the conceptual significance of another, interactive aspect between them has been under-explored. We suggest that bringing the two perspectives together brings added insights, especially in the cases where complementors can both create and destroy value. This paper advances theory by offering a preliminary integrated framework . Building on interdependencies as foundations of both ecosystem and business model, it shows how platform entrepreneurs can choose to design different interdependencies on a same service. With each design choice having different implications for both scale and scope, entrepreneurs can co-develop both platform business model and ecosystem. The integral view offers theoretical insights on 1) platform competitive dynamics, 2) changes in value creations and capture mechanisms understood as business model / ecosystem changes, and 3) entrepreneurial opportunity formations.