What is a Business Ecosystem?

A business ecosystem is an idea used to describe the whole of the factors, in nature and in business, that contribute to the success or failure of a business. The term most often appears in the fields of evolutionary economics, also called ecological economics, which is a field focused on comparing businesses to life forms and the systems found in the natural environment.

Evolutionary economics views the business as a life-form created with the purpose of making a profit. This field uses the metaphor of life and the ecosystem to explain financial principles and understand economic changes. Complex in structure, a business ecosystem is made up of many parts, including partnering businesses and organizations, competitors within the same field, and laws and government, as well as employees, contractors, the availability of resources, and earth and environmental conditions.

Evolutionary economics examines the interactions of components of a business ecosystem, how the ecosystem's components tend to affect other parts of the ecosystem, and how those interactions change the business ecosystem as a whole. Many theories presented in evolutionary economics are in contrast with classical and neoclassical economic theories, which hold that the free market automatically works to improve itself for the good of the people. Proponents of the use of the business ecosystem metaphor used in evolutionary economics argue that an economic system does not as a whole reach for a greater purpose. This means that as companies are battling for a piece of the available resources, they are not necessarily together striving for the greater good.

Companies generally have to work together to coordinate production, marketing, and distribution of products and services. As for-profit life forms in a business ecosystem, companies have to compete for the resources they need to keep the business alive and profitable. Resources can include land space, the materials needed to make a product, or the money needed to keep the business going. Businesses that work within the same market must compete for customers as a resource.

In evolutionary economics, the Earth is considered to be part of the economic ecosystem along with the companies. Changes in each part of the system impact many connected parts of an economic network. As the actions of business begin to affect the environment, with pollution, oil spills, deforestation and resource depletion, the changes in the environment will cause business changes that affect the financial economy. If a fishing company overfishes an area of the ocean and causes the fish to disappear, even for a time, the disappearance of the fish will impact the economy of an extensive chain of interdependent businesses, extending from fishermen, fish sellers, and grocery stores to food manufacturers, restaurants, and food-shopping consumers.