A business ecosystem is the community of organisations that affect, and are affected by, a firm, usually across several industries. Suppliers, partners, customers, regulators and rivals all belong. Their fortunes are linked, so they change together over time.
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Key factors
- A healthy keystone. The firm at the centre sets direction and shares value. If it takes too much, or stumbles, the members suffer with it.
- Shared fate. Members gain when the ecosystem grows, so they have reasons to invest in it even without a contract.
- Fluid roles. Roles are less fixed than in a supply chain. A supplier can become a partner, a rival or a leader as the ecosystem changes.
- Cooperation and competition at once. Members work together to grow the market and compete for their share of it. Too much of either weakens the whole.
Examples
Xiaomi. Xiaomi started with phones, then backed a wide network of start-ups making connected products, from rice cookers to air purifiers. By the end of 2024 its platform linked more than 900 million devices. In March 2024 its first car, the SU7, joined the same app and accounts. Partners sell under Xiaomi’s brand and app, so a buyer of one partner’s product is a ready customer for the others.
Grab. Grab began as a taxi-booking app in Malaysia in 2012 and later moved its headquarters to Singapore. It now offers rides, food delivery, payments and loans in eight Southeast Asian countries, and drivers, restaurants, banks and regulators all shape how well each service works. Its own role has shifted too. In 2022 it opened GXS Bank, a digital bank in Singapore, with the telecoms firm Singtel.
Frequently asked questions
What is the difference between a business ecosystem and a supply chain?
In a supply chain the lead firm decides what is supplied, by whom and at what price. In a business ecosystem, members keep control of their own offers and prices.
Is a business ecosystem the same as an innovation ecosystem?
No. A business ecosystem centres on a firm and everything around it. An innovation ecosystem centres on one innovation and only the partners needed to deliver it.
Can a small company be part of a business ecosystem?
Yes. Most members are small, such as app developers, local sellers or specialist suppliers. Their success depends on the health of the wider ecosystem as well as on their own work.
Who first used the term business ecosystem?
James Moore, in a 1993 Harvard Business Review article called “Predators and Prey”. He borrowed the idea from biology to argue that firms rise and fall with the communities of businesses around them.
How do you map a business ecosystem?
Start with the firm and list everyone whose decisions affect its customers, from suppliers and partners to regulators and rivals. Then mark who depends on whom, and where the firm has influence but no control.
Full guide: What is a business ecosystem?