The Digital Business Ecosystem
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The Digital Business Ecosystem

Edited by Angelo Corallo, Giuseppina Passiante and Andrea Prencipe

By bringing together elements of a radical new approach to the firm based on a biological metaphor of the ecosystem, this unique book extends the limits of existing theories traditionally used to investigate business networks.
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Chapter 1: The Business Ecosystem as a Multiple Dynamic Network

Angelo Corallo

Extract

1. The business ecosystem as a multiple dynamic network Angelo Corallo INTRODUCTION Recent changes (for example technological and market) in the competitive environment have profound implications on the way that organizations compete and cooperate. Whereas vertically integrated firms are reconfiguring their value chain, focusing on added value activities, small firms belonging to industrial districts are growing globally, creating loosely coupled networks of firms. Firms experiment with alternative coordination mechanisms that transcend the traditional dichotomy market and hierarchy. These mechanisms can be arranged in a continuum-like fashion, with discrete market transactions located at one end, and highly centralized firms at the other. In the middle, various intermediate or hybrid forms of organization can be found, ranging from market pole, repeated trading relationships, quasi-firms, subcontracting arrangements, franchising, joint ventures and decentralized profit centres. Powell (1990) and Castells (1996) argued that networks are a distinctive form of coordinating economic activity and it makes sense to classify any organizational structure adopting a coordination mechanism in this grey area as a business network. From Vertical Corporation to Business Network The resource-based view of the firm focuses on the capabilities of organizations to leverage specialized knowledge in order to create competitive advantage (Penrose 1959, Nelson and Winter 1982, Teece and Pisano 1994). The disaggregation of the vertical industrial firm requires capabilities of low-coupled market-based organization in order to reconfigure the organization and competencies to emerging needs and explore distant learning trajectories (Coase 1937, Williamson 1975, 1987). The Japanese keiretsu was the first...

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