Transition From Supply Chains To Ecosystems

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* Article: The uneasy transition fromsupply chains to ecosystems. The value-creation/value-capture dilemma. Soumaya Ben Letaifa. Management DecisionVol. 52 No. 2, 2014pp. 278-295



"This paper uses the multidimensional definition of value – ecosystemic value – andemploys lifecycle theory to identify the different stages of evolution of value-creation and -captureprocesses in an ecosystem. Specifically, the aim of this paper is to show the uneasy transition fromsupply chains to ecosystems.

Based on a field study of a Canadian ICT ecosystem, this paperadopts a multilevel perspective on value-creation and value-capture processes and illustrates howthese processes need to move from a dyadic economic focus to a network socioeconomic one.

The findings pinpoint the uneasy transition from supply-chains management toecosystems management and provide a framework for understanding how value creation and valuecapture should be coupled throughout the ecosystem lifecycle. Finally, five theoretical and managerialpropositions are suggested to better leverage ecosystemic capabilities and better manage valuecreation and value capture in ecosystems.

Five theoretical and managerial propositions are suggested to betterleverage ecosystemic capabilities and better manage value creation and value capture in ecosystems."


From the introduction:

"A decade ago, Ulaga (2001) described the difficulty with handling and interpreting value creation and capture in a context in which businesses are increasingly organizedin networks. The trend is continuing toward “value-creating networks”(Kothandaraman and Wilson, 2001), in which individuals, customers, partners,competitors, and suppliers collaborate, value-creation processes are shifting toco-creation with multiple actors, transforming value chains into open knowledge- or competency-based networks. New multilevel methodologies and new value-creation and -capture metrics need to be developed in order to understand how value is co-created through interactions among different socioeconomic actors and replacing traditional asymmetric perspectives (firm or customer centricity).Cutting-edge social technologies have enabled ecosystems of innovation to thriveand to transform value creation into a more open and collaborative process (Adner and Kapoor, 2010). Organizations are shifting their strategy, focus, and capabilities from firm centricity to ecosystems in order to exploit open innovation opportunities (Van derBorgh et al., 2012). Traditional hierarchical models known for their efficiency (Teece, 1986; Williamson, 1979) are unsuitable in high and unpredictable technological andmarket shifts (Velu et al., 2013).

Scholars recognize the need for a more networked organizational form enabling rapid adaptation to markets and high inter-organizational collaboration with customers, competitors, partners, and suppliers (Prahalad and Krishnan, 2008). New collaborative capabilities are necessary to stimulate, capture, and exploit innovation opportunities in ecosystems (Velu et al., 2013). In the new (ecosystemic) space of collaboration and innovation, theconcept of value is being reinvented.A new multilevel and multi-actor perspective on “value,” “value creation,” and“value capture” distinguishes ecosystems from traditional value chains andtransactional networks (Gummesson, 2008; Vargo and Lusch, 2008). Indeed, with theemergence of the new service- and knowledge-based economy, the concept of value isbecoming more knowledge based, social, subjective, intangible, and complex and isshifting away from a post-industrial economic mantra (cost, efficiency, customerexpectations) (Pitelis, 2009). Value is no longer an economic equation, simply because it is a multilevel experience involving multiple actors in continuous interactions (Payne et al., 2008). Value co-creation is no longer restricted to a dyad as it involves interactionbetween at least two socioeconomic networks to which the supplier and the customerbelong (Cova and Salle, 2008; Mele and Polese, 2011). This evolution shifts value creation from a linear economic process taking place in a specific production chain to amore networked, open, and emergent process involving multiple actors, including customers and competitors (Normann and Ramirez, 1993). This network perspective challenges the underlying assumptions of industrial economics (IO) (cost and demand are known to all firms, technology and innovation are exogenous to firms, and so on) (Pitelis, 2009). In the old goods-dominant logic (Vargo and Lusch, 2008), value, value creation, and value capture are asymmetrically defined by suppliers with an IO focus.Whereas value creation is often synonymous with exchange value or the price the customer is willing to pay (Peteraf and Barney, 2003; Porter, 1985), value capture is measured by the firm’s revenues resulting from the value that it created and the price accepted by customers (Pitelis, 2009). Even in recent network- and industry-level studies, the focus remained on the firm or supplier level of analysis and atransactional-cost framework was used to assess how firms capture value (see Adner and Kapoor, 2010; Chatain and Zemsky, 2011). Yet, new forms of networks, calledecosystems, are neither firm- nor market-centric and require a novel multilevel analysis of value creation and capture.

Ecosystems are defined as the third pillar of organizational theory, and they need to be addressed differently from markets and hierarchies (Moore, 2006). Many authors are suggesting new eco-systemic methodologies and metrics to evaluate eco-systemic health (performance) (Kanter,2012; Wieland et al., 2012). The new metrics make it possible to go beyond traditionaleconomic firm-centricity and short-term vision to grasp social and community-basedvalue.

This article, based on a theoretical sampling of a critical ICT ecosystem case,explains how the value-creation and -capture processes interplay and shape the ecosystem’s lifecycle. The author observed the discourses and practices of multiple socioeconomic actors who were the instigators of value creation and capture."