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Business Models, Ecosystems, and Scale: A Unified Framework for Modern Enterprise Design
A unified framework for ecosystem-first business models, integrating value creation, delivery, capture, and governance for resilient scale.
Business Models, Ecosystems, and Scale: A Unified Framework for Modern Enterprise Design
Executive Summary
This paper presents a grounded, theory-based framework for understanding how all businesses - large and small - create and participate in ecosystems. Building on classical business model theory and extending it with ecosystem and platform scholarship, we define a comprehensive approach to designing resilient business ecosystems that do not collapse under scale. We integrate four key components:
- Value Creation
- Value Delivery
- Value Capture
- Governance
We argue that ecosystems are not optional extensions of business models but are intrinsic to how value moves and is structured in the modern economy. We also identify when and why ecosystem approaches fail, how power and surplus distribution matter over time, and how ecosystems evolve through a lifecycle that affects design choices.
1. Introduction
Traditional business model theory has focused on how a firm creates, delivers, and captures value. This view serves many types of business well but does not fully account for ecosystems - networks of organizations, individuals, technologies, and institutions that collectively shape economic outcomes. In contemporary markets, even businesses with limited geographic or transactional scope participate in broader value networks that influence their strategy and resilience.
A growing body of research shows that firms increasingly operate within business, innovation, and platform ecosystems where roles and boundaries overlap and value co-creation takes place across actors, not just within a single firm. This paper synthesizes existing theory and practice into a coherent model for ecosystems and applies it to both traditional and microbrand contexts, grounded in ecosystem research and literature reviews across business and innovation systems. (See Business and Innovation Ecosystem Review.)
2. Classical Foundations: Business Models and the Limits of Linear Thinking
A business model has long been understood as how an organization makes or intends to make money. The Business Model Canvas, introduced by Osterwalder and Pigneur, describes this through nine building blocks including value proposition, customer segments, channels, partners, and revenue streams. (See Business Model Canvas.)
This model has been effective at describing single-entity value chains where a firm produces goods or services and sells them to customers. However, it assumes:
- A single focal organization
- Linear value flow (from producer to consumer)
- Value primarily internal to the firm's boundaries
Modern marketplaces, platforms, and ecosystems demonstrate that value is often co-created by many actors, and value flows are multi-directional, involving complements, partners, users, and external contributors.
3. The Ecosystem Shift: From Firm to System of Exchange
3.1 What Is an Ecosystem?
In management and innovation research, a business ecosystem refers to a network of interdependent actors interacting to create collective value. These actors may include customers, partners, suppliers, complementors, regulators, and even competitors. Moore defined business ecosystems as economic communities supported by interacting organizations and individuals. (See Predators and Prey: A New Ecology of Competition.)
For overview definitions and origins, see Business Ecosystem Overview and Business Ecosystem Definition. Ecosystems are more than networks; they are systems with their own dynamics, shaped by interactions, governance, incentives, and shared standards.
3.2 Platforms as a Special Case
Platform ecosystems, common in digital markets, facilitate value exchanges between distinct user groups (for example, buyers and sellers in a marketplace). These are sometimes described as two-sided markets, where value grows as participation increases on both sides. (See Two-Sided Market.)
While platform thinking is vital, ecosystem thinking is broader: even non-digital firms participate in ecosystems through value networks and interdependencies.
4. The Extended Framework: Four Pillars of Ecosystem Business Models
To design and analyze resilient ecosystems, we extend classical models with an explicit fourth pillar: governance. Every business must address these four components:
4.1 Value Creation
Question: Who creates value?
In ecosystem contexts, value can be created by:
- The focal firm
- Customers
- Partners
- Independent contributors
- Complementary technologies
Value is no longer produced upstream only. It emerges from interactions among actors, often across organizational boundaries.
Design implication: For resilience, a business should enable distributed value creation, reducing dependency on a single source.
4.2 Value Delivery
Question: How does value reach participants?
Traditional models emphasize channels controlled by the firm. Ecosystems require thinking in terms of exchange architectures:
- Direct to consumer (B2C)
- Business to business (B2B)
- Consumer to consumer (C2C)
- Consumer to business (C2B)
- Marketplaces or platforms
These configurations define who can interact and under what conditions.
Design implication: Ecosystems must allow and manage multi-directional delivery paths rather than a single pipeline.
4.3 Value Capture
Question: How is economic value extracted or shared?
Value capture becomes more complex when value is co-created. Ecosystem participants may earn:
- Revenue sharing
- Fees for access or services
- Licensing income
- Usage-based payments
Understanding who captures surplus under what rules is essential.
Example: Platforms often subsidize one participant group to attract another (for example, free consumer access to attract sellers).
4.4 Governance
Question: Who sets the rules and enforces them?
Governance defines:
- Participation rights
- Standards and protocols
- Quality controls
- Dispute resolution
- Data and decision rights
Without governance, ecosystems degrade into chaos or exploitative practices. Research on ecosystem and platform governance shows this is a core part of sustainability. (See Ecosystem Roles and Governance.)
Design implication: Governance must be explicit, stable, and aligned with long-term ecosystem health.
5. Boundary Conditions: When Ecosystems Do Not Fit
Not all businesses should intentionally build broad ecosystems. Ecosystem approaches perform poorly when:
- Quality critically depends on centralized control
- Demand is limited and cannot support multi-actor participation
- Regulatory constraints restrict participant roles
- Coordination costs outweigh benefits
Explicitly identifying these conditions prevents over-engineering and strategic missteps.
6. Power, Surplus, and Distribution in Scale
As ecosystems grow, so does influence over rules and flows. Research on two-sided markets and platform envelopment shows that firms can accumulate power by controlling access, pricing terms, and standards.
Unchecked, this centralization can turn ecosystems from generative (expanding value for all) to extractive (capturing most surplus for the orchestrator). Design choices around governance and incentives determine this trajectory.
7. Ecosystem Lifecycle: Formation to Degeneration
Drawing on ecosystem research, we describe four lifecycle stages:
- Formation: Focal firm defines core value and invites participation.
- Growth: Participants create and exchange value; governance evolves.
- Stability: Distributed creation, clear rules, aligned incentives.
- Degeneration: Misaligned incentives, rule changes, extraction pressures, loss of trust.
Understanding these dynamics enables proactive management rather than reactive repair.
8. Implications for Microbrands and Small Enterprises
Microbrands can benefit from ecosystem design without needing large scale:
- Define clear value propositions that others can build on.
- Enable third-party participation in co-creation.
- Set governance mechanisms that protect quality and trust.
- Avoid dependence on external platforms without direct engagement rules.
Small ecosystems can scale horizontally within niches while staying resilient.
9. Conclusion
An ecosystem perspective is essential for understanding and designing modern business models because:
- Value creation is increasingly multi-actor, not firm-centric.
- Delivery pathways are networked, not linear.
- Value capture must account for shared surplus.
- Governance is fundamental, not optional.
By integrating classical business model theory with ecosystem and platform research, this framework supports robust design and analysis for businesses of any scale.