Abstract
Sussan and Acs (Small Business Economics, 49(1), 55–73, 2017) proposed the “Digital Entrepreneurial Ecosystem” (DEE), a novel framework to guide our understanding of entrepreneurship in the digital age. By integrating literatures on digital ecosystem and entrepreneurial ecosystem, they brought to attention the importance of examining entrepreneurship as an outcome of interactions between biotic and abiotic entities represented by four concepts: Digital User Citizenship, Digital Entrepreneurship, Digital Infrastructure Governance, and Digital Marketplace. This paper revisits, critiques, and refines the framework through the following reconfigurations: (1) Digital User Citizenship is reintroduced as a heterogeneous group of users differentiated by their primary activity, as either consumers or producers. (2) Digital Technology Entrepreneurship encompasses all agents that build complementary products and services connecting to platforms. (3) Digital Multi-sided Platform is the intermediary for transaction of goods and services, and also a medium of knowledge exchanges that enables and facilitates experimentation, entrepreneurial innovation, and value creation. The main contribution of the paper is in the reconfigurations that clearly lay the ground for a more sustainable DEE—one in which user privacy is protected, platform efficiency enhanced, market competition encouraged, and digital infrastructure secured.
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Notes
Jacobides et al. (2018) summarize the ecosystems literature in three: business ecosystem centered on a focal firm and its environment, innovation ecosystem centered on a particular innovation, and platform ecosystem organized around a platform. The distinction between knowledge and innovation ecosystems is in that the former is about knowledge exploration and the latter about co-creation of innovation (Valkokari 2015). The distinction between business and knowledge ecosystems are in that the objective of the former is in enhancing customer value while the latter knowledge generation (Clarysse et al. 2014). Another important distinction to keep in mind is the disciplines (e.g., sociology, strategy, information science, economics and so on) that drive these research streams.
Its focus on cooperation rather than competition marks a subtle but a substantive departure from comparable literatures in strategy and regional development. Strategy literature, such as clusters (Porter 1998), focuses on a firm’s value creation, value capture, and competitive advantage. Regional development literature, such as industrial districts (Markusen 1996), attempts to explain differences in aggregate regional performances.
Entrepreneurial ecosystems are, in a sense, related to business ecosystems when considering plausible evidence that suggests higher rate of spinoffs or spinouts in geographies with large “anchor” firms that act as a seedbed for nascent entrepreneurs (Zahra and Nambisan 2012).
Porter and Heppelmann (2015) identify three waves of information technology-driven (IT) changes. The first wave, during 1950s and 1970s, automated individual activities in the value chain. The second wave, during the 1980s and 1990s, has been driven by the rise of the internet. The first two waves gave rise to large productivity gains and growth across the economy through the transformation of the value chain. In the current third wave, they argue, IT is transforming not the process but the product itself. Smart products collect data that are used strategically for a competitive advantage.
For the purpose of this paper, platforms, digital platforms, and Digital Multi-sided Platforms are terms used interchangeably.
In the supply-side economies, average cost decrease with scale while in the demand-side economies (more commonly known as network effects), average revenue increases with scale (Shapiro and Varian 1998). Hence, industries dominated by network effects can command increasing returns to scale (Arthur 1989).
Agents include app developers and all other third-party individuals that build complementary products and services connecting to platforms.
https://www.engadget.com/2011/02/08/nokia-ceo-stephen-elop-rallies-troops-in-brutally-honest-burnin/. (Accessed December 3, 2018). Discussion of competition based on platform-centric ecosystems dates back to Katz and Shapiro (1994).
Liebowitz and Margolis (1994) differentiate the term network effects from network externality, which provide a useful distinction. In network effects, the benefit of an additional user on existing users is internalized but in network externalities, it is not.
According to Fang (2002), the scope of study for e-government includes the following interactions: Government-to-Citizen (G2C), Citizen-to-Government (C2G), Government-to-Business (G2B), Business-to-Government (B2G), Government-to-Government (G2G), Government-to-Nonprofit (G2N), Non-profit-to-Government (N2G), and Government-to-Employee (G2E).
There is a large literature in economics on market design that studies a variety of incentives and disincentives; also, topics related to search costs, pricing, allocation mechanisms, and reputation systems (Athey and Luca 2019).
Terms like “User entrepreneurship” have emerged to describe end-users such as hobbyists, who accidentally discover opportunities while using the product (Shah and Tripas 2007; Haefliger et al. 2010). In the DEE framework, “User entrepreneurship” indicates an occupational choice characterized by a transition from Digital User Citizenship to Digital Technology Entrepreneurship.
Razak v. Uber Technologies Inc., U.S. District Court for the Eastern District of Pennsylvania, Case No. 2:16-cv-00573.
To best of my knowledge, this distinction between supply-side platform users and demand-side platform users is first proposed by Eisenmann et al. (2009).
see https://techterms.com/definition/api (Accessed December 3, 2018).
see https://eugdpr.org/ (Accessed December 3, 2018)
A unicorn is a privately held startup valued at $1 billion or more.
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Acknowledgements
This paper draws on the research initiated by Sussan and Acs (2017). I thank Dr. László Szerb and participants at the entrepreneurship workshop hosted by the Center for Entrepreneurship and Public Policy, Schar School of Policy and Government, at George Mason University in October 2018 for the helpful comments and suggestions. I would like to thank especially Dr. Zoltan Acs and Dr. David Hart for helpful comments. Any remaining errors are mine.
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Song, A.K. The Digital Entrepreneurial Ecosystem—a critique and reconfiguration. Small Bus Econ 53, 569–590 (2019). https://doi.org/10.1007/s11187-019-00232-y
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DOI: https://doi.org/10.1007/s11187-019-00232-y
Keywords
- Entrepreneurship
- Ecosystem
- Matchmakers
- Digital infrastructure
- Digital governance
- Digital citizenship
- Multi-sided platforms
- Information technologies