Skip to main content

The digital transformation of a traditional market into an entrepreneurial ecosystem

Abstract

Information and Communication Technologies (ICT) are transforming the business models and entrepreneurial ecosystems of different economic activities. As a result, the survival of some of these activities, especially physical markets, is under threat. This article aims to shed light on the distinct e-commerce mechanisms of wholesale markets that enable transforming and upgrading their ecosystem. The study combines insights from the scholarly debate on ecosystems, wholesale markets, and e-commerce with the empirical findings of a case study (a wholesale fruit market in Chongqing, China). By exploring the mechanisms and outcomes of e-commerce, this article shows that ICT adoption can be a threat as well as an opportunity for wholesale markets. On the one hand, transaction costs and marketing channel power might make physical wholesale markets less attractive for wholesalers and customers. On the other hand, network effects and business model innovation can enhance the traditional wholesale advantages of physical markets, in turn transforming and upgrading this traditional ecosystem into an entrepreneurial one.

This is a preview of subscription content, access via your institution.

Fig. 1

References

  • Acs ZJ, Stam E, Audretsch DB, O’Connor A (2017) The lineages of the entrepreneurial ecosystem approach. Small Bus Econ 49:1–10

    Google Scholar 

  • Adner R (2017) Ecosystem as structure: an actionable construct for strategy. J Manag 43:39–58

    Google Scholar 

  • Álvarez SA, Young SL, Woolley JL (2015) Opportunities and institutions: a co-creation story of the king crab industry. J Bus Ventur 30:95–112

    Google Scholar 

  • Alvedalen J, Boschma R (2017) A critical review of entrepreneurial ecosystems research: towards a future research agenda. Eur Plan Stud 25:887–903

    Google Scholar 

  • Amit R, Zott C (2001) Value creation in e-business. Strat Manag J 22:493–520

    Google Scholar 

  • Amit R, Zott C (2012) Creating value through business model innovation. MIT Sloan Manag Rev 53:41–49

    Google Scholar 

  • Audretsch DB, Belitski M (2017) Entrepreneurial ecosystems in cities: establishing the framework conditions. J Technol Transf 42:1030–1051

    Google Scholar 

  • Audretsch D, Cunningham J, Kuratko D, Lehmann E, Menter M (2019) Entrepreneurial ecosystems: economic, technological, and societal impacts. J Technol Transf 44:313–325

    Google Scholar 

  • Auerswald PE, Dani L (2017) The adaptive life cycle of entrepreneurial ecosystems: the biotechnology cluster. Small Bus Econ 49:1–21

    Google Scholar 

  • Baake P, Boom A (2001) Vertical product differentiation, network externalities, and compatibility decisions. Int J Ind Organ 19:267–284

    Google Scholar 

  • Bakos Y (2001) The emerging landscape for retail e-commerce. J Econ Pers 15(1):69–80

    Google Scholar 

  • Ballestar MT, Grau-Carles P, Sainz J (2019) Predicting customer quality in e-commerce social networks: a machine learning approach. Rev Manag Sci 13:589–603

    Google Scholar 

  • Barrowclough M, Boys KA, Carpio C (2019) Benefits, challenges and trade-offs: buyer and contract characteristics valued by small farm suppliers to wholesale marketing channels. J Agric Resour Econ 44:605–623

    Google Scholar 

  • Beliaeva T, Ferasso M, Kraus S, Damke EJ (2019) Dynamics of digital entrepreneurship and the innovation ecosystem. Int J Entrep Behav Res 26:266–284

    Google Scholar 

  • Boiko V, Kwilinski A, Misiuk M, Boiko L (2019) Competitive advantages of wholesale markets of agricultural products as a type of entrepreneurial activity: the experience of Ukraine and Poland. Econ Ann XXI 175:68–72

    Google Scholar 

  • Bouncken RB, Kraus S, Roig-Tierno N (2019) Knowledge- and innovation-based business models for future growth: digitalised business models and portfolio considerations. Rev Manag Sci. https://doi.org/10.1007/s11846-019-00366-z

    Article  Google Scholar 

  • Bromley RJ (1971) Markets in the developing countries: a review. Geography 56:124–132

    Google Scholar 

  • Brown R, Mason C (2017) Looking inside the spiky bits: a critical review and conceptualisation of entrepreneurial ecosystems. Small Bus Econ 49:11–30

    Google Scholar 

  • Cadilhon JJ, Fearne AP, Hughes DR, Moustier P (2003) Wholesale markets and food distribution in Europe: new strategies for old functions. Department of Agricultural Sciences, Imperial College London (Wye Campus), London

    Google Scholar 

  • Carr NG (2000) Hypermediation: commerce as clickstream. Harvard Bus Rev 78:46–47

    Google Scholar 

  • Carson SJ, Ghosh M (2019) An integrated power and efficiency model of contractual channel governance: theory and empirical evidence. J Market 83:101–120

    Google Scholar 

  • Cavallo A, Ghezzi A, Balocco R (2019) Entrepreneurial ecosystem research: present debates and future directions. Int Entrep Manag J 15:1291–1321

    Google Scholar 

  • Chen H, Ma Y (2004) Challenges and innovation strategies in the wholesale market专业市场面临的挑战及创新战略. Rural Econ 4:58–60

    Google Scholar 

  • Chiu CM, Wang ET, Fang YH, Huang HY (2014) Understanding customers’ repeat purchase intentions in B2C e-commerce: the roles of utilitarian value, hedonic value and perceived risk. Inform Syst J 24:85–114

    Google Scholar 

  • Clarysse B, Wright M, Bruneel J, Mahajan A (2014) Creating value in ecosystems: crossing the chasm between knowledge and business ecosystems. Res Policy 43:1164–1176

    Google Scholar 

  • Coase RH (1937) The nature of the firm. Economica 4:386–405

    Google Scholar 

  • Colombo MG, Dagnino GB, Lehmann EE, Salmador M (2019) The governance of entrepreneurial ecosystems. Small Bus Econ 52(2):419–428

    Google Scholar 

  • Content J, Bosma N, Jordaan J, Sanders M (2020) Entrepreneurial ecosystems, entrepreneurial activity and economic growth: new evidence from European regions. Reg Stud 54:1007–1019

    Google Scholar 

  • Cornelissen JP (2017) Preserving theoretical divergence in management research: why the explanatory potential of qualitative research should be harnessed rather than suppressed. J Manag Stud 54:368–383

    Google Scholar 

  • Correani A, De Massis A, Frattini F, Messeni Petruzzelli A, Natalicchio A (2020) Implementing a digital strategy: learning from the experience of three digital transformation projects. Calif Manag Rev. https://doi.org/10.1177/0008125620934864

    Article  Google Scholar 

  • Cui M, Pan SL, Cui L (2019) Developing community capability for e-commerce development in rural China: a resource orchestration perspective. Inform Syst J 29:953–988

    Google Scholar 

  • Cunningham JA, Menter M, O’Kane C (2018) Value creation in the quadruple helix: a micro level conceptual model of principal investigators as value creators. R&D Manag 48:136–147

    Google Scholar 

  • Dalpiaz E, Rindova V, Ravasi D (2016) Combining logics to transform organisational agency: Blending industry and art at Alessi. Admin Sci Q 61:347–392

    Google Scholar 

  • De Massis A, Kammerlander N (2020) Handbook of qualitative research methods for family business. Edward Elgar, Cheltenham Glos

    Google Scholar 

  • De Massis A, Kotlar J, Wright M, Kellermanns F (2018) Sector-based entrepreneurial capabilities and the promise of sector studies in entrepreneurship. Entrep Theory Pract 42:3–23

    Google Scholar 

  • Delmestri G, Greenwood R (2016) How Cinderella became a queen: theorising radical status change. Admin Sci Q 61:507–550

    Google Scholar 

  • Eisenhardt KM (1989) Building theories from case study research. Acad Manag Rev 14:532–550

    Google Scholar 

  • Eisenhardt KM, Graebner ME (2007) Theory building from cases: Opportunities and challenges. Acad Manag J 50(1):25–32

    Google Scholar 

  • El-Ansary AI, Stern LW (1972) Power measurement in the distribution channel. J Market Res 9:47–52

    Google Scholar 

  • Eliasson G (2001). Industrial policy, competence blocs and the role of science in economic development. In: Capitalism and democracy in the 21st century. Physica, Heidelberg, pp 223–247

  • Emerson RM (1962) Power-dependence relations. Am Sociol Rev 27:31–41

    Google Scholar 

  • Erina I, Shatrevich V, Gaile-Sarkane E (2017) Impact of stakeholder groups on development of a regional entrepreneurial ecosystem. Eur Plan Stud 25:755–771

    Google Scholar 

  • Fan Y, Ju J, Xiao M (2016) Reputation premium and reputation management: evidence from the largest e-commerce platform in China. Int J Ind Organ 46:63–76

    Google Scholar 

  • Fang Y, Qureshi I, Sun H, McCole P, Ramsey E, Lim KH (2014) Trust, satisfaction, and online repurchase intention: the moderating role of perceived effectiveness of e-commerce institutional mechanisms. MIS Q 38:407–428

    Google Scholar 

  • Ferreira JJ, Fernandes CI, Kraus S (2019) Entrepreneurship research: mapping intellectual structures and research trends. Rev Manag Sci 13:181–205

    Google Scholar 

  • Foss K, Foss N (2006) Entrepreneurship, transaction costs, and resource attributes. Int J Strat Change Manag 1:53–60

    Google Scholar 

  • Gallaugher JM (2002) E-commerce and the undulating distribution channel. Commun ACM 45:89–95

    Google Scholar 

  • Gregory GD, Ngo LV, Karavdic M (2019) Developing e-commerce marketing capabilities and efficiencies for enhanced performance in business-to-business export ventures. Ind Market Manag 78:146–157

    Google Scholar 

  • Gundlach GT, Cadotte ER (1994) Exchange interdependence and interfirm interaction: research in a simulated channel setting. J Market Res 31:516–532

    Google Scholar 

  • Haluk D (2015) Special section: enhancing e-commerce outcomes with IT service innovations. Int J Electro Comm 19:2–6

    Google Scholar 

  • Harrison R, Mason C, Robson P (2010) Determinants of long-distance investing by business angels in the UK. Entrep Region Dev 22:113–137

    Google Scholar 

  • Hong T (2018) China agricultural products e-commerce development report 2018. China Food (Agricultural) Safety E-commerce Research Institute. Retrieved 6 April 2020 from http://www.ynscrc.com/index.php?s=/home/file/filedownload/id/216.html

  • Iannella R (2004) Online trading of rights-enabled learning objects. Int J Electro Commun 8:99–113

    Google Scholar 

  • Jacobides MG, Cennamo C, Gawer A (2018) Towards a theory of ecosystems. Strat Manag J 39:2255–2276

    Google Scholar 

  • Katz ML, Shapiro C (1985) Network externalities, competition, and compatibility. Am Econ Rev 75:424–440

    Google Scholar 

  • Kim SK, Hsieh PH (2003) Interdependence and its consequences in distributor-supplier relationships: a distributor perspective through response surface approach. J Market Res 40:101–112

    Google Scholar 

  • Kim J, Mahoney JT (2006) How property rights economics furthers the resource-based view: resources, transaction costs and entrepreneurial discovery. Int J Strat Change Manag 1:40–52

    Google Scholar 

  • Klein HK, Myers MD (1999) A set of principles for conducting and evaluating interpretive field studies in information systems. MIS Q 23:67–93

    Google Scholar 

  • Kolloch M, Dellermann D (2018) Digital innovation in the energy industry: the impact of controversies on the evolution of innovation ecosystems. Technol Forecast Soc Change 136:254–264

    Google Scholar 

  • Kraus S, Roig-Tierno N, Bouncken RB (2019) Digital innovation and venturing: an introduction into the digitalisation of entrepreneurship. Rev Manag Sci 13:519–528

    Google Scholar 

  • Kshetri N (2014) Developing successful entrepreneurial ecosystems: lessons from a comparison of an Asian tiger and a Baltic tiger. Baltic J Manag 9:330–356

    Google Scholar 

  • Lee TW, Mitchell TR, Sablynski CJ (1999) Qualitative research in organisational and vocational psychology, 1979–1999. J Voc Behav 55:161–187

    Google Scholar 

  • Leong CML, Pan SL, Newell S, Cui L (2016) The emergence of self-organising e-commerce ecosystems in remote villages of China: a tale of digital empowerment for rural development. MIS Q 40:475–484

    Google Scholar 

  • Liao KH (2016) Impact of traditional Chinese culture on business-to-business relationship marketing and service firm performance. J Bus Bus Market 23(4):277–291

    Google Scholar 

  • Liguori E, Bendickson J, Solomon S, McDowell WC (2019) Development of a multi-dimensional measure for assessing entrepreneurial ecosystems. Entrep Region Dev 31(1–2):7–21

    Google Scholar 

  • Liu X, Walsh J (2019) Study on development strategies of fresh agricultural products e-commerce in China. Int Bus Res 12:61–70

    Google Scholar 

  • Lu L, Wang Z (2008) Wholesale market-evolution of local markets. Shanghai People’s Publishing House, Shanghai

    Google Scholar 

  • Mack EA, Mayer H (2016) The evolutionary dynamics of entrepreneurial ecosystems. Urban Stud 53:2118–2133

    Google Scholar 

  • Markus ML, Christiaanse E (2003) Adoption and impact of collaboration electronic marketplaces. Inf Syst E-Bus Manag 1:139–155

    Google Scholar 

  • Mölk A, Auer M (2018) Designing brands and managing organisational politics: a qualitative case study of employer brand creation. Eur Manag J 36:485–496

    Google Scholar 

  • Nakayama M (2000) E-commerce and firm bargaining power shift in grocery marketing channels: a case of wholesalers’ structured document exchanges. J Inf Technol 15:195–210

    Google Scholar 

  • Newell S, Marabelli M (2015) Strategic opportunities (and challenges) of algorithmic decision-making: a call for action on the long-term societal effects of ‘datification.’ J Strat Inf Syst 24:3–14

    Google Scholar 

  • Overby E, Forman C (2015) The effect of electronic commerce on geographic purchasing patterns and price dispersion. Manag Sci 61:431–453

    Google Scholar 

  • Pan K, Lai KK, Leung SC, Xiao D (2010) Revenue-sharing versus wholesale price mechanisms under different channel power structures. Eur J Oper Res 203:532–538

    Google Scholar 

  • Park SH, Luo YD (2001) Guanxi and organizational dynamics: Organizational networking in chinese firms. Strat Manag J 22:455–477

    Google Scholar 

  • Rai A, Patnayakuni R, Seth N (2006) Firm performance impacts of digitally enabled supply chain integration capabilities. MIS Q 30:225–246

    Google Scholar 

  • Ranganathan C, Dhaliwal JS, Teo TS (2004) Assimilation and diffusion of web technologies in supply-chain management: an examination of key drivers and performance impacts. Int J Electron Comm 9:127–161

    Google Scholar 

  • Rosenbloom B (2002) The ten deadly myths of e-commerce. Bus Horiz 45:61–66

    Google Scholar 

  • Rosenbloom B (2007) The wholesaler’s role in the marketing channel: disintermediation vs. reintermediation. Int Rev Retail Dist Cons Res 17:327–339

    Google Scholar 

  • Schneider P (2018) Managerial challenges of Industry 4.0: an empirically backed research agenda for a nascent field. Rev Manag Sci 12:803–848

    Google Scholar 

  • Siggelkow N (2007) Persuasion with case studies. Acad Manag J 50:20–24

    Google Scholar 

  • Spigel B (2017) The relational organization of entrepreneurial ecosystems. Entrep Theory Pract 41:49–72

    Google Scholar 

  • Stam E (2015) Entrepreneurial ecosystems and regional policy: a sympathetic critique. Eur Plann Stud 23:1759–1769

    Google Scholar 

  • Steinfield C, Bouwman H, Adelaar T (2002) The dynamics of click-and-mortar electronic commerce: Opportunities and management strategies. Int J Electron Comm 7:93–119

    Google Scholar 

  • Subramanian H (2017) Decentralized blockchain-based electronic marketplaces. Commun ACM 61:78–84

    Google Scholar 

  • Subramanian H, Overby E (2017) Electronic commerce, spatial arbitrage, and market efficiency. Inform Syst Res 28:97–116

    Google Scholar 

  • Tsang EW (1998) Can guanxi be a source of sustained competitive advantage for doing business in China? Acad Manag Perspect 12(2):64–73

    Google Scholar 

  • Wang Y, Lee SH (2017) The effect of cross-border e-commerce on China’s international trade: an empirical study based on transaction cost analysis. Sustainability 9:2028

    Google Scholar 

  • Wang WT, Wang YS, Liu ER (2016) The stickiness intention of group-buying websites: the integration of the commitment–trust theory and e-commerce success model. Inf Manag 53:625–642

    Google Scholar 

  • Williamson O (1985) The economic institutions of capitalism. Free Press, New York

    Google Scholar 

  • Win A (2008) The value a 4PL provider can contribute to an organisation. Int J Phys Distrib Logist Manag 38:674–684

    Google Scholar 

  • Wu LY, Chen KY, Chen PY, Cheng SL (2014) Perceived value, transaction cost, and repurchase-intention in online shopping: A relational exchange perspective. J Bus Res 67:2768–2776

    Google Scholar 

  • Yang KH, Yuan CH, Guo JJ (2017) B2B platform development in electronics manufacturing supply chain of China. In: 2017 Portland International Conference on Management of Engineering and Technology (PICMET). IEEE

  • Yin R (1989) Case study research: design and methods. CA, SAGE Publications, Beverly Hills

    Google Scholar 

  • Yoo B, Choudhary V, Mukhopadhyay T (2002) A model of neutral B2B intermediaries. J Manag Inform Syst 19:43–68

    Google Scholar 

  • Zhou T, Lu Y (2011) Examining mobile instant messaging user loyalty from the perspectives of network externalities and flow experience. Comput Human Behav 27:883–889

    Google Scholar 

  • Zhuang G, Zhou N (2004) The relationship between power and dependence in marketing channels. Eur Manag J 38:675–693

    Google Scholar 

  • Zott C, Amit R, Donlevy J (2000) Strategies for value creation in e-commerce: best practice in Europe. Eur Manag J 18:463–475

    Google Scholar 

Download references

Acknowledgements

This study received financial support from the National Social Science Fund of China (17BJY143); the Annual Project of Collaborative Innovation Center of Urban Industries Development in Chengdu-Chongqing Economic Zone (KFJJ2018017); the MOE Project of Key Research Institute of Humanities and Social Sciences: Research Center for Economy of Upper Reaches of the Yangtze River Chongqing Technology and Business University (Commercial circulation team, CJSYTD201701).

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Octavio Escobar.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix: Data collection

Appendix: Data collection

Author 1 lead the research team composed of a lecturer and three graduate students. First, the team conducted face-to-face in-depth interviews at the Caiyuanba wholesale fruit market.

All interviews lasted 60–90 min, and at least one professor and one student participated in each.

The content of the interviews varied according to the interviewee profiles as follows (Table 3).

Table 3 Interview content by profile

As the study progressed, this content was adjusted according to the theoretical perspective, and additional interviews were conducted with each interviewee. The following table provides the details (Table 4).

Table 4 Number of interviews

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Song, Y., Escobar, O., Arzubiaga, U. et al. The digital transformation of a traditional market into an entrepreneurial ecosystem. Rev Manag Sci 16, 65–88 (2022). https://doi.org/10.1007/s11846-020-00438-5

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11846-020-00438-5

Keywords

  • Entrepreneurial ecosystem
  • Wholesale market
  • Digitalization
  • e-commerce
  • Case study
  • China

Mathematics subject classification

  • L26
  • L81
  • O33
  • O53