The evolution of business ecosystems : interspecies competition in the steel industry

• Main Author: Mathur, Akshat
• Other Authors: Theodore F. Piepenbrock.
• Format: Others
• Language: English
• Published: Massachusetts Institute of Technology 2010
• Subjects: Engineering Systems Division.; System Design and Management Program.
• Online Access: http://hdl.handle.net/1721.1/59258

Thesis (S.M. in System Design and Management)--Massachusetts Institute of Technology, Engineering Systems Division, 2010. === Cataloged from PDF version of thesis. === Includes bibliographical references (p. 101-104). === This thesis contributes toward the building of a theory of the evolution of business ecosystems by exploring the applicability of Piepenbrock's' theoretical framework to a commodity industrial setting, namely the U.S. steel industry from 1860-2010. As the evolution of business ecosystems framework posits the emergence of symbiotic inter-species competition between heterogeneous inter-organizational architectures, this thesis builds grounded theory by expanding Piepenbrock's original theoretical sample to include the following dominant firms in the U.S. steel industry: United States Steel and Bethlehem Steel, representing incumbents and Nucor and Arcelor-Mittal, representing late-entrants. Comparative historical analyses are performed to determine the evolution of the firms' form, function and fitness: specifically their inter-organizational architectures, their strategic choices in both market quantity and technological quality, and the maturity of the steel industry environment in both market quantity and technology quality. The U.S. steel industry is demonstrated to currently be in a mature state, with slowing rates of growth in terms of both market quantity and technology quality (i.e. performance improvement trajectories of products and production processes). During the growth and maturing of this market environment, the inter-organizational architectures of the dominant incumbent firms of United States Steel and Bethlehem Steel appear to have evolved from integral to modular forms. As the market became mature, late-entrant firms of Nucor and Arcelor-Mittal appear to have entered with integral inter-organizational architectures, in which they compete on quality, cost and delivery dimensions enabled through stable long-term growth. The findings of this thesis demonstrate that the evolution of business ecosystems appears to be a reasonably robust theoretical framework, which is useful in explaining why firms in the same industry vary systematically in performance over time. The investigation of inter-species competition in the U.S. steel industry expands the external validity or generalizability of the framework to include commodity industrial settings. The framework captures the evolution of dominant designs in enterprise architectures that oscillate between modular and integral states throughout an industry's life-cycle. Architectural innovation at the extended enterprise level in Nucor and Arcelor-Mittal is demonstrated to contribute to the failure of established firms United States Steel and Bethlehem Steel. === by Akshat Mathur. === S.M.in System Design and Management