Business ecosystems as a way to activate lock-in in business models: a theoretical integration

As technology-enabled innovations have become ever more common, successful firms have struggled to stay ahead of their imitators. One way for an innovating firm to defend itself from imitators is to activate lock-in mechanisms. These mechanisms discourage actors in the innovating firm’s business model from migrating to imitators. Current business model theory explains how to establish lock-in through loyalty, sunk costs, direct network effects, indirect network effects, and data network effects. This paper extends the current understanding of lock-in by integrating business ecosystem theory with business model theory. The objective is to outline how firms can strategically configure their business ecosystems to activate lock-in mechanisms that discourage actors (e.g., customers, suppliers, and partners) from migrating to competitors. When an innovating firm’s business model is deliberately configured to activate lock-in by establishing a business ecosystem, it can withstand imitation. Real-life examples are provided to illustrate this mechanism in action. The paper also provides managerial recommendations for how to activate lock-in by establishing a business ecosystem. Finally, it highlights topics that deserve further research.