A Structural Complexity Perspective for Understanding Value Networks

Since the 1960\´s, complexity has been an important construct for understanding the dynamics of systems and how they exchange resources with the environment. The business literature contains many examples of the application of complexity theory to the analysis of value networks and business ecosystems, emphasizing the importance of the interdependence between participating firms. Frequently, the nature of this interdependence and the resultant market-wide complexity are explored in terms of evolutionary biology or bio-ecology metaphors. While biological metaphors represent a valid framework for characterizing complex business systems, this presentation will broaden the perspective by qualitatively applying an "ensemble" view; usually employed by physical scientists to infer macro-properties of complex systems from the interaction of their micro components. We will review different ways for characterizing complexity, emphasizing organizational complexity and its dynamical consequences near equilibrium and far away from equilibrium. These consequences may be attributable to system components interacting through effectively one-body (many-body) forces at small (large) time scales relative to market-wide disruptive forces. We conclude by summarizing the implications of this framework to strategy formation and strategic planning in corporate food chains for global technology or technology-enabled markets.