The term Open Innovation Ecosystem consists of three parts that describe the foundations of the approach of open innovation, innovation systems and business ecosystems.
While James F. Moore researched business ecosystems in manufacturing around a specific business or branch, the open model of innovation with the ecosystem theory was recently studied in various industries. Traitler et all. researched it 2010 and used it for R&D, stating that global innovation needs alliances based on compatible differences. Innovation partnerships based on sharing knowledge represents a paradigm shift toward accelerating co‐development of sustainable innovation. West researched open innovation ecosystems in the software industry,following studies in the food industry that show how a small firm thrived and became a business success based on building an ecosystem that shares knowledge, encourages individuals’ growth, and embeds trust among participants such as suppliers, alumni chef and staff, and food writers. Other adoptions include the telecom industry or smart cities.
Ecosystems foster collaboration and accelerate the dissemination of knowledge through the network effect, in fact, value creation increases with each actor in the ecosystem, which in turn nurtures the ecosystem as such.
A digital platform is essential to make the innovation ecosystem work as it aligns various actors to achieve a mutually beneficial purpose. Parker explained that with platform revolution and described how networked Markets are transforming the economy.
Business ecosystems are increasingly used and drive digital growth. and pioneering firms in China use their technological capabilities and link client data to historical transactions and social behaviour to offer tailored financial services among luxury goods or health services. Such open collaborative environment changes the client experience and adds value to consumers. The drawback is that it is also threatening incumbent banks from the U.S. and Europe due to its legacies and lack of agility and flexibility.