Profiting from Ecosystems: Examining Incumbents’ Dynamic Capabilities

In today’s economy, numerous incumbents are engaged in or plan to engage with ecosystems, driven by the belief in significant growth opportunities and increased profitability. However, some firms have started retreating to their core businesses due to unmet expectations and unrealized goals. Despite the growing importance of ecosystems, relatively little is known about the realization of these expected performance outcomes. Therefore, we aim to shed light on the incumbents’ boundary conditions for profiting from ecosystems. Drawing on the dynamic capabilities’ literature as a powerful lens for incumbents operating in change, we argue that dynamic capabilities serve as a critical foundation for achieving successful performance outcomes. By using a survey dataset of firms in the banking and insurance industries, we reveal the positive relationship between dynamic capabilities and ecosystem performance. Additionally, we provide evidence of the positive impact of ecosystem performance on firms’ non-financial performance.