Technological Forecasting & Social Change 177 (2022) 121496

Contents lists available at ScienceDirect

Technological Forecasting & Social Change

journal homepage: www.elsevier.com/locate/techfore

The evolution of the digital service ecosystem and digital business model
innovation in retail: The emergence of meta-ecosystems and the value of
physical interactions
Maximilian Palmié a, Lucas Miehé a, b, Pejvak Oghazi c, d, *, Vinit Parida e, f, Joakim Wincent d, g
a
Institute of Technology Management, University of St. Gallen, Switzerland
b
Department of Strategy and Innovation, Copenhagen Business School, Denmark
c
School of Social Sciences, Sodertorn University, Stockholm, Sweden
d
Hanken School of Economics, Helsinki, Finland
e
Department of Management, University of Vaasa, Finland
f
Entrepreneurship and Innovation, Luleå University of Technology, Sweden
g
Global Center for Entrepreneurship & Innovation, University of St. Gallen, Switzerland

A R T I C L E I N F O A B S T R A C T

Keywords: As e-commerce has increasingly gained traction in the retail market, many traditional “brick-and-mortar” re­
Digital business model tailers are innovating their business models and making the transition towards digital business models. While
Digital business model innovation scholars have started to examine the influence of digitalization on various business model elements, they have so
Ecosystem
far paid little attention to its implications on the external relationships in which firms engage for value creation.
Ecosystem emergence
Digital transformation
Building on a qualitative analysis of seventeen interviews, this study develops a two-stage framework for the
Digital service transition to digital business models. In Stage 1, retailers collaborate with specialized service providers to
Digitization implement a digital business model. As firms from the retail ecosystem collaborate with firms from the digital-
Retail service ecosystem to create a value proposition for end-customers, a meta-ecosystem emerges. In Stage 2, firms
(retailers) seek to differentiate themselves from their competitors in the meta-ecosystem. Physical interactions
with the digital service providers, the product suppliers, and the customers are a primary means towards this
end. Thus, digitalization does not make physical interactions and close personal ties obsolete. Our study has
substantial implications for the academic literature and management practice.

1. Introduction pathways for creating value (Gregori and Holzmann, 2020). Digital
technologies allow both retailers and players in other industries to
The advent and enormous growth of digital technologies and asso­ devise new product or service offerings as well as new forms of re­
ciated data are shifting competition in many industries (Broekhuizen lationships with their stakeholders, thereby enabling increases in con­
et al., 2021; Porter and Heppelmann, 2014). A prominent example is venience, customer experience, and customer satisfaction as well as in
retailing. Whereas “born digital” retailers such as Amazon, eBay, and speed, resource utilization, and efficiency (Hokkanen et al., 2020;
Zalando have proved their ability to grow and gain solid positions within Rachinger et al., 2019). In other words, digital technologies provide
the market, formerly successful “brick-and-mortar” retailers such as J.C. companies with opportunities to innovate their business models (Broe­
Penney, Sears, and HMV have struggled to defend their market shares khuizen et al., 2021; Soluk et al., 2021). A business model articulates
(Hokkanen et al., 2020). To remain competitive, brick-and-mortar re­ how the focal organization will convert resources into economic value
tailers have gone online, developed web-based stores and mobile apps, (Teece, 2010). Academic research on the implications of digital tech­
increased the number of digital customer touchpoints, and started nologies for business models has grown exponentially over the last
merging the physical and online worlds (Jocevski, 2020). couple of years (see Caputo et al., [2021] and Ritter and Pedersen
These actions illustrate that digital technologies spawn many new [2020] for overviews). This research has so far predominantly adopted a

* Corresponding author.
E-mail addresses: maximilian.palmie@unisg.ch (M. Palmié), lmi.si@cbs.dk (L. Miehé), pejvak.oghazi@sh.se, Pejvak.oghazi@hanken.fi (P. Oghazi), vinit.parida@
ltu.se (V. Parida), joakim.vincent@unisg.ch (J. Wincent).

https://doi.org/10.1016/j.techfore.2022.121496
Received 8 June 2021; Received in revised form 4 January 2022; Accepted 7 January 2022
Available online 19 January 2022
0040-1625/© 2022 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
M. Palmié et al. Technological Forecasting & Social Change 177 (2022) 121496

customer (“demand pull”) or an internal (“technology push”) perspec­ 2. Theoretical background

tive, focusing mainly on the implications of digital technologies for the
value proposition that a company offers to its customers and on their 2.1. Digital business models
implications for internal value-creation processes (see Frank et al., 2019;
Hokkanen et al., 2020). In contrast, the impact of digital technologies on The question of how firms can apply digital technologies is currently
external relationships in which firms engage to create and deliver value occupying the minds of many managers (Ritter and Pedersen, 2020).
has received much less attention. This imbalance of research attention is Merely developing or acquiring digital technologies is not sufficient for
detrimental, as digital technologies substantially reshape both industry profiting from them; rather, firms must also devise appropriate business
structures and organizational boundaries, encouraging inter-firm models for the commercialization of these technologies (Gassmann
collaboration (Kothamäki et al., 2019; Vendrell-Herrero et al., 2018). et al., 2014; Parida et al., 2019). A business model links the tech­
Porter and Heppelmann (2014, p. 67) consider the question of how nological/physical domain and the economic domain of an organization
companies work with traditional and new external partners to be one of (Pieroni et al., 2019). It articulates how the focal organization will
the most “fundamental” issues that firms must address as digital tech­ convert technologies and other resources into economic value (Ritter
nologies reshape industry boundaries. Since this issue has been greatly and Schanz, 2019; Teece, 2010). The business model concept first
under-researched so far, many scholars have recently called for more became popular in the 1990s when e-commerce emerged and firms
efforts on the impact of digitalization – defined as the application of introduced new ways of creating and capturing value (Geissdoerfer
digital technologies (Ritter and Pedersen, 2020) – on inter-firm re­ et al., 2018; Zott et al., 2011). Since then, the concept has proven very
lationships and business models (e.g., Caputo et al., 2021; Luz useful in planning, structuring, communicating, and analyzing how a
Martín-Peña et al., 2018; Kothamäki et al., 2019; Paiola and Gebauer, business works (Geissdoerfer et al., 2018; Zott et al., 2011). Designing
2020; Parida et al., 2019; Ritter and Pedersen, 2020). Most of these and implementing a promising business model is now considered a
scholars further argue that an ecosystem perspective (Moore, 1993; strategic priority for managers (Chesbrough, 2010; Palmié et al.,
Thomas and Autio, 2020) is a fruitful angle from which to study these 2021b).
inter-firm relationships. Conceptualizations that interpret the business model as a combina­
In order to respond to these calls for research and help close the tion of specific mechanisms have become highly popular in research and
identified knowledge gap, this article seeks to answer the following practice; consequently, they appear to be most advantageous to re­
question: How do firms (retailers) incorporating digital technologies searchers, managers, and stakeholders (Foss and Saebi, 2017; Palmié
into their business model create value through relationships with et al., 2021a). While these conceptualizations differ in the number of
external actors? We answer this question through a qualitative study components they specify, the components roughly represent four broad
consisting of 17 interviews. Our findings result in a two-stage framework areas: (1) the target customers, (2) the value proposition that an orga­
for the transition towards digital business models. Lacking the digital nization offers to its customers, (3) the value-creation and -delivery
capabilities to implement digital solutions on their own, retailers activities by which the value proposition is produced and brought to the
commonly collaborate with specialized digital service providers (Stage customers, and (4) the value-capture activities dealing with the revenues
1). The retail ecosystem and the digital service ecosystem consequently and costs of creating and delivering the value proposition (e.g., Boons
form a meta-ecosystem. Retailers frequently work with digital agencies et al., 2013; Dentchev et al., 2018; Geissdoerfer et al., 2018; Palmié
which act as their intermediaries and coordinate various digital services et al., 2021a).
on their behalf, while the retailers continue to coordinate the product Since digital technologies spawn new pathways for creating and
flows. Thus, the digital agencies orchestrate the digital service side of delivering value (Gregori and Holzmann, 2020), they can make existing
the meta-ecosystem, while the retailers coordinate the retail side. To business models obsolete and uncompetitive (Paiola and Gebauer, 2020;
differentiate themselves from their rivals in the meta-ecosystem, the Parida et al., 2019) and hence call for new or adapted business models
retailers rely heavily on physical interactions and strong personal con­ (Broekhuizen et al., 2021; Caputo et al., 2021). In other words, digital
nections with the suppliers of digital services, the suppliers of physical technologies call for business model innovation, which can be defined as
goods, and their customers (Stage 2). novel and non-trivial changes to the key components of a firm’s business
Our study makes three important contributions to the literature. model (Foss and Saebi, 2017, p. 216). Digital technologies can affect
First, it responds to numerous calls to examine the nexus between firms’ various components of a business model (Ritter and Pedersen, 2020),
external relationships and digitalization (e.g., Caputo et al., 2021; such as the value proposition (via servitization) or the value-creation
Paiola and Gebauer, 2020; Ritter and Pedersen, 2020) and to examine and -delivery processes (via automation) (Frank et al., 2019; Soluk
what firms can do to yield greater returns on their investments in digital et al., 2021). To innovate its business model – for example, to transform
technologies (e.g., Kothamäki et al., 2019; Parida et al., 2019). Second, it into a “digital business model” – a firm does not need to implement
it contributes to the nascent literature on ecosystem emergence and changes in all key components; instead, it can selectively alter one or a
ecosystem evolution (e.g., Hannah and Eisenhardt, 2018; Kolloch and few of them (Gassmann et al., 2014; Palmié et al., 2021b). In combi­
Dellermann, 2018) and the literature on ecosystem orchestration (e.g., nation, the facts that digital technologies can affect various components
Dattée et al., 2018; Lingens et al., 2021; Masucci et al., 2020). Third, it of a business model and that firms do not have to change all key com­
generates insights into the digital transformation of the retail sector, ponents of a business model may explain why thus far there is no
which has been described as under-explored (Hokkanen et al., 2020). generally accepted definition of “digital business models” (cf. Caputo
The remainder of this article is organized as follows. The next section et al., 2021; Luz Martín-Peña et al., 2018). Building on Soluk et al.
contains the conceptual background to our study. It provides informa­ (2021), we use the term “digital business model” to refer to a business
tion on digital business models and the digital transformation of the model whose value proposition, value creation and delivery, and/or
retail sector, as well as on ecosystems and ecosystem emergence. The value capture is embodied in or significantly enabled by digital
third section describes the empirical setting of our study and how we technologies.
collected and analyzed data. The fourth section details the findings from While previous research has predominantly studied the implications
our analysis and synthesizes them into a two-stage framework. The fifth of digital technologies for the value proposition and for internal value-
section discusses the implications of our study for the academic litera­ creation and -delivery processes (see Frank et al., 2019; Hokkanen
ture and management practice. Finally, the sixth section concludes the et al., 2020), our subsequent analysis will focus on their implications for
article. value-creation and -delivery activities involving collaborations with
external partners. This selective focus is consistent with the above
notion that firms do not have to alter all components simultaneously to

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implement a digital business model, is in line with prior work (e.g., ecosystem for the final customer. While these three labels and the
Geissdoerfer et al., 2018; Palmié et al., 2021b), and allows us to focus associated research streams may emphasize different aspects of eco­
our attention on a business model component that has been found to be systems, they describe phenomena “that overlap in the real world”
in particular need of further research (e.g., Caputo et al., 2021; Luz (Jacobides et al., 2018, p. 2258). Thomas and Autio (2020) therefore
Martín-Peña et al., 2018; Kothamäki et al., 2019; Paiola and Gebauer, aggregate these three research streams into one category, as they all
2020; Parida et al., 2019; Ritter and Pedersen, 2020). focus on a community of firms creating value for a defined audience, and
these authors differentiate ecosystems in this sense from entrepreneurial
2.2. The digital transformation of the retail sector ecosystems and knowledge ecosystems. Entrepreneurial ecosystems are
regional communities of start-up ventures instantiating business model
Retailing has traditionally represented a low-technology sector, but innovation (Autio et al., 2018), whereas knowledge ecosystems (e.g.,
digitalization has induced drastic changes in the retail market over the Clarysse et al., 2014; Järvi et al., 2018) describe regional communities of
last couple of years (Hokkanen et al., 2020; Jocevski, 2020(Oghazi et al., actors interested in advancing the generation of research-based knowl­
2018)). Under the influence of the COVID-19 pandemic, retailing is edge and its translation into products and services. Entrepreneurial
experiencing an accelerated restructuring and digital transformation ecosystems and knowledge ecosystems are beyond the focus of our
(Hokkanen et al., 2020; UNCTAD, 2021). With increasing consumer study. Thus, we use the term “ecosystem” to refer to Thomas and Autio’s
trust in online retailing, the internet has become an important element (2020) first category of ecosystems. An ecosystem in this sense can be
in and source of information for planning, executing, and evaluating defined as “a community of hierarchically independent, yet interdependent
purchase decisions(Oghazi et al., 2020) (Hokkanen et al., 2020). Inter­ heterogeneous participants who collectively generate an ecosystem output and
nationally, online retailing is growing faster than the retail markets related value offering targeted at a defined audience” (Thomas and Autio,
overall (Hokkanen et al., 2020; UNCTAD, 2021). The emergence of 2020, p. 38). Based on this definition, an ecosystem emerges when hi­
e-commerce and digital retailers has put pressure on conventional re­ erarchically independent yet interdependent firms work together to
tailers to transform their business models in order to defend their market generate a value offering targeted at a defined audience. When firms
shares. Many traditional brick-and-mortar retailers have gone online, from one ecosystem cooperate with firms from another ecosystem to
developed web-based stores and mobile apps, or increased their generate such a value proposition and the main value propositions of the
numbers of digital customer touchpoints (Jocevski, 2020). However, two originating ecosystems do not compete with each other, a
such business model innovations have not proven to be easy, with meta-ecosystem emerges. Adapting the above definition, a
prominent retailers such as J.C. Penney, Sears, and HMV struggling to meta-ecosystem can thus be defined as: A community of hierarchically
find convincing responses (Hokkanen et al., 2020). In contrast, “born independent, yet interdependent heterogeneous participants that stem from
digital” retailers such as Amazon, eBay, and Zalando were able to gain two or more distinct, mainly non-competing ecosystems and that collectively
solid positions in their markets. These opposite developments have led generate a value offering targeted at a defined audience.
to two competing narratives – one of a “retail apocalypse” and one of Since a meta-ecosystem comprises two or more smaller ecosystems,
emerging opportunities in the retail market (Hokkanen et al., 2020, p. it can be understood as a nested hierarchy of ecosystems. The general
45). Digital business model innovation will likely determine which idea that an ecosystem may consist of several smaller ecosystems is not
narrative will manifest for which company in the sector. new. The term “ecosystem” in the sense of Thomas and Autio’s (2020)
In addition to conventional retailers, which are experimenting with first category can be used more broadly to designate firms or a group of
innovative digital business models, “born digital” retailers are also firms in an industry (e.g., the “retail ecosystem”) or more narrowly to
innovating their business models. For example, Amazon entered brick- designate a group of firms that jointly produce a “coherent,
and-mortar retailing by developing the Amazon Go concept store. In customer-facing solution” (Adner, 2006, p. 98) and/or that use the same
comparison to conventional physical retailing, Amazon Go features technological platform (e.g., Graça and Camarinha-Matos, 2017; Tsuji­
some digital innovations such as allowing customers to scan codes on moto et al., 2018). In the case of the narrower usage, the individual
their mobile device and leave with their purchases without any on-site ecosystems may be designated by referring to a leading firm in each of
checkout process (Jocevski, 2020). Such efforts of “born digital” re­ them (e.g., in retail, “J.C. Penney’s ecosystem” or “Amazon’s
tailers reinforce the continuing and widespread relevance of digital ecosystem”). The general (industry) ecosystem comprises multiple
business model innovation in the retail sector. (firm-)specific ecosystems (Palmié et al., 2020; a related argument for
actor networks has been made by Kolloch and Dellermann [2018]). In
2.3. Ecosystems and ecosystem emergence this understanding, the main value propositions of the specific ecosys­
tems subsumed in a general ecosystem are very similar, if not the same,
Many of the scholars who have called for more research on digital and are hence substitutes for one another. What sets meta-ecosystems
business models and the influence of digitalization on value creation apart is that they represent an aggregation of ecosystems with
recommend an ecosystem perspective for this analysis (e.g., Kohtamäki different main value propositions.
et al., 2019; Luz Martín-Peña et al., 2018; Paiola and Gebauer, 2020;
Parida et al., 2019; Teece, 2018). Our subsequent analysis follows this 3. Data and methods
recommendation.
While research on ecosystems has not used the term ecosystems 3.1. Research design
consistently (Aarikka-Stenroos and Ritala, 2017), three main uses of the
term dominate (Jacobides et al., 2018); these are business ecosystems, We follow an explorative research design to understand a new phe­
innovation ecosystems, and platform ecosystems. Business ecosystems nomenon (Miles et al., 2013), the transition towards digital business
(e.g., Moore, 1993; (Rong and Shi, 2015); Teece, 2007) focus on the models. We studied digital business model innovation in the Swedish
dynamics resulting from the interactions among actors within a com­ retail market. Being ranked among the top three countries for business
munity. Innovation ecosystems (e.g. Adner, 2017; Adner and Kapoor, (Forbes, 2019), Sweden represents an attractive market for international
2010; Jacobides et al., 2018), also called modular ecosystems, focus on retailers (Retail Gazette, 2021). Swedish consumers are considered to be
the joint materialization of a focal value proposition through contribu­ open-minded, trend-sensitive early adopters with strong purchasing
tions from critical actors. Platform ecosystems (e.g. Cennamo and power, leading to a well-developed, innovative, and technologically
Santaló 2019; Gawer and Cusumano, 2008; Ozalp et al., 2018) focus on advanced retail market in Sweden (Forbes, 2019; Retail Gazette, 2021).
the ecosystems’ technological ability to integrate the contributions of In total, we conducted 17 interviews with various executives from five
the actors involved, which ultimately increase the value of the retail firms, resulting in a rich qualitative data base.

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3.2. Data collection subsequent discussion among all the involved researchers, the frame­
work became more mature as the differentiation phase (stage 2 in the
Data collection for this study was performed in several steps. First, final framework) became apparent when discussing the findings. To
the authors conducted preliminary interviews (between 30 and 60 mi­ validate the emerging findings, additional interviews were scheduled.
nutes) with the key contact person at the ecosystem orchestrator in order Our use of replication logic across our data enhanced the validity of our
to establish that the ecosystem met the sampling criteria and to famil­ findings while helping us to refine our framework (Eisenhardt, 1989).
iarize themselves with these ecosystems (05/2020–10/2020). Second,
the authors conducted interviews with executives from the orchestrator 4. Results
who had an in-depth insight of the ecosystem (01/2021–06/2021). The
data collection was carried out as semi-structured interviews based on The advent and growth of e-commerce has generated a broad
an interview guideline consisting of three parts: (A) Information con­ awareness among retailers that they need to incorporate digital solu­
cerning the orchestrating company, including the number of employees, tions into their business models. These digitally enhanced business
the revenue level, setting, background, and a company description; (B) models can allow retailers to serve existing customers better, to increase
the explanation of the ecosystem; and (C) surrounding conditions of the the penetration of their current markets, and to enter new markets.
ecosystem, such as environmental vagueness, industry features, or “When e-commerce is doubling every three, four years, that puts a
competition. completely new [… perspective] on distribution. That’s a huge trans­
This initial interview guide helped to increase internal validity due to formation. We see all these new companies coming up and being able to serve
its formal method (Spieth et al., 2019)Spieth et al., 2019 and is shown in customers in a new way on how they want their products to arrive them.
Appendix 1. The interviews lasted between 60 and 90 minutes. Some of That’s obviously one giant change.”(CEO of retail firm)
the interviews were recorded and transcribed to maintain data quality “We’re using a lot of Facebook ads, and Google ads. […] the statistics are
(Fernandez et al., 2018; Frankenberger and Sauer, 2019; Velu, 2017) coming into the picture. We can see everything. We can see impressions. We
Fernandez et al., 2018Frankenberger and Sauer, 2019Velu, 2017. Notes can see how the customers react to our content, our product, et cetera. […].
were taken during each interview. Moreover, we also collected supple­ It’s actually really where we drive the most of our sales. Through Facebook
mentary and secondary data. These data included information on web­ ads, Instagram ads, Google ads.” (CEO of retail firm)
pages, press releases, media reports, annual reports, as well as internal “One of [our key strategic assumptions] is, I mentioned, that traditional
presentations and reports. These additional data allowed us to deepen retailers – we – continue to add on e-commerce capabilities, and to expand
and expand the insights gained in the interviews, and to validate and into new markets faster than before.” (CEO of omni-channel retail firm)
triangulate them (Yin, 2018)Yin, 2018. While retailers commonly recognize the potential of digital tech­
Finally, we took precautionary measures to handle potential biases in nologies and digital business model innovation, they often simulta­
our data collection process in line with recommendations on qualitative neously realize that they lack the necessary capabilities to implement
research (Eisenhardt and Graebner, 2007; Gioia et al., 2013; Yin, 2018) the digital solutions themselves or with their existing partners. As a
Eisenhardt and Graebner, 2007Gioia et al., 2013Yin, 2018. Specifically, result, they look for new external partners and the retail ecosystem is
to prevent respondent biases, the interviewers did not expose any changing.
theoretical understandings or thought to the respondents (Huber, 1985) “We don’t have the competence to build up our e-commerce. Strategi­
Huber, 1985 and did not ask questions regarding explicit theoretical cally, we don’t really see how we should do it. We need people that can advise
constructs (Ozcan and Eisenhardt, 2009)Ozcan and Eisenhardt, 2009. us about how we should go further on with it.” (CEO of traditional retail
We also employed different interview techniques, such as event firm)
tracking, to urge respondents to revisit details pertaining to the ques­
tions intellectually. This procedure can strengthen the precision of in­ 4.1. Stage 1 – emergence of a meta-ecosystem
formation (Ozcan and Eisenhardt, 2009)Ozcan and Eisenhardt, 2009. As
an additional check for consistency, the authors conducted supple­ In order to access the desired digital capabilities, retailers search for
mentary interviews with other companies in the ecosystems. In all in­ competent partners that are familiar with these digital technologies.
terviews, no noteworthy inconsistencies emerged, which corroborates Hence, they turn to specialized companies in the digital service
the reliability of our data. ecosystem.
“I switched everything to digital online marketing. I just canceled all
3.3. Data analysis agreements, and we laid off a couple of people internally that were not strong
enough, and then I took in the two best agencies in Sweden when it comes to
The interviews were transcribed and enriched with secondary data to organic Google traffic and then paid traffic […].”" (CEO of major online
enable triangulation based on multiple sources of data (Jick, 1979), to beverage firm)
increase the construct validity of our qualitative study (Yin, 2009). In Retailers start to collaborate with firms in the digital service
addition to data triangulation, we also used investigator triangulation ecosystem to enter new markets and increase the efficiency and effec­
(Patton, 2015), as the data were analyzed by two researchers indepen­ tiveness of their activities in their current markets. Thereby, in­
dently. These two researchers did not conduct the interviews them­ terdependencies between the (previously physical) retail ecosystem and
selves. This situation had a further advantage in that the analysis was not the digital service ecosystem emerge. As the activities cross the
influenced by bias from the interviews or contact with the informants. boundaries between the two ecosystems, the two ecosystems start to
Both researchers employed active reading (highlighting phrases in the form a meta-ecosystem.
documents) and used open coding (copying quotes and associated codes Within this meta-ecosystem, retailers play different roles. While they
into MS Excel) for their analysis. Based on their individual analysis, the orchestrate the traditional retail side of the meta-ecosystem themselves,
two researchers jointly searched for recurring patterns across the in­ many of them – including “digitally native” online retailers – consider
formants’ responses, using replication to distill the underlying logic of the orchestration of the digital services to be more challenging than the
the patterns (Eisenhardt, 1989). By cycling between data and the liter­ orchestration of the physical product flows.
ature, the researchers sought, applied, and further refined explanations “The integration between different kinds of [digital services –] payments,
for the logic observed. Subsequently, the researchers sketched an initial logistics, marketing, and so on [– is a challenge for us]. It’s still a lot of silos.
framework focusing on the collaboration between retailers and digital […] I don’t think we talk about the [digital service] ecosystem around my
service providers. Thus, the engagement of specialists for digital busi­ business [enough]. I think that could be much, much better and needs to be
ness model innovation emerged quite early in the analysis. In the much, much better in the future. […] We need to work more together.” (CEO

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of online retail company) the retail sector and the option of virtual meetings are unlikely to
“There is more integration between different parts in the [traditional diminish the prominent role of human interaction and face-to-face
retail] ecosystem. That is thanks to […] quite a great ERP system.”" (CEO of communication. Retailers continue to rely on personal relationships
traditional retail firm) for coordinating product flows.
Few of the interviewed retail firms felt that they have the necessary “Traditional contact is going to remain, and the networking is important.
capabilities to tackle these orchestration challenges by themselves. […] I would say, the difference between a fair and a meet-the-buyers event is
“[The services that we are sourcing from digital service providers and the that the meet-the-buyers event can [be held and can succeed] fully digitally….
interactions with the digital service providers –] that we coordinate ourselves. Whereas a fair is a fair, and the dynamics in a fair, and you want to see and
One of our founders has that expertise. She coordinates all the outsourced […] meet people in the corridors and all of that, that’s impossible to do in a
digital services herself.” (Co-founder and COO of online health supple­ digital way. The traditional fair [– they tried…] to do a digital one, but they
ment company) [did…] not succeed. [… The informal talks at the side lines of a fair, doing
More commonly, the interviewed retailers reported collaborating coffees and lunches] are important […] When an industry is gathering, you
with agencies or intermediaries that help them orchestrate the digital have all those dinners, all those other things that are happening, and it’s never
services. possible to capture that digitally.” (Managing Director of omni-channel
“Yes we use agencies, two digital agencies. […] It will be more and more company)
important that we have a good partnership with a digital agency. […] I can’t Rather than replacing human interaction and face-to-face commu­
keep up pace with […] the platforms because they change all the time and nication, digital solutions may augment and enrich these relationships.
therefore, I buy the competence.” (CEO of online cosmetics firm) They facilitate the exchange of information that is relevant to the
“We work with some agencies. […] We go to intermediaries there. […] retailer, the supplier of goods, and the objectives they pursue together
They have really great contacts with the companies we work with today.” (e.g., improvements in environmental or social sustainability).
(CMO of traditional retail firm) “I think we will see more and more […] a closer link between us and our
The digital services that the diverse players from the digital service suppliers, so we will work perhaps more as partners to drive the same
ecosystem provide to a given retailer are crucial for the successful agenda.” (CEO of online cosmetics company)
execution of the retailer’s digital business model. The retailers depend While the value of personal ties and trust-based partnerships may be
heavily on the digital agencies that orchestrate and integrate the various widely accepted among the players in the traditional retail ecosystem,
digital services on their behalf. Retailers thus assume different roles in some companies that provide digital services to retail firms have not yet
the meta-ecosystem – they are orchestrators in the retail ecosystem and recognized the value of this kind of relationship.
complementors in the digital service ecosystem. “Some of them are partners, like [a specific digital payment provider] is
“For example […] Amazon […], they like to keep changing the terms and more of a partner. They are more proactive than others. They also have a
the different stock levels. They keep changing their fees and everything. In that relation with us and we want a relation with them, of course, because we
case, it’s just like, if you want to sell on Amazon, you just go along, basically. think we can come out better when we have that kind of relationship. Many of
For example, [with] Shopify […] it was the same. We just have to go along our other [digital solution] suppliers, they’re happy that they sold a tool to us
and do our best, try to make the best out of it, I guess.” (COO of omni- and then leave us there.” (CEO of online retail company)
channel health and retail company) However, the interviewed retail firms emphasize the value of trust­
“From one day to the other, [there could] be some changes in Google, for ing relations and personal contacts for the coordination with their
example. The algorithm is changing. I work with the digital bureau [… when partners from the digital service ecosystem.
such changes occur]. I can’t orchestrate [… the response to such changes]. “We have a good relationship with [some digital service agencies]. We
They [i.e., employees from the digital bureau] come to me and say: ’Hello, have built up a relationship for a long time […] It’s about trust and […
[name of interviewee], you need to do something now, they changed this. We building] relationships between us. […] They also have a round table where
will do this.’ [And I reply:] ’Okay, let’s do that.’” (CEO of online retail we meet once a year together. The companies invite us to meet them and to
company) discuss.” (CEO of traditional retail)
“That’s a good thing that we can meet [with some digital service pro­
4.2. Stage 2 – differentiation within the meta-ecosystem viders] and discuss common challenges or opportunities. That’s quite inter­
esting. It’s not just interesting, it’s really good to do that kind of thing.” (COO
A challenge faced by the retailers is that their competitors engage of online retail company)
with the digital service ecosystem as well. With more and more retailers Thus, physical interaction and trust-based relationships matter for
beginning to use state-of-the-art technology, the mere application of the coordination of both sides of the new meta-ecosystem – they are a
digital service solutions is not enough for retailers to gain a competitive critical means for coordinating the traditional supply of goods and a
advantage over their rivals. critical means for coordinating the supply of digital services. Moreover,
“The websites – the look and feel and the functionality – [… are] personal contacts and strong relationships with customers can differ­
becoming a commodity. It becomes more difficult to stand out by saying we entiate the retailer from its competitors on the sales market.
have a really nice and efficient and fast-functioning website, it’s just it has to “We need to build a strong community around our customers, to be able to
be there. Shopify is dominating the area today. With that technical innova­ create that value added. […] Through that community, we can gather even
tion, they have set the standard […].” (Co-founder and COO of online more insights through social listening and engagement, and so on. That’s one
health supplement company) of the assumptions. The other assumption is that customers will still expect to
“It’s a kind of standardization in a way. The tools will look a little bit the personalize the customer shopping experience and value feeling special,
same [across providers …]. It’s harder today to buy some kind of software, requesting help, advice, inspiration, and so on, when they want it. Learning
because really, [it …] look[s] the same [across providers].” (CEO of online when to interact in the customer journey will become even more important.
retail company) The line between helpful and great service and bothering customers will
Thus, retailers have to find ways to differentiate themselves from become even thinner. […] What can we do about that? It’s important [for the
their rivals. Traditionally, close personal relationships have played a customer] to build a connection and a personal relationship with the company
major role in differentiation in the retail sector. […] and for the company [it is important to build a connection and personal
“In this business, it’s about personal connections. You use everyone’s relationship with …] the customer.” (CEO of online retail company)
personal connections around you in the industry. This is important.” Digital technologies provide retailers with new opportunities for
(Managing Director of omni-channel company) creating personal contacts and relationship management. Using digital
Our interviewees believe that the ongoing digital transformation of solutions to increase the quantity and quality of interactions and to

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M. Palmié et al. Technological Forecasting & Social Change 177 (2022) 121496

stimulate deeper relationships with their customers can be a source of stores. Rather, many of them have pursued temporary solutions to meet
competitive advantage. consumers in person, such as pop-up stores, exhibitions and fairs, and
“The web page, you have to have one, but you have much more emphasis firm-specific events (e.g., informative breakfasts and yoga retreats in the
on the direct digital contacts.” (Managing Director of omni-channel case of retailers selling dietary supplements).
company) In conclusion, digitalization does not imply that physical contacts
“We’re trying to find all possible ways of interacting with customers live. become irrelevant. On the contrary, physical interactions and personal
In a way, you can perhaps say, ’Are we trying to replicate a physical store?’ relationships are expected to contribute significantly to the orchestra­
Maybe a little bit, but I think that’s a big area with technology. [New digital tion of product flows, the provision of digital services, and differentia­
technologies enable us…] to have a more interactive shopping experience. tion in the eyes of consumers.
[…] It’s huge in China. […] China will teach us how to do business in this
social selling perspective. No Western companies have really picked it up yet.
4.3. Synthesis – a framework for the transition to digital business models
[…] Top of the agenda today is for sure live selling.” (Co-founder and COO
of online health supplement company)
Our findings can be synthesized into a framework for the transition
A retailer of dietary supplements pointed out that online communi­
to digital business models. This framework is displayed in Fig. 1. In Stage
cation can occasionally even stimulate a more open exchange than a
1, firms (retailers) collaborate with specialized service providers to
face-to-face meeting in a physical store, as it may entail a feeling of
implement a digital business model. As firms from the retail ecosystem
greater privacy and anonymity.
collaborate with firms from the digital-service ecosystem to create a
“I think being able to interact with the consumers, and talk about these
value proposition for end-customers, a meta-ecosystem emerges. In
sensitive issues [… related to your] gut [… and health], that’s where the
Stage 2, firms (retailers) seek to differentiate themselves from their
utilization [of digital applications] gives a big benefit. […] I think [the source
competitors in the meta-ecosystem. They achieve this by engaging in
of lasting competitive advantage provided by digitalization to retail com­
physical interactions and building strong relationships with digital ser­
panies] is this consumer interaction. We have to have a dialogue with every
vice providers, suppliers in the retail ecosystem, and their customers.
single consumer, that’s a very strong thing, which you can only have in a
digital world.” (Co-founder of online health supplement company)
5. Discussion
In general, however, digital communication and virtual meetings are
seen as no substitutes for physical interactions. Physical interactions are
The developed two-stage framework makes three main contributions
commonly perceived to be richer and more conducive to the establish­
to the academic literature. First, it improves our understanding of how
ment of trust. Some retailers therefore complement their online presence
firms use collaborations with external partners to make the transition to
with opportunities for physical interactions between the company and
a digital business model.
its customers and believe that a lasting competitive advantage will
The firms in our sample came to the conclusion that it is often either
emerge from the integration of offline and online contacts.
not possible or prohibitively expensive to develop the competitive ca­
“I think it’s important to also keep in mind that you shouldn’t lose the
pabilities required for their digital business model (e.g., with respect to
connection to your customers. I’ve seen a lot of major big brands doing that.
data analytics) in-house. Hence, they started working with external
They’re going 100% online and never seeing their customers, never talking to
partners that specialize in providing these digital services. The decision
them […] I don’t believe in a 100% online presence, so that’s why I’m
to involve an external service provider was fostered by the fact that
considering these pop-up store solutions. I think it’s a fantastic idea to grow
retailers are typically accustomed to collaborate with external parties,
the brand community and brand awareness in general.” (COO of omni­
such as manufacturers whose products they are selling. Their decision to
channel health and retail company).
collaborate with digital service providers led to interdependencies be­
“It’s both physical and digital. That’s the trick, to combine them […] We
tween the (traditionally physical) retail ecosystem and the digital ser­
rely very much on our physical stores, and we trust our personnel. This is
vice ecosystem, such that a meta-ecosystem emerged. Moreover, we
where we can differentiate ourselves from our competitors.” (CEO of tradi­
found that physical interactions and close personal relationships with
tional retail company)
external partners serve as means of differentiation on a market that is
Not all of the online retailers that emphasized the relevance of
becoming increasingly homogeneous with respect to the digital tools
physical interactions with customers have permanent brick-and-mortar
used. Our finding that digitalization stimulates the emergence of meta-

Fig. 1. Framework for the transition towards digital business models.

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M. Palmié et al. Technological Forecasting & Social Change 177 (2022) 121496

ecosystems responds to numerous calls for further research on the in­ ecosystem to create a value proposition for end-customers, a meta-
fluence of digitalization on firms’ external relationships (e.g., Caputo ecosystem emerges. This meta-ecosystem is coordinated by multiple
et al., 2021; Luz Martín-Peña et al., 2018; Kothamäki et al., 2019; Paiola orchestrators – retailers tend to orchestrate the retail side and digital
and Gebauer, 2020; Parida et al., 2019; Ritter and Pedersen, 2020). Our service providers the digital service side of the meta-ecosystem. In Stage
finding that digitalization does not make physical interactions with 2, firms (retailers) seek to differentiate themselves from their competi­
suppliers and customers obsolete also responds to these calls. Instead of tors in the meta-ecosystem that use very similar (or even the same)
becoming obsolete, physical interactions can provide a competitive services. Physical interactions with the digital service providers, the
advantage among rivals that increasingly rely on digital technologies. product suppliers, and the customers represent the primary means to­
This finding corroborates and extends the observation that digitally wards this end.
enabled resource-to-resource interaction is not always a substitute for, Our study has substantial implications for management practice.
but can occasionally serve as a complement to, human interaction in the Shedding light on the role of external relationships for digital business
orchestration of resource-sharing networks (Palmié et al., 2021b). model innovation, it cautions managers against virtualizing the re­
Whereas Palmié et al. (2021b) refer to human interaction across a va­ lationships with their traditional partners (suppliers of goods) and their
riety of communication channels as a whole, our study shows that firms customers completely. Physical interactions and personal connections
specifically value physical interactions. Thus, even though digitization are likely to remain key. Managers should also build trusting relation­
fosters remote and virtual interactions, personal, face-to-face meetings ships with digital agencies that they can use as intermediaries for the
remain relevant. Our finding that close personal connections can com­ coordination of digital services. Regular “in-person” meetings with
plement the application of digital technologies responds to the calls to representatives of the digital agencies are also a promising means to this
devote more attention to the question of what firms can do to yield more end. Our study indicates that retail firms can share the orchestration
returns from their investments in digital technologies (e.g. Kothamäki activities with a digital agency. Doing so can reduce the complexity of
et al., 2019; Parida et al., 2019). the digital transformation and accelerate the transition to a digital
Second, our study shows how the digital transformation of sectors business model for firms from the retail sector and other traditionally
leads to the evolution of ecosystems and the emergence of meta- low-technology industries. However, managers from these industries
ecosystems, thereby contributing to the nascent literature on should keep in mind that their competitors are likely to implement
ecosystem emergence and ecosystem evolution (Fang et al., 2021; similar digital solutions, making competitors more homogeneous.
Hannah and Eisenhardt, 2018; Kolloch and Dellermann, 2018; Palmié Managers thus need to find other ways to differentiate their firms from
et al., 2020; Thomas and Ritala, 2021). Moreover, we observe that re­ rivals. Strong personal relationships with customers are certainly not the
tailers frequently depend on intermediaries (digital agencies) to coor­ only relevant means to this end.
dinate various digital services they receive. Thus, these intermediaries That being said, more research is needed to establish the generaliz­
serve as orchestrators of the digital service side of the meta-ecosystem, ability of our findings. Our study gained its insights from a qualitative
whereas the retail firms act as orchestrators of the retail side of the analysis of one sector in one country. Although the properties of the
meta-ecosystem. Our insights contribute to the growing literature on retail sector in general and the Swedish retail sector in particular render
ecosystem orchestration (e.g., Dattée et al., 2018; Lingens et al., 2021; the Swedish retail sector an intriguing empirical setting, future research
Masucci et al., 2020) by illustrating that digitalization can lead to should study the link between external relationships and digital business
(meta-)ecosystems that are coordinated by multiple orchestrators. The model innovation in other sectors and countries. Scholars could also
concept of meta-ecosystems complements the previous idea of platform explore the effect of specific digital technologies (such as artificial in­
envelopment which might occur in platform-based ecosystems (Eisen­ telligence) on firms’ external relationships. Moreover, they could study
mann et al., 2011). In platform envelopment, one ecosystem combines firms’ external relationships in conjunction with other business model
its functionality with the functionality of a target ecosystem into one elements (e.g., regarding the value proposition or value capture) to
overarching value proposition and starts to compete with the target identify promising configurations of multiple elements. Finally, future
ecosystem for the users of the target’s functionality. In contrast, the research should devote further attention to meta-ecosystems. Since
individual ecosystems forming a meta-ecosystem do not compete for the many sectors are currently undergoing digital transformation, meta-
same customers but rather collaborate to produce a joint value propo­ ecosystems including the digital service ecosystem are currently
sition for certain customers. In other words, meta-ecosystems can be emerging in many industries. Our study represents only a first step in
described as interconnected business models of multiple ecosystems. understanding this relevant phenomenon.
Moreover, the meta-ecosystem concept refines the notion of ecosystem
overlap which occurs when two ecosystems offer the same value prop­ Funding
osition (Miehé and Gassmann). For instance, both the financial service
ecosystem and the automotive ecosystem may offer car financing solu­ Pejvak Oghazi and Vinit Parida acknowledges research funds pro­
tions to car buyers. Ecosystem overlap can either result from competi­ vided by the Vinnova (Sweden’s innovation agency, Project No.
tion or from collaboration among the involved ecosystems. 2019–03,017).
Third, this article generates insights into the digital transformation of Lucas Miehé acknowledges a scholarship provided by the Swiss Na­
the retail sector, which has been described as under-explored (Hokka­ tional Science Foundation (Project No. 200151).
nen et al., 2020). It thus extends nascent research in this area, which has
so far considered how digitalization blurs the boundaries between dig­ CRediT authorship contribution statement
ital and physical retailing (Jocevski, 2020) and the opportunities digi­
talization offers to improve retail business models, such as new customer Maximilian Palmié: Conceptualization, Formal analysis, Writing –
experiences, increased speed and convenience, and data-driven decision original draft, Writing – review & editing. Lucas Miehé: Conceptuali­
making (Hokkanen et al., 2020). zation, Methodology, Writing – original draft, Writing – review & edit­
ing. Pejvak Oghazi: Investigation, Funding acquisition, Project
6. Conclusions administration, Writing – review & editing. Vinit Parida: Investigation,
Funding acquisition, Writing – review & editing. Joakim Wincent:
Our article developed a two-stage framework for the transition to Writing – review & editing.
digital business models. In Stage 1, retailers collaborate with specialized
service providers to implement a digital business model. As firms from
the retail ecosystem collaborate with firms from the digital-service

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M. Palmié et al. Technological Forecasting & Social Change 177 (2022) 121496

APPENDIX differentiation from competitors that use similar digital tools and
offer the same set of digitally enabled services? One example might
Questionnaire be the organization of social events (e.g., wine tastings if you are
selling wine online).
Theme 1: Respondent- and company-related information • What is your approach to digitization? Do you try to be a first mover
(at least in retail) or do you see yourself as a (fast) follower? What is
• Company name the motivation behind your approach?
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Lingens, B., Miehé, L., Gassmann, O., 2021. The ecosystem blueprint: how firms shape Thomas, L.D.W., Ritala, P., 2021. Ecosystem legitimacy emergence: a collective action
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ecosystems: the strategic role of outbound open innovation. Res. Policy 49 (1), taxonomy and future research avenues. Strategic Change 27 (2), 87–90. https://doi.
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Miehé, L., & Gassmann, O. (forthcoming). Ecosystems and their relevance for FinTech. In Velu, C., 2017. A systems perspective on business model evolution: the case of an
Lipton, A. and Schär, F. (Eds), FinTech Encyclopedia. World Scientific. agricultural information service provider in India. Long. Range Plan. 50 (5),
Miles, M., Huberman, M., Saldaña, J., 2013. Qualitative Data Analysis: A Methods 603–620. https://doi.org/10.1016/j.lrp.2016.10.003.
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CA: Sage. Sage.
Moore, J.F., 1993. Predators and prey: a new ecology of competition. Harv. Bus. Rev. 71 Yin, R.K., 2018. Case Study Research and applications: Design and Methods, 6th.
(3), 75–86. Thousand Oaks, CA: Sage.
Oghazi, Pejvak, Karlsson, Stefan, Hellström, Daniel, Hjort, Klas, 2018. Online purchase Zott, C., Amit, R., Massa, L., 2011. The business model: recent developments and future
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2020. Oghazi, P., Karlsson, S., Hellström, D., Mostaghel, R., & Sattari, S. (2020).
Maximilian Palmié is an Assistant Professor of Energy and Innovation Management at the
From Mars to Venus: Alteration of trust and reputation in online shopping. Journal of
University of St. Gallen (Switzerland). He received his PhD in Management from the
Innovation & Knowledge. Journal of Innovation & Knowledge 6 (4), 197–202.
University of St. Gallen. His research focuses on the management of sustainability trans­
Ozalp, H., Cennamo, C., Gawer, A., 2018. Disruption in platform-based ecosystems.
formations and the management of digital transformations, especially on questions related
J. Manage. Studies 55 (7), 1203–1241. https://doi.org/10.1111/joms.12351.
to scaling, stakeholder engagement, and business model innovation. His work has been
Ozcan, P., Eisenhardt, K.M., 2009. Origin of alliance portfolios: entrepreneurs, network
published in Entrepreneurship Theory & Practice, International Journal of Management Re­
strategies, and firm performance. Acad. Manag. J. 52 (2), 246–279. https://doi.org/
views, Journal of Cleaner Production, Strategic Entrepreneurship Journal, Technological Fore­
10.5465/amj.2009.37308021.
casting & Social Change, and other journals
Paiola, M., Gebauer, H., 2020. Internet of things technologies, digital servitization and
business model innovation in BtoB manufacturing firms. Industrial Marketing
Manage. 89, 245–264, 10.1016/j.indmarman.2020.03.009. Lucas Miehé is a PhD student and Research Associate at the Institute of Technology
Palmié, M., Boehm, J., Friedrich, J., Parida, V., Wincent, J., Kahlert, J., Gassmann, O., Management, University of St. Gallen, Switzerland and Visiting Researcher at the
Sjödin, D., 2021a. Startups Versus Incumbents in ‘green’ Industry transformations: A Department of Strategy and Innovation, Copenhagen Business School, Denmark. Prior to
comparative Study of Business Model Archetypes in the Electrical Power Sector. academia, he worked for insurance companies and was deployed for military peace sup­
Industrial Marketing Management, in press. https://doi.org/10.1016/j. port operations in the Balkans (three tours). His research interests lie in the design and
indmarman.2021.04.003. governance of ecosystems. He has published his work in Long Range Planning.
Palmié, M., Boehm, J., Lekkas, C.K., Parida, V., Wincent, J., Gassmann, O., 2021b.
Circular business model implementation: design choices, orchestration strategies,
Pejvak Oghazi is Professor in Business Studies and head of department at Sodertorn Uni­
and transition pathways for resource-sharing solutions. J. Clean. Prod. 280, 124399
versity, School of Social Sciences in Stockholm, Sweden. He is also senior research asso­
https://doi.org/10.1016/j.indmarman.2021.04.003.
ciate Management at Hanken School of Economics, Finland He holds an MSc in Industrial
Palmié, M., Wincent, J., Parida, V., Caglar, U., 2020. The evolution of the financial
and Management Engineering in addition to a PhD in Industrial Marketing from Lulea
technology ecosystem: an introduction and agenda for future research on disruptive
University of Technology in Sweden. Prior to his current position, Professor Oghazi
innovations in ecosystems. Technol. Forecast. Soc. Change 151, 119779. https://doi.
worked as an industrial manager at national and international level. Professor Oghazi’s
org/10.1016/j.techfore.2019.119779.
current research interests revolve around topics in Digitalization, Business models, SCM
Parida, V., Sjödin, D., Reim, W., 2019. Reviewing literature on digitalization, business
and Marketing.
model innovation, and sustainable industry: past achievements and future promises.
Sustainability 11 (2), 391. https://doi.org/10.3390/su11020391.
Patton, M.Q., 2015. Qualitative Research and Evaluation Methods, 4th. Thousand Oaks, Vinit Parida is a Professor in Entrepreneurship and Innovation at Luleå University of
CA: Sage. Technology, Sweden. His research interests include servitization, business models, open
innovation, and organizational capabilities. He has published more than 80 journal arti­
cles, including articles in Academy of Management Journal, Strategic Management Journal,

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M. Palmié et al. Technological Forecasting & Social Change 177 (2022) 121496

Journal of Management Studies, Long Range Planning, Industrial Marketing Management, St. Gallen. His current research interests include technology, artificial intelligence, man­
Production and Operations Management, Journal of Cleaner Production, and others. agement, and innovation in organizations. Previous articles by him have been published in
journals such as the Academy of Management Review, Strategic Management Journal, Harvard
Business Review, Journal of Management Studies, Journal of Business Venturing, Entrepre­
Joakim Wincent is Professor in Entrepreneurship and Management at Hanken School of
neurship Theory and Practice and others.
Economics, Finland, and a Professor in Entrepreneurship and Innovation at University of

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