Ecosystems vs Conglomerates: the Evidence from Asian Countries

This research paper provides a comparative analysis of Asian ecosystems and conglomerates, with a focus on performance, resilience, and market analysis. As the 21st century has progressed, technological advancements have significantly impacted various industries, where business ecosystems—interlinked networks of companies—have emerged as a global megatrend. These ecosystems have dramatically reshaped the economic landscape, influencing large corporations' management strategies and becoming dominant players in the global economy. This study seeks to fill a notable gap in the literature by comparing performance and resilience of these modern business ecosystems to traditional conglomerates, particularly in the rapidly advancing Asian markets. Central to our study are two hypotheses: H1 posits that business ecosystems on average outperform their conglomerate counterparts, and H2 suggests that ecosystems exhibit less volatility during economic shocks. We use empirical data sourced from leading consulting firms and results of academic research papers to analyze performance trends in both business models within Asia. This region was chosen due to the economic rise of Asian countries, especially increasing dependance of the world on the technologies and businesses of those countries (McKinsey & Company, 2023). We chose conglomerates for comparison due to the similarity of ones with ecosystems in terms of owning many businesses in diverse industries and difference of both in approaches to interconnectivity of businesses, customer-centricity and data usage in every day operations. By examining structural similarities and operational differences between ecosystems and conglomerates as well as financial statement data, valuation metrics and financial market data, we came up with the following results of our research: ecosystems are performing quite similar to the conglomerates: profitability and ROE are highly dependent on the country specifics, market capitalization is on average lower for ecosystems, however, we should emphasize that revenue growth is significantly better for ecosystems in all of the analyzed cases, which might suggest that in future ecosystems can outperform conglomerates by the all metrics. Volatility of the ecosystems is higher than of the conglomerates not even during economic shock, but also during times of stability. These results clarify business ecosystems performance and resilience, offering valuable insights for investors, policymakers, and business leaders navigating these complex business architectures.