The digital transformation of a traditional market into an entrepreneurial ecosystem

Song, Ying and Escobar, Octavio and Arzubiaga, Unai and De Massis, Alfredo (2022) The digital transformation of a traditional market into an entrepreneurial ecosystem. Review of Managerial Science, 16 (1). pp. 65-88. ISSN 1863-6691

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Abstract

Information and Communication Technologies (ICT) are transforming the business models and entrepreneurial ecosystems of different economic activities. As a result, the survival of some of these activities, especially physical markets, is under threat. This article aims to shed light on the distinct e-commerce mechanisms of wholesale markets that enable transforming and upgrading their ecosystem. The study combines insights from the scholarly debate on ecosystems, wholesale markets, and e-commerce with the empirical findings of a case study (a wholesale fruit market in Chongqing, China). By exploring the mechanisms and outcomes of e-commerce, this article shows that ICT adoption can be a threat as well as an opportunity for wholesale markets. On the one hand, transaction costs and marketing channel power might make physical wholesale markets less attractive for wholesalers and customers. On the other hand, network effects and business model innovation can enhance the traditional wholesale advantages of physical markets, in turn transforming and upgrading this traditional ecosystem into an entrepreneurial one.