Ecosystem Emergence when Supply, Demand, and Incentives are scarce: The Case of the Clinical Trials Ecosystem for Rare Diseases

In recent years there has been a growing and consistent interest in business ecosystems to study their emergence (e.g, Hannah and Eisenhardt, 2018), management (e.g., Adner and Kapoor, 2010), and disruption (e.g., Ozalp, Cennamo, and Gawer, 2018). Scholars have also examined when ecosystems are better than markets (Jacobides, Cennamo, and Gawer, 2018). While markets are characterized primarily by transactions, ecosystems are characterized by complementarities of value creation and interdependences, and by specific dynamics between ecosystem actors (e.g., Cozzolino, Corbo, and Aversa, 2018; Jacobides et al., 2018). When supply and demand are scarce and incentives are limited, markets are less likely to emerge (e.g., Autio and Thomas, 2014; Murthy and Madhok, 2021; Navis and Glynn, 2010). Similar conditions of small/scattered demand, supply bottlenecks, and limited incentives are largely overlooked by scholars, but we submit that ecosystems can still emerge. Contexts characterized by such conditions can be important, as is the case of “rare diseases” where both patients and clinical trial participants are few in number and often difficult to identify. Therefore, the investigation of ecosystem emergence as a solution to non-market emergence is both theoretically relevant and practically valuable, especially for those cases where the ecosystem in question produces goods or services that have important societal implications. To help fill this theoretical and practical lacuna, we investigate the following research question: What are the processual mechanisms enabling ecosystem emergence in conditions when a market would not emerge, such as when supply, demand, and incentives are scarce? The phenomenon guiding our investigation is the emergence and evolution of the clinical trials ecosystem around rare diseases, a revelatory case (Yin, 1994) for our research questions, as shown below. The clinical trial focus was chosen because this is the most important and expensive phase in drug development. Over the past two decades, pharmaceutical firms have outsourced most of their clinical trials to so-called clinical research organizations (CROs), which conduct clinical trials on patients on behalf of pharmaceutical companies. Clinical trials are a critical component of the pharmaceutical value chain, not only from a regulatory perspective but also because they allow for building direct relationships with patients - a factor that is particularly vital when it comes to rare diseases. This interdependence is key for our research: we believe that it is important to study the interdependent relationships between CRO, pharmaceutical companies, and patients / patient organizations, extending prior studies focused only on pharmaceutical companies and biotech startups (e.g., Arora and Gambardella, 1990; Rothaermel, 2001) and contributing to the broader perspective of ecosystem research (Hannah and Eisenhardt, 2018; Jacobides et al., 2018).