The term "Edge Effect" is used in Permaculture Design (I'm studying for the certificate) to refer to the observation that interesting things happen at the point where two different environments come together (e.g., land/water, grass/forest, grass/pavement, etc..). The rate of plant growth, type of plant growth, type of species composition, diversity of species composition and other measurable outcomes change at the boundaries between environments. Permaculturists are encouraged to pay close attention to these edges in the landscape and design landscapes with an eye towards increasing and optimizing edge to promote species diversity, better growing conditions, etc...

An example of applying the edge effect principle to landscape design would be that instead of designing a pond that is circular and all at the same depth, a permaculturist would want to increase edge effects by having an irregularly formed boundary between the water and the land (e.g., micro harbors) to encourage diversity of plants and animals that can exist around the pond. Pieces of land jutting into the pond would be home to more plant and animal species than land confined to a circular perimeter around the pond. The depth might be varied as well so that different organisms (e.g., fish) and plants could live in the shallow parts of the pond versus the deeper parts (e.g., creating a 3 dimensional edge through height differences in the pond).

Angelo Eliades in his excellent blog Deep Green Permaculture offers up a nice visualization of one reason why species diversity increases around edges:

The ‘edge effect’ – Where two ecosystems overlap, the overlapping area supports species from both, plus another species that is only found in the overlapping area.

Source: http://deepgreenpermaculture.com/permaculture/permaculture-design-principles/10-edge-effect/

What I like to think about is how permaculture principles such as the edge effect might apply more broadly to the project of growing a businesses. This is a form of biomimetics where we take a principle regarding how nature works and see if it can teach us something about how other systems should be designed, such as a business. Are there edge effects in business? If we want to grow our business should we focus more on the edges of our business or the internals of our business? Where are the edges of our business and how do they overlap with other businesses? Are these areas of overlap the areas we should focus on more if we want to grow our business?

I do not have the answers to these questions. They are abstract questions and we all have to define the concepts according to our own particular business circumstances. The concept of an "edge effect" gives us a cognitive tool that can get us looking at our business differently and asking different questions about it. This may or may not be a productive exercise. To the extent that nature is a good teacher you may want take to heart some of her lessons as they apply to physical reality and see if they also apply to business reality. Are there edge effects in business? Do they occur for similar reasons?