Abstract
This article explores the interplay between the platform business model and the creation and distribution of shared reputational value. Broadly speaking, platform businesses serve to connect consumers with producers and often rely on a global network to create value. A paradox exists in that while platform economies should reduce informational asymmetries through signaling, the attribution of signals for reputational outcomes is imprecise when so much value creation is shared. This article helps practitioners understand the creation of shared reputational value with respect to the platform business model and employs the CAGE framework to highlight challenges of operating across national borders.
Highlights
The concept of platform businesses, referring to businesses connecting those that produce goods and services with those that consume them, has sparked enthusiasm due to the popularity and global success of gigantic platforms including Uber, Facebook, Amazon, and Alibaba, among others
The network ecosystems created by platform businesses often reduce informational asymmetries, by providing better management of, and greater access to, informational signals from network participants, which in turn allows for increased global market participation (Lehdonvirta, Kässi, Hjorth, Barnard, & Graham, 2019)
Albeit a very popular organizational form in the digital economy, platform businesses have not been the subject of much inquiry in the international business (IB) field despite the fact that they often represent a globally dispersed ecosystem that could be very complex to manage due to the cultural, economic, political, geographic differences that exist among countries
Summary
The concept of platform businesses, referring to businesses connecting those that produce goods and services with those that consume them, has sparked enthusiasm due to the popularity and global success of gigantic platforms including Uber, Facebook, Amazon, and Alibaba, among others. The network ecosystems created by platform businesses often reduce informational asymmetries, by providing better management of, and greater access to, informational signals from network participants, which in turn allows for increased global market participation (Lehdonvirta, Kässi, Hjorth, Barnard, & Graham, 2019) Such platforms may paradoxically, fuel network effects that create winnertake-all marketplaces (Knee, 2018) and confound information signals used to precisely attribute the shared reputational value created. As many informational asymmetries are reduced allowing for more global participants (Lehdonvirta, Kässi, Hjorth, Barnard, & Graham, 2019), signal attribution, and the corresponding shared reputational value allocation, becomes less clear Stated another way, the global value chain creates signals related to the quality of products and services based on consumer experiences within the platform, but it may be unclear to the consumer what caused the experience, or they may be unclear when providing feedback such as reviews, that create reputational value. Applying the CAGE framework (Ghemawat, 2001), we illustrate potential areas of global signal generation and management concern (GSGC and GSMC) and conclude with a few recommendations for managers
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