Does a Target Platform’s Reverse Resource Transfer Always Mean a Loss? The Perspective of User-Generated Content Volume

Abstract

We have witnessed tremendous growth in platform firms over the past several years. Given the “winner take all” principle of two-sided markets, platform firms usually engage in aggressive strategies to compete, increasing the likelihood of mergers and acquisitions (M&As). The extant literature, however, concentrates on competition strategies while neglecting cooperation strategies in the context of platform M&A. Thus, this study focuses on the implementation of a reverse resource transfer policy during the post-M&A integration of two transaction platforms. Using data obtained from the target platform of the M&A event, we perform regression discontinuity design to analyze the causal effect of the policy change on user-generated content (UGC) volume of merchants in a target platform. The results indicate that the policy change leads to a positive discontinuity jump for the UGC volume of merchants around the cutoff point. Specifically, policy change increases the volume of reviews with pictures and the number of interactions within reviews in both the short and long run. These findings help to deepen our understanding of the impact of reverse resource sharing of the target platform firm on the generation of UGC and clarify how different types of agents can benefit from the strategy.