Governance mechanisms implementation in the evolution of digital platforms: a case study of the Internet of Things platform

Abstract

Digital platforms have emerged as engines of innovation for companies to build complementary products and services in the ecosystems leveraged by the remarkable progress in digital technologies. However, the implementation of governance mechanisms to manage complementary innovation in digital platform ecosystems remains poorly understood. This study explores how digital platform owners implement governance mechanisms to manage complementary innovation along with the evolution of digital platforms. Based on the longitudinal case analysis of a leading Chinese digital platform in the Internet of Things sector, we identify four major governance mechanisms in digital platform ecosystems for managing complementors, which include agreement and rules, selective promotion, joint problem solving, and socialisation. We then develop two governance modes: the ‘commanding’ mode for mobilising complementors in the start‐up stage and the ‘enabling’ mode for locking in complementors in the scale‐up stage. This study reveals the major governance mechanisms and interaction dynamics between governance mechanisms and platform architecture in the evolution of digital platforms.