How B2B platform improves Buyers’ performance: Insights into platform’s substitution effect

Abstract

Platforms are observed to gradually replace traditional pipeline supply chains. To better understand how platforms can assist business buyers in improving their bottom-line, this study investigates the influence of platform usage on three aspects of buyers’ performance. We build a theoretical framework focused on the roles of trust and transaction cost, and the moderating effects of transaction frequency. Using a sample of 314 buyer firms who are enrolled on a major e-commerce platform within the past ten years, we find that platform usage increases trust and decreases transaction cost for buyer firms, both of which in turn improve the buyers’ relationship performance, supplier performance and market performance. We also reveal a positive moderating effect of transaction frequency in this framework. The findings highlight the substitution effect of platforms in replacing traditional supply chains and what it means for business buyers.