Slicing the cake without baking it: Opportunistic platform entry strategies in digital markets

Abstract

The growth of digital platforms relies on the generative nature of digital resources and platforms' openness to complementary innovation. These features often generate strong network effects and winner-take-all dynamics that protect incumbents from competition. However, under certain conditions, these same features render incumbent platforms vulnerable to competitive strategic moves via entrant platforms wherein the entrants can capture value and simultaneously avoid upfront investments in value creation. In this study, we identify three such strategies: platform exploitation, platform injection, and platform pacing. These strategies allow the entrant platform to capture value using the incumbent ecosystem's resources by copying parts of the resources (exploitation), by following the development cycle of key boundary resources (pacing), or by placing itself inside the platform (injection). In this study, we employ an interpretative cross-case synthesis to both theorize these strategies as a new category of opportunistic platform competition and to reveal their distinctive characteristics. Overall, the study demonstrates the potential for unconventional and opportunistic platform competition strategies that extend beyond more traditional ones, such as quality, variety, and network size.