Turning Tables: Understanding When, How, and Why Emerging Platform Complementors Outshine Incumbents

Abstract

In the platform economy, entrants, despite significant losses, appear to challenge incumbents and alter industry architectures in more profound ways than I might have expected. This paper explores one of these cases, shedding light on when and why power shifts emerge, so that entrants take the driver seat, often with the support of incumbents. This inductive study of the Southeast Asian mobility-as- a-service industry explores how these dynamics unfold. I find that while incumbents often experiment with the new technologies that can lead to platforms, their need to grow consistently with their core offerings and organizational rigidities make them bypass these activities; or sometimes invest in entrants that engage in exploration. Once a platform emerges, incumbents do nothing to challenge it, and often support it, inasmuch as it serves some of their needs. Successful entrants ignore incumbents, while opportunistically pursuing relationships with a host of different actors and focusing on intra-platform competition. With platform leaders emerging, capital market support for entrants makes them oblivious to incumbent response, and incumbents gradually compete between them to support the platforms that ultimately challenge their dominance. This process is amplified by organizational changes, and by the growing role of managers who come from outside of the incumbent industry. Successful platform owners, on the other hand, continue to opportunistically reposition themselves with little regard to the focal sector structure.