Multi-sided Platforms Research Articles

Платформы как многосторонние рынки эпохи цифровизации

Platforms have become a specific format of multi-sided markets in the 21st century digital economy. The paper provides theoretical examination of business and pricing models which underlie the success of many of modern fastestgrowing and most powerful companies such as Apple, Microsoft, Google, Amazon, eBay, Airbnb, Uber, Visa, Sony, etc. The author reviews four different types of multi-sided platforms: matching, multimedia, payment and software platforms. It is shown that platform business models are based on some unique features, including: technological infrastructure that provides interaction of agents; direct (among agents on the one side) and indirect (among agents on different sides) network externalities which make platforms more valuable to their customers; non-neutral price structure using to attract more clients on all sides. The author focuses on the main question determining the success of multi-sided platforms: how to create and monetize network externalities? It is stressed that the optimal platform price structure depends on the intensity of the indirect network externalities and the price sensitivity of agents. Special attention is paid to developing ways of launching a platform and monetizing the value created by network externalities. Basing on the platform economics statements, the author makes out two directions of the future “platform revolution”. The first direction will be the increasing competition among platforms that is no longer purely technological rivalry and a struggle for the critical mass of agents, which makes the platform viable. It is rapidly shifting towards service characteristics and prices. The second direction will be the dramatic growth of the business models associated with the Internet of things platforms (IoT-platforms).

Designing a Multi‐Sided Platform business model assessment framework: a Dynamic Performance Management perspective

AbstractThe purpose of this research is to offer an assessment framework to validate multisided platform business models. For this aim, we propose a systemic perspective based on the dynamic performance management approach. This approach is particularly effective to make explicit the net of relationships between internal and external strategic resources, the value creation and capture drivers, and the way such drivers influence platform performances. The developed multisided platform business model assessment framework has been tested by using a success and a failure case, respectively, Airbnb and Take Eat Easy. Research originality results from the combination of multisided platform value creation/capture drivers and innovative approach like the dynamic performance management to assess platforms business models. Findings show that neglecting the role played by value creation and capture drivers and those cause‐and‐effect mechanisms aimed at leveraging critical internal and external strategic resources can lead to platform failure.

Leveraging industry 4.0 – A business model pattern framework

Industry 4.0 (I4.0), also known as the fourth industrial revolution, describes the digitalization of manufacturing industries. The transition to I4.0 is crucial for manufacturing firms to sustain competitive advantage and seize new opportunities. Most research has focused on the technological aspects of I4.0 in the form of product and process innovations. Despite I4.0's rising attention from both researchers and practitioners, little research exists about I4.0 business model (BM) innovation, even though BM innovations can be more successful than product or process innovations. To address this research gap, we analyze 32 case studies of I4.0 BM innovators. We develop a taxonomy to characterize I4.0 BMs and derive 13 patterns of I4.0 BMs by applying the taxonomy to the case studies. Three super-patterns are identified: integration, servitization, and expertization. Integration innovates a BM with new processes and integrates parts of the supply chain. New combined products and services are the basis for servitization. Expertization is a hybrid of product- and process-focused BMs, which includes consulting services and multi-sided platforms. This study contributes to research with a framework for describing, analyzing, and classifying BMs for I4.0. The findings deepen the understanding of how I4.0 impacts ecosystem roles, BMs, and service systems. Archetypal patterns show how firms can leverage I4.0 concepts and build a conceptual basis for future research. The taxonomy supports practitioners in evaluating the I4.0-readiness of their existing BM. The patterns additionally illustrate opportunities for becoming an I4.0 firm.

The Invisible Hand, the Regulatory Touch or the Platform’s Iron Grip?

The “invisible hand” has become an icon for an economic philosophy that assumes a laissez-faire governmental policy will result in optimal social and financial outcomes as market forces will drive a socially efficient equilibrium. This approach is in tension with another philosophy that emphasizes the role of regulation in correcting market failures that inhibit markets from functioning smoothly. At the heart of this paper is a third approach to market regulation—that of the multi-sided platform. Multi-sided platforms are designed specifically to control and craft parties’ underlying transactions. In the modern era, data-savvy platforms collect information on every participant and transaction; control entrance, information flow, and competition design; assist in searching and matching; set the contractual terms (and sometimes even price) of a finalized transaction; allocate risk between parties; and are often involved in enforcing the transaction or resolving disputes. Thus, the laissez-faire assumption of refraining from government intervention in markets takes on a new meaning as it leaves the market to be governed not by the invisible hand of competition, but by iron grip of the platform that closely monitors and designs every aspect of its underlying parties’ interactions. This paper suggests that when assessing whether regulators can concede some of their roles to private actors, competition and transparency can act as central forces aligning platforms’ incentives with those of the public, and conversely, as platforms’ activities and policies grow more opaque, or competitive forces are weakened, policy makers should be concerned that such regulatory powers may be misused.

Multi-sided platforms

Multi-sided platforms

Multi-sided platform diffusion in competitive B2B networks: inhibiting factors and their impact on network effects

Although multi-sided platforms (MSPs) and their diffusion in B2C contexts received heightened attention in recent literature, there is still a dearth of research on MSP diffusion inhibitors in competitive B2B networks. Using the air cargo hub in Frankfurt, Germany, as highly competitive B2B network which struggles with the acceptance of an MSP for over 10 years, we applied a grounded theory approach to identify key inhibitors to MSP diffusion. Based on several interviews with a diverse set of stakeholders and a systematic coding procedure, we identified 21 factors inhibiting MSP diffusion. The majority of these factors slows down or even thwarts positive network effects, typically occurring on MSPs. Furthermore, we derive a classification showing that the inhibiting factors primarily hamper cross-side network effects in highly competitive B2B networks, and to a lesser degree also same-side and mixed-side network effects. Finally, implications of these results and future research directions are discussed.

Surrounded by middlemen - how multi-sided platforms change the insurance industry

Multi-sided platforms (MSP) strongly affect markets and play a crucial part within the digital and networked economy. Although empirical evidence indicates their occurrence in many industries, research has not investigated the game-changing impact of MSP on traditional markets to a sufficient extent. More specifically, we have little knowledge of how MSP affect value creation and customer interaction in entire markets, exploiting the potential of digital technologies to offer new value propositions. Our paper addresses this research gap and provides an initial systematic approach to analyze the impact of MSP on the insurance industry. For this purpose, we analyze the state of the art in research and practice in order to develop a reference model of the value network for the insurance industry. On this basis, we conduct a case-study analysis to discover and analyze roles which are occupied or even newly created by MSP. As a final step, we categorize MSP with regard to their relation to traditional insurance companies, resulting in a classification scheme with four MSP standard types: Competition, Coordination, Cooperation, Collaboration.

Survival Scale: Marketplace Lending and Asymmetric Network Effects

Using data on 988 peer-to-peer lending platforms in China, we examine cross-side network effects (CNEs)---arguably the most important factor for multi-sided marketplaces---throughout platforms’ lifecycle in a dynamic industry characterized by entries, exits, and network externalities. We find that unlike borrowers’ symmetric CNEs, lenders’ CNEs are lower on declining, more established, or smaller platforms than on growing, new, or larger platforms. Borrowers’ CNEs are also larger than lenders’ CNEs, especially for declining or sub-scale platforms. We rationalize the asymmetries in a model of financial platforms incorporating endogenous failures and their empirically motivated distinguishing features: lenders’ portfolio diversification, failures’ differential impacts on agents, and borrowers’ stickiness. The model further predicts that lenders’ CNEs and platforms’ ranks predict the platforms’ survival likelihood, among others, which the data corroborate. Our findings provide novel economic insights on multi-sided platforms and inform FinTech practitioners and regulators.

The Uberization of the United Nations’ regime to prevent the online financing of terrorism: tackling the problem of obfuscation in virtual currencies

ABSTRACTThis article examines an Uberization model of governance that can enable the existing United Nations (UN) regime for preventing the financing of terrorism to overcome the problems caused by the obfuscation techniques employed by virtual currencies (VCs). This new global governance model envisions a multi-sided platform where public and private actors are interconnected by the United Nations Security Council (UNSC). The central argument of this article is that the UNSC can build a powerful and transparent platform of cooperation and set binding rules of cooperation for all countries and members of the VC ecosystem. This governance platform will offer an entrepreneurial opportunity for private actors of the VC ecosystem to allocate their idle investigation capacity towards cooperation with national law enforcement agencies who lack investigation resources to tackle the problem of obfuscation in VCs. It will also enable national law enforcement agencies to collaborate with the most competent private cyber forensic experts in a cost-efficient way.

Designing a multi-sided data platform: findings from the International Data Spaces case

The paper presents the findings from a 3-year single-case study conducted in connection with the International Data Spaces (IDS) initiative. The IDS represents a multi-sided platform (MSP) for secure and trusted data exchange, which is governed by an institutionalized alliance of different stakeholder organizations. The paper delivers insights gained during the early stages of the platform’s lifecycle (i.e. the platform design process). More specifically, it provides answers to three research questions, namely how alliance-driven MSPs come into existence and evolve, how different stakeholder groups use certain governance mechanisms during the platform design process, and how this process is influenced by regulatory instruments. By contrasting the case of an alliance-driven MSP with the more common approach of the keystone-driven MSP, the results of the case study suggest that different evolutionary paths can be pursued during the early stages of an MSP’s lifecycle. Furthermore, the IDS initiative considers trust and data sovereignty more relevant regulatory instruments compared to pricing, for example. Finally, the study advances the body of scientific knowledge with regard to data being a boundary resource on MSPs.

Perceived Risk, Trust and Familiarity of Online Multi-Sided Pure-Play Platforms Selling Physical Offerings in an Emerging Market

Understanding how customers perceive trust and risk when engaging with online pure-play multi-sided platforms (MSPs), has become critical to the performance of digital marketing strategies. This study explored the relationship between perceived trust, perceived risk and user familiarity associated with MSPs. For the purpose of this study, MSPs are conceptualised as firms that operate only online, that seek to provide transacting services to buyers and sellers, and that sell physical offerings in an emerging market context. Primary data were collected through an online instrument across five MSPs and the study reported the results pertaining to differences and similarities between groups and platforms. The results show that while familiarity drives trust, its impact is moderated by perceived risk. Contrary to common belief, the results show gender differences, but do not confirm age differences in trust and the moderation effect of risk. Moreover, the results also show that the influence of familiarity is not significantly different across MSPs.

The Recipe of Successful Crowdfunding Campaigns: An Analysis of Crowdfunding Success Factors and Their Interrelations

Online crowdfunding websites are multi-sided platforms that offer project founders the possibility to publish their project ideas, to address potential investors, and to ask for funding. The successful funding of crowdfunding campaigns is important for founders, investors, platform operators, and diverse interest groups as well. As a consequence, research has already shed light on some success factors of crowdfunding campaigns, but the interrelations between the success factors have been neglected so far. Building upon previous research in the field of crowdfunding, investment decision making, and signaling theory, we propose a research model to explain crowdfunding success considering success factors and their interrelations. Our findings reveal that not only the factors themselves but also their interrelations are important to explain funding success. Our results are highly relevant for the stakeholders on crowdfunding platforms in order to prepare and identify successful project proposals.

The recipe of successful crowdfunding campaigns

Online crowdfunding websites are multi-sided platforms that offer project founders the possibility to publish their project ideas, to address potential investors, and to ask for funding. The successful funding of crowdfunding campaigns is important for founders, investors, platform operators, and diverse interest groups as well. As a consequence, research has already shed light on some success factors of crowdfunding campaigns, but the interrelations between the success factors have been neglected so far. Building upon previous research in the field of crowdfunding, investment decision making, and signaling theory, we propose a research model to explain crowdfunding success considering success factors and their interrelations. Our findings reveal that not only the factors themselves but also their interrelations are important to explain funding success. Our results are highly relevant for the stakeholders on crowdfunding platforms in order to prepare and identify successful project proposals.

Customer Shopping Network on a Multi-Sided Platform

Multi-sided platforms (MSPs) e.g., Alibaba and Google Express, are an emerging business model that is growing rapidly. MSPs in retail are partnership networks that use the internet to bring multiple stakeholders together. One of the benefits of retail MSPs is the network effect, where customers can buy from various retailers on an MSP creating a customer shopping network. However, very few studies have explored what types of retailers benefit more from network effects. Using network theories of centrality and structural holes, we examine network positions that are advantageous or disadvantageous for retailers in the MSP. Using panel data from one such MSP, our results show that retailers who have higher customer reciprocity, structural centrality or the ability to bridge structural holes have higher sales as compared to other retailers. This has implications for an MSP as it decides which retailer to court and promote and also with whom to renegotiate terms of contract. Theoretical contributions are also discussed.

The emergence of multi-sided platform MNEs: Internalization theory and networks

The rise of the digital economy provides firms across the globe with unique business opportunities. Companies such as Facebook, Alibaba, and Uber are competing in a new multi-sided platform world; the primary focus of these firms, from their inception, is to provide digital infrastructure, information and technology—intangible assets that enable direct interaction or value creation across platforms by linking different user group and complementors, often at the international level. Building on data drawn from multinational multisided Platform corporations (MMPCs) operating in China, we combine insights from internalization theory and network effects in understanding the value creation of such firms. We explore the boundaries of these new “breed” of MNEs in exploiting firm-specific advantages (FSAs) and in creating new knowledge between headquarters and subsidiaries. The findings suggest that internalization theory needs to shift its focus from the ‘boundaries of the firm’ to the ‘boundaries of the local network’. By integrating their internal and external networks of knowledge in adapting their business models in host markets, this new breed of MNEs is more likely than the traditional one to gain a sustainable competitive advantage in the new information age.

Managing Multi-Sided Platforms

Multi-sided platforms (MSPs) have revolutionized competitive dynamics across a wide array of markets. Despite significant advances in MSP strategy research, many challenges and ambiguities about th...

Circumventing Disintermediation in Multi-Sided Platforms with Experiential Services

Platform ventures in the sharing economy fear disintermediation, which occurs when the buyers and sellers of services interact directly to exchange payment, thereby circumventing the platform and i...

Digital Platforms and Women's Health: An Analysis of Peer-to-Peer Lending and Abortion Rates

Digital multisided platforms and peer-to-peer marketplaces are increasingly attracting attention from scholars, with recent work beginning to examine many of their societal implications. Despite su...

The Digital Entrepreneurial Ecosystem—a critique and reconfiguration

Sussan and Acs (Small Business Economics, 49(1), 55–73, 2017) proposed the “Digital Entrepreneurial Ecosystem” (DEE), a novel framework to guide our understanding of entrepreneurship in the digital age. By integrating literatures on digital ecosystem and entrepreneurial ecosystem, they brought to attention the importance of examining entrepreneurship as an outcome of interactions between biotic and abiotic entities represented by four concepts: Digital User Citizenship, Digital Entrepreneurship, Digital Infrastructure Governance, and Digital Marketplace. This paper revisits, critiques, and refines the framework through the following reconfigurations: (1) Digital User Citizenship is reintroduced as a heterogeneous group of users differentiated by their primary activity, as either consumers or producers. (2) Digital Technology Entrepreneurship encompasses all agents that build complementary products and services connecting to platforms. (3) Digital Multi-sided Platform is the intermediary for transaction of goods and services, and also a medium of knowledge exchanges that enables and facilitates experimentation, entrepreneurial innovation, and value creation. The main contribution of the paper is in the reconfigurations that clearly lay the ground for a more sustainable DEE—one in which user privacy is protected, platform efficiency enhanced, market competition encouraged, and digital infrastructure secured.

Multi-sided platforms in B2B contexts: The role of affiliation costs and interdependencies in adoption decisions

Multi-sided platforms, enabling interactions between different user sides, hold an important place in the contemporary economy. Current literature, focusing on established and successful platforms, has neglected to study B2B multi-sided platform adoption mechanisms. In this article, we analyze these mechanisms by investigating the case of dematerialization platforms for B2B transactions between the multiple actors involved in public works contracts. Various qualitative materials, including 28 semi-structured interviews, were gathered over a thirty-month period. Adopting a business user perspective, this study contributes to the literature on multi-sided platforms in various ways. We show that platform adoption, in project-based B2B contexts, is mainly constrained by a high level of affiliation costs and the existence of tight-interdependencies between users' activities at project level. Thus, a consecutive adoption path would result in negative cross-group network externalities and undermine the platform's attractiveness. Conversely, a concurrent adoption path would activate positive network externalities and encourage platform adoption decisions.