Skip to main content
SpringerLink
Log in

Digital Platforms and Industry Change

  • Chapter
  • First Online:
Society as an Interaction Space

Part of the book series: Translational Systems Sciences ((TSS,volume 22))

Abstract

Scholars argue that the platform economy spurs both increased efficiency and innovation for participating actors, often opening new ways for radical change and disruption in different industrial settings. However, despite the large academic and practitioner interest towards digital platforms and multisided markets, we are only beginning to understand the scope and impact of the platform economy in our society. In this chapter, we, therefore, explore how digital platforms shape industry dynamics. Based on a non-systematic review of both recent and eminent literature on digital platforms, we construct a literature-based theoretical model of digital platform-led industry change. Our study increases understanding of how a digital platform-led industry transformation evolves and thus serves as a useful basis for future research on the topic.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 99.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 129.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 129.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Adner, R., & Kapoor, R. (2010). Value creation in innovation ecosystems: How the structure of technological interdependence affects firm performance in new technology generations. Strategic Management Journal, 31(3), 306–333.

    Article  Google Scholar 

  • Boudreau, K. J. (2010). Open platform strategies and innovation: Granting access vs. devolving control. Management Science, 56(10), 1849–1872.

    Article  Google Scholar 

  • Brandenburger, A. M., & Nalebuff, B. J. (1997). Co-opetition: A revolution mindset that combines competition and cooperation; the game theory strategy that’s changing the game of business. New York: Currency.

    Google Scholar 

  • Burtch, G. (2011). Herding behavior as a network externality. ICIS 2011 Proceedings.

    Google Scholar 

  • Caldieraro, F., Zhang, J. Z., Cunha, M., Jr., & Shulman, J. D. (2018). Strategic information transmission in peer-to-peer lending markets. Journal of Marketing, 82(1), 42–63.

    Article  Google Scholar 

  • Choi, J. P. (2010). Tying in two-sided markets with multi-homing. The Journal of Industrial Economics, 58(3), 607–626.

    Article  Google Scholar 

  • Clements, M. T., & Ohashi, H. (2005). Indirect network effects and the product cycle: Video games in the US, 1994–2002. The Journal of Industrial Economics, 53(4), 515–542.

    Article  Google Scholar 

  • Cohen, W., Nelson, R., Walsh, J. (2000). Protecting their intellectual assets: appropriability conditions and why U.S. manufacturing firms patent (or not). NBER Working Paper No. 7552.

    Google Scholar 

  • Cortade, T. (2006). A strategic guide on two-sided markets applied to the ISP market. Communications and Strategies, 61(1), 17–35.

    Google Scholar 

  • Datta, H., Knox, G., & Bronnenberg, B. J. (2018). Changing their tune: How consumers’ adoption of online streaming affects music consumption and discovery. Marketing Science, 37(9), 5–21.

    Article  Google Scholar 

  • de Reuver, M., Sørensen, C., & Basole, R. C. (2018). The digital platform: A research agenda. Journal of Information Technology, 33(2), 124–135.

    Article  Google Scholar 

  • Eisenmann, T. R. (2006). Winner-take-all in networked markets. Harvard Business School Technical Note, pp. 806–131.

    Google Scholar 

  • Eisenmann, T., Parker, G., & Van Alstyne, M. W. (2006). Strategies for two-sided markets. Harvard Business Review, 84(10), 92.

    Google Scholar 

  • Eisenmann, T., Parker, G., & Van Alstyne, M. (2011). Platform envelopment. Strategic Management Journal, 32(12), 1270–1285.

    Article  Google Scholar 

  • Emarketer. (2018). Amazon now has nearly 50% of US ecommerce market. Retrieved April 18, 2019, from https://retail.emarketer.com/article/amazon-now-has-nearly-50-of-us-ecommerce-market/5b48c542ebd4000b24140992

  • European Commission. (2019). Online platforms digital single market. Retrieved April 18, 2019, from https://ec.europa.eu/digital-single-market/en/online-platforms-digital-single-market

  • Evans, D. S. (2009). How catalysts ignite: The economics of platform-based start-ups. In A. Gawer (Ed.), Platforms, markets and innovation. Northampton, MA: Edward Elgar.

    Google Scholar 

  • Evans, D. S., & Schmalensee, R. (2010). Failure to launch: Critical mass in platform businesses. Review of Network Economics, 9(4), 1–26.

    Article  Google Scholar 

  • Farrell, D., & Greig, F. (2016). Paychecks, paydays, and the online platform economy: Big data on income volatility. JP Morgan Chase Institute.

    Google Scholar 

  • Farrell, J., & Klemperer, P. (2007). Coordination and lock-in: Competition with switching costs and network effects. Handbook of Industrial Organization, 3, 1967–2072.

    Article  Google Scholar 

  • Gawer, A. (2014). Bridging differing perspectives on technological platforms: Toward an integrative framework. Research Policy, 43(7), 1239–1249.

    Article  Google Scholar 

  • Gawer, A., & Cusumano, M. (2002). Platform leadership: How intel, palm, cisco and others drive industry innovation. Brighton, MA: Harvard Business School Press.

    Google Scholar 

  • Gawer, A. (2009). Platforms dynamics and strategies: From products to services. In A. Gawer (Ed.), Platforms, markets and innovation (pp. 45–76). Cheltenham, UK/Northampton, MA: Edward Elgar.

    Google Scholar 

  • Gawer, A., & Cusumano, M. A. (2014). Industry platforms and ecosystem innovation. Journal of Product Innovation Management, 31(3), 417–433.

    Article  Google Scholar 

  • Gawer, A., & Phillips, N. (2013). Institutional work as logics shift: The case of Intel’s transformation to platform leader. Organization Studies, 34(8), 1035–1071.

    Article  Google Scholar 

  • Ghazawneh, A., & Henfridsson, O. (2015). A paradigmatic analysis of digital application marketplaces. Journal of Information Technology, 30(3), 198–208.

    Article  Google Scholar 

  • Hagiu, A., & Wright, J. (2015). Multi-sided platforms. International Journal of Industrial Organization, 43, 162–174.

    Article  Google Scholar 

  • Han, X., Martinez, V., & Neely, A. (2016). Service in the platform context: A review of the state of the art. Cambridge Service Alliance.

    Google Scholar 

  • Hanna, R., Rohm, A., & Crittenden, V. L. (2011). We’re all connected: The power of the social media ecosystem. Business Horizons, 54(3), 265–273.

    Article  Google Scholar 

  • Hänninen, M., Mitronen, L., & Kwan, S. K. (2019). Multi-sided marketplaces and the transformation of retail: A service systems perspective. Journal of Retailing and Consumer Services, 49, 380–388.

    Article  Google Scholar 

  • Hasker, K., & Sickles, R. (2010). eBay in the economic literature: Analysis of an auction marketplace. Review of Industrial Organization, 37(1), 3–42.

    Article  Google Scholar 

  • Hazlett, T. W., Teece, D. J., & Waverman, L. (2011). Walled garden rivalry: The creation of mobile network ecosystems. George Mason Law and Economics Research Paper No. 11–50.

    Google Scholar 

  • Iansiti, M., & Lakhani, K. R. (2017). Managing our hub economy. Strategy, ethics, and network competition in the age of digital superpowers. Harvard Business Review, 95(5), 84–92.

    Google Scholar 

  • Jacobides, M. G., Knudsen, T., & Augier, M. (2006). Benefiting from innovation: Value creation, value appropriation and the role of industry architectures. Research Policy, 35(8), 1200–1221.

    Article  Google Scholar 

  • Jiang, B., Jerath, K., & Srinivasan, K. (2011). Firm strategies in the “mid tail” of platform-based retailing. Marketing Science, 30(5), 757–775.

    Article  Google Scholar 

  • Katz, M. L., & Shapiro, C. (1986). Technology adoption in the presence of network externalities. Journal of Political Economy, 94(4), 822–841.

    Article  Google Scholar 

  • Kenney, M., & Pon, B. (2011). Structuring the smartphone industry: Is the mobile internet OS platform the key? Journal of Industry, Competition and Trade, 11(3), 239–261.

    Article  Google Scholar 

  • Kenney, M., & Zysman, J. (2016). The rise of the platform economy. Issues in Science and Technology, 32(3), 61–69.

    Google Scholar 

  • Laamanen, T., Pfeffer, J., Rong, K., & Van de Ven, A. (2016). Business models, ecosystems, and society in the sharing economy. Academy of Management Discoveries, 2(2), 218–221.

    Article  Google Scholar 

  • Laamanen, T., Pfeffer, J., Rong, K., & Van de Ven, A. (2018). Editors’ introduction: Business models, ecosystems, and society in the sharing economy. Academy of Management Discoveries. (Forthcoming).

    Google Scholar 

  • Lee, S., & Lee, S. (2014). Early diffusion of smartphones in OECD and BRICS countries: An examination of the effects of platform competition and indirect network effects. Telematics and Informatics, 31(3), 345–355.

    Article  Google Scholar 

  • Li, S., Liu, Y., & Bandyopadhyay, S. (2010). Network effects in online two-sided market platforms: A research note. Decision Support Systems, 49(2), 245–249.

    Article  Google Scholar 

  • Liu, Z., Hong, Y., & Zhang, Z. (2016). Do ride-sharing services affect traffic congestion? An empirical study of Uber entry. Social Science Research Network, 2002, 1–29.

    Google Scholar 

  • Mathmann, F., Chylinski, M., de Ruyter, K., & Higgins, E. T. (2017). When plentiful platforms pay off: Assessment orientation moderates the effect of assortment size on choice engagement and product valuation. Journal of Retailing, 93(2), 212–227.

    Article  Google Scholar 

  • McIntyre, D. P., & Srinivasan, A. (2017). Networks, platforms, and strategy: Emerging views and next steps. Strategic Management Journal, 38(1), 141–160.

    Article  Google Scholar 

  • Meyer, M. H., & Lehnerd, A. P. (1997). The power of product platforms: Building value and cost leadership. New York: Free Press.

    Google Scholar 

  • Monteverde, K., & Teece, D. J. (1982). Supplier switching costs and vertical integration in the automobile industry. The Bell Journal of Economics, 13, 206–213.

    Article  Google Scholar 

  • Nambisan, S. (2017). Digital entrepreneurship: Toward a digital technology perspective of entrepreneurship. Entrepreneurship Theory and Practice, 41(6), 1029–1055.

    Article  Google Scholar 

  • Parker, G. G., & Van Alstyne, M. W. (2005). Two-sided network effects: A theory of information product design. Management Science, 51(10), 1494–1504.

    Article  Google Scholar 

  • Parker, G., Van Alstyne, M., & Choudary, S. P. (2016). Platform revolution: How networked markets are transforming the economy—And how to make them work for you. New York: W. W. Norton Publishing.

    Google Scholar 

  • Rochet, J., & Tirole, J. (2003). Platform competition in two-sided markets. Journal of the European Economic Association, 1, 990–1029.

    Article  Google Scholar 

  • Rogers, B. (2016). Employment rights in the platform economy: Getting back to basics. Harvard Law & Policy Review, 10, 479.

    Google Scholar 

  • Rysman, M. (2009). The economics of two-sided markets. The Journal of Economic Perspectives, 23(3), 125–143.

    Article  Google Scholar 

  • Seamans, R., & Zhu, F. (2013). Responses to entry in multi-sided markets: The impact of craigslist on local newspapers. Management Science, 60(2), 476–493.

    Article  Google Scholar 

  • Shapiro, C., & Varian, H. R. (1999). The art of standards wars. California Management Review, 41(2), 8–32.

    Article  Google Scholar 

  • Sinclair, M. (2016). Fair and efficient regulation of the sharing economy. Economic Affairs, 36(2), 204–211.

    Article  Google Scholar 

  • Statista. (2018). Number of apps available in leading app stores as of 3rd quarter 2018. Retrieved April 23, 2018, from https://www.statista.com/statistics/276623/number-of-apps-available-in-leading-app-stores/

  • Sun, M., & Tse, E. (2007). When does the winner take all in two-sided markets? Review of Network Economics, 6(1), 16–40.

    Article  Google Scholar 

  • Teece, D. (1998). Capturing value from knowledge assets: The new economy, markets for knowhow and intangible assets. California Management Review, 40(3), 55–79.

    Article  Google Scholar 

  • Tian, L., Vakharia, A. J., Tan, Y., & Xu, Y. (2018). Marketplace, reseller, or hybrid: Strategic analysis of an emerging e-commerce model. Production and Operations Management, 27(8), 1595–1610.

    Article  Google Scholar 

  • Tiwana, A. (2014). Platform ecosystems: Aligning architecture, governance, and strategy. Burlington, MA: Morgan Kaufmann.

    Book  Google Scholar 

  • Tiwana, A., Konsynski, B., & Bush, A. A. (2010). Research commentary—Platform evolution: Coevolution of platform architecture, governance, and environmental dynamics. Information Systems Research, 21(4), 675–687.

    Article  Google Scholar 

  • Zervas, G., Proserpio, D., & Byers, J. W. (2017). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), 687–705.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Marketing, Aalto University School of Business, Espoo, Finland

    Mikko Hänninen

  2. Center for Knowledge and Innovation Research, Aalto University School of Business, Espoo, Finland

    Lauri Paavola

Authors
  1. Mikko Hänninen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Lauri Paavola
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Mikko Hänninen .

Editor information

Editors and Affiliations

  1. University of Eastern Finland, Kuopio, Finland

    Hanna Lehtimäki

  2. Frisky & Anjoy, Helsinki, Finland

    Petri Uusikylä

  3. Research and Development, Finnish Institute of Occupational Health, Helsinki, Finland

    Anssi Smedlund

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Singapore Pte Ltd.

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Hänninen, M., Paavola, L. (2020). Digital Platforms and Industry Change. In: Lehtimäki, H., Uusikylä, P., Smedlund, A. (eds) Society as an Interaction Space. Translational Systems Sciences, vol 22. Springer, Singapore. https://doi.org/10.1007/978-981-15-0069-5_10

Download citation

Publish with us

Policies and ethics

Search

Navigation