Introduction

Digital platforms are emergent organizational forms that intertwine a primarily modular and layered architecture with governance mechanisms that manage an ecosystem of heterogeneous, autonomous complementors (Gawer 2014). While these complementors complete the platform’s value proposition by co-creating value (Dattée et al. 2018), managing their contributions can be accomplished in proprietary or shared ways (Eisenmann 2008). In contrast to proprietary platforms, where a single platform owner unilaterally makes decisions about design, strategy, and technology, the decision rights in shared platforms are distributed across the complementors that ultimately constitute these platforms (Saadatmand et al. 2019).

The sharing of management responsibilities renders governance in shared platforms particularly challenging (Jacobides et al. 2018). To achieve efficiencies in an environment that is rife with conflict, which grows directly out of competition among misaligned complementors (Jones et al. 2021), the negotiation and development of technology standards play a pivotal role (Saadatmand et al. 2019). Indeed, shared platforms can be understood as “standard setting” (Parker and Van Alstyne 2018) or “meta” organizations (Kretschmer et al. 2020; McIntyre et al. 2020).

However, developing technology standards within shared platforms is likely to be marred by tensions (Saadatmand et al. 2019), simply because each individual complementor has a stake in ensuring that its own technological infrastructure can be seamlessly connected to the platform architecture—and thus the standard—being developed (Miller and Toh 2020; Toh and Miller 2017). A substantial task for designing effective integration solutions (e.g., standards that capture transaction sets concisely and consistently) therefore entails satisfying the needs and expectations of an ecosystem of heterogeneous, autonomous complementors. This demands that the relationships among them be managed, which represents a key challenge in shared platform organizations (Chen et al. 2020; Chen et al. 2021).

Saadatmand et al. (2019) point to a pragmatic solution for the challenge of consensus development in shared platforms as they engage in standardization. It entails identifying a viable solution (e.g., a working prototype) and elevating the complementor with the requisite resources (e.g., knowledge, technology) to lead the process of adapting the solution to the specific needs of the shared platform as a whole. This process of adapting a working prototype owned by one complementor is expected to expedite the standardization process by providing a tangible, unifying goal around which building complementor consensus is quicker than when starting from a blank sheet (Dattée et al. 2018).

The approach suggested by Saadatmand et al. (2019) seems analogous to the strategy of compatibility promotion (Spaeth and Niederhöfer 2022), which is proposed as an alternative to selective promotion (Hukal et al. 2020; Rietveld et al. 2019). Selective promotion concerns the interdependence between the ecosystem of complementors and the governance role played by the platform sponsor (Jacobides et al. 2018). The sponsor unilaterally chooses among different complementors to promote a complement (i.e., application resources) with which the sponsor seeks to advance the platform’s competitive position (Rietveld et al. 2019).

In contrast, the strategy of compatibility promotion can be used in shared platforms to screen the individually held, standardization-relevant resources that are made available to the collective. To gain access to a specific infrastructural resource, the complementor that owns it is promoted within the ecosystem, that is, elevated to a leadership position within the standard development effort (Saadatmand et al. 2019). As the needs of the platform evolve, different complementors may be identified at different points in time (Spaeth and Niederhöfer 2022).

We have currently very little insight into how compatibility promotion is accomplished for standard development within shared platforms. Unpacking the implications of this strategy for developing solutions in shared platforms, which may include blockchain-based infrastructures, is important for the successful emergence of these platforms. Given the novelty of the compatibility promotion strategy (Spaeth and Niederhöfer 2022), our exploratory research question reads: what are the implications of pursuing a compatibility promotion strategy for the development of technology standards in shared platforms? In addition to answering this question, we will also theorize our somewhat surprising results, namely, that the promoted complementors were harmed rather than rewarded for their elevated status and leadership role in the standardization process.

Our results are based on a twelve-year (2002-2013) action research study of a shared platform that was brought into being to develop a technology standard intended to facilitate data integration among the diverse players within the Swedish road haulage industry. The standard was expected to align the technology islands of embedded, mobile, and stationary IT systems that proliferated the industry (Lindgren et al. 2021). The platform was envisioned not only to facilitate effective transport processes both within and across road haulage firms, but also to generate new digital options and value-creation opportunities for an industry that found itself under increasing competitive pressure from large international trucking companies (Saadatmand et al. 2019).

The remainder of the paper is organized as follows. We first define shared platforms and introduce compatibility promotion as an alternative strategy to selective promotion. Thereafter, we describe the research context, detail the study method, and report the data collection and analysis. In the findings section, we describe three incidents of compatibility promotion and analyze how they unsettled the governance of the emerging shared platform organization. We then theorize the negative implications of pursuing a compatibility promotion strategy for the selected complementors. We conclude by articulating our research contributions and offering future directions for research.

Shared platforms

A platform represents an emergent organizational form (Chen et al. 2021; Gawer 2014) that is characterized by a technology architecture (i.e., a modular core, standardized interfaces, and complementary extensions), which is inextricably intertwined with mechanisms for governing an ecosystem of heterogeneous, autonomous complementors who complete the platform’s value (Gawer 2014; Hein et al. 2020). Importantly, effective platforms embed these governance mechanisms in their technology architecture (Saadatmand et al. 2019).

Modularity (Baldwin and Clark 2000) lays the architectural foundations for a platform, as it affords smooth integration of disparate systems and processes operating in the ecosystem that the platform serves (Jacobides et al. 2018). As the technological architecture becomes increasingly modular, complementors need to expend less effort and resources to understand the detailed workings of others’ components (architectural or social), with which their own practices need to interact. In this way, they can remain interoperable with the platform and other complementors’ technologies, enabling focused attention on developing their own innovative solutions with which to enhance their competitive position. These affordances, in turn, allow different complementors to specialize and invest in their own knowledge domains (Baldwin and Clark 2000).

Despite the merits of modularity, accomplishing it in a situation where complementors are competing with one another—as is the case in shared platforms—is challenging (Saadatmand et al. 2019). When complementors operate within the same industry or product segment and have overlapping technological or commercial interests, the likelihood of cooperation decreases. This is especially true when the potential for the expropriation of IP is high. “Forking” and bloated standards that accommodate complementors’ idiosyncratic technologies and practices are then likely to derail the platform’s architectural specification efforts (Jones et al. 2021).

The lack of a clear platform leader with the right to make decisions that are deemed in the best interest of the platform, as a whole, hampers the development of the standards needed to enact the desired interorganizational integration (Miller and Toh 2020). In shared platforms, coordination is contingent on agreements over the shared resources among heterogeneous, potentially-competing actors. Technology standards materialize such agreements, and due to the layered nature of platform architectures, building on established standards is like to make subsequent development of shared resources easier.

In shared platforms, technology standards tend to be “anticipatory”, meaning that they are “developed prior to the existence of markets for compatible products” (Lee and Oh 2006, p. 185). Given the significant implication of such standards and the inter-organizational data sharing they afford for innovation and, ultimately, the success of the platform and industry, decisions around such standards represent high stakes for the anticipated platform complementors (Grøtnes 2009; Lindgren et al. 2021; Uotila et al. 2017).

In the development of industry standards, it is common for players with relevant knowledge and technologies to influence the direction of the emergent standard by being part of committees or working groups that shape the technological specifications. However, collaborative standard development takes a long time as an agreement among many constituents is needed. In the case of a shared platform, such a consensus-seeking approach is rendered more challenging due to the diversity of complementors—implying limited overlap in knowledge and technologies—as well as competition and conflicting interests among them (Toh and Miller 2017).

Saadatmand et al. (2019) offer an alternative approach to standardization in shared platforms (Dattée et al. 2018). It entails promoting a complementor with prior experience in and, ideally, a technical solution for managing a given capability that the community of platform complementors seeks to develop. Rather than building the standard collaboratively from scratch, a “good-enough” solution is used as a starting point for standardization and then adapted by the platform complementors to accomplish the platform’s design goals.

One of the benefits of this strategy, which Spaeth and Niederhöfer (2022) label compatibility promotion, is attracting and socializing new complementors by bringing attention to an “exemplary” complementor that produces desirable goods and services. However, this short-circuiting of the platforming and standardizing process raises important questions about whether, how and under what conditions such complementor promotion leads to the effective design of a shared platform. For example, a key risk of the selective promotion of complementors in proprietary platforms is that they take advantage of their elevated position to accrue opportunistic benefits that make them relatively better off than other platform members (Chen et al. 2021). What is unclear, at this point, is how the development of shared platforms is affected by compatibility promotion.

By introducing the concept of compatibility promotion as a shared-platform strategy to emulate proprietary-platform selective promotion, Spaeth and Niederhöfer (2022) identify standards and the size of the installed base as selection criteria for choosing a compatibility complement (e.g., software) and complementor to promote in a shared platform. While they find strong support for the size-driven strategy, with giant platforms being promoted most often, they suggest that the standards-focused approach involves screening the stock of complementary resources (e.g., different technology design choices) available to platform participants and then promoting the complementor whose solution is most clearly aligned with the platform’s goals.

Given Saadatmand et al.’s (2019) findings that a strategy akin to complementor promotion can be effective in technology standardization efforts, this research explores how the strategy of compatibility promotion (Spaeth and Niederhöfer 2022) is enacted in shared platforms and with what implications. We rely on an action research study of a platform development initiative in the Swedish road haulage industry.

Method

We explore the implications of compatibility promotion in the development of a technology standard that afforded the alignment of the islands of embedded (e.g., fuel consumption, driving time, and speed), mobile (e.g., communication between drivers and dispatchers), and stationary (e.g., order management) IT systems that operated in the Swedish Road Haulage industry (Lindgren et al. 2021; Saadatmand et al. 2019). The platform development initiative consisted of fourteen technology vendors (including MobiOne, Hogia, and NL Partner (later acquired by Locus Scandinavia), two truck manufacturers (Scania and Volvo Trucks), a number of road haulage firms, a consulting organization (TRB), owned by fifteen Swedish transport organizations, and the Viktoria Institute (design-oriented applied research organization). The standard/platform development effort thus brought together a sizeable group of players from different industries with expertise in a heterogeneous set of technologies (Andersson et al. 2008; Andersson and Lindgren 2005; Lindgren et al. 2008).

Our data collection involved numerous data sources including interviews, board, project, and work meetings, workshops, and e-mails, as well as strategy and technical documents. In addition, we had access to a large quantity of industry presentations, project applications, environmental reports, press releases, popular press articles, module and standard specifications, and use case and test case descriptions. However, the three main sources of data were project meetings, work meetings, and interviews.

Thirty project meetings were held over the 12-year effort. The recorded and transcribed material from these meetings provided detailed data on the standardization actions taken and their architectural consequences. Seventy-five work meetings were conducted with members of the platform initiative. These meetings primarily concerned the processes by which standard prototypes and modules were conceptualized and then implemented. Most of the meetings were recorded and transcribed for later data analysis. One hundred and thirty-six formal interviews were completed, recorded, and transcribed. Respondents included complementors, developers, drivers, dispatchers, and haulage firm managers. On average, the interviews lasted 80 min and covered different themes relevant to the development and adoption of standards in the road haulage industry.

To analyze our data, we first identified the enactments of the complementor promotion strategy. We then focused on how these enactments shaped the respective platform architectures and affected the cooperation among the complementors that constituted the shared platform. Lastly, we identified the immediate- and longer-term implications of these architectural decisions on individual players and the platform overall.

Research findings

In the late 1990s, the Swedish road haulage industry consisted mainly of small local firms with deep-rooted traditions. Statistics from the Swedish Road Haulage Association (SRHA) suggest that up to 90 percent of its members operated five or fewer vehicles. Recently, the European Union’s open market policy allowed foreign road haulers to increase their market share in Sweden. This new situation entailed that Swedish road haulage firms started to believe that embedded, mobile, and stationary technologies could help them coordinate better to cope with the increasing competitive pressures. Fueled by trade press articles and white papers, these firms anticipated that assemblages of these technologies would improve mobile resource evaluation, facilitate seamless transport data management, and rationalize dispatcher-driver communication.

However, there were few available accounts of how such assemblages had led to productivity gains or improved sustainability. In fact, at industry conferences and seminars, the SRHA complained about the low penetration of advanced distributed technology among its members. Anecdotes from road haulers also revealed that integration initiatives often faced complex challenges because of the heterogeneous and distributed nature of technologies, organizations, and practices. This meant that road haulers continued to rely on fragmented infrastructures that prevented productive combinations of embedded, mobile, and stationary IT systems. Suffering from what they referred to as the “mobile-stationary divide,” many firms felt they wasted their money, and there was decreasing willingness to make proactive IT investments among them.

Situated in this challenging context, the shared platform initiative under study presented us with an excellent opportunity to explore how the compatibility promotion strategy was used during technology standard setting. Our longitudinal analysis identifies three specific cases in which individual complementors were promoted to propel the standardization process. We emphasize for each of these cases how this strategy invited the promoted player to engage in opportunistic behaviors that shaped the evolving platform architecture so that it triggered competitive responses among the collective of complementors to avoid any unwanted dominance. These responses ultimately led to a somewhat paradoxical situation where the platform as a whole was moving forward but at the cost of those complementors that were elevated to gain momentum.

The promotion of a “start-up CANBUS innovator”

The Viktoria Institute initiated the mobile-stationary interface (MSI) project in 2002. Initially, the Swedish Road Haulage Organization (SRHA) was a natural partner, and its experiences provided a deeper understanding of the problematic state of IT use within the industry. As a first step, the researchers analyzed available IT solutions and core vendor competencies. This was more complicated than anticipated because stationary technology vendors reached out to include mobile resources (drivers and vehicles) and embedded technology vendors (including truck manufacturers) increasingly embraced traditional stationary domains. Based on a visit to the annual trade fair and numerous meetings with technology vendors and truck manufacturers, the researchers distinguished between three types of systems: embedded, mobile, and stationary. Interestingly, the vendors were surprisingly technology-focused and promoted their solutions relative to competitors rather than in terms of hauler requirements and added value. It was therefore difficult for small haulers to identify gaps and overlaps between different solutions, which effectively hampered attempts to combine their own solutions.

As the next critical step, the researchers interviewed managers from some 20 road haulers about their IT experiences. The problem of lock-in effects kept surfacing in these conversations. On the one hand, fleets with vehicles from multiple manufacturers were common, and integrating different embedded and mobile components with the stationary systems was prohibitively expensive for small firms. On the other hand, although vendors were confined within their own technological paradigm and unable to comprehend wider design challenges, they actively promoted their solutions outside their core competence to increase market shares. This led to a persistent problem within the Swedish road haulage industry with failed IT implementation projects, simply because haulers attempted to implement services offered by embedded, mobile, and stationary vendors in parallel.

Given this understanding of the socio-technical factors that contributed to the mobile-stationary divide in road haulage firms, the researchers recruited an MSc student to engage in small-scale open platform service prototyping activities with Vehco. As a university-sponsored start-up in embedded IT, it positioned itself as a service provider capable of helping road haulers to improve their competitiveness and to develop environmentally sustainable business practices. The collaboration led to a prototype that instantiated an industry platform for integrating embedded, mobile, and stationary systems. As such, EcoHauler generated not only reports that calculated per-delivery costs, but also provided a calculation of emissions per delivery. To get embedded data from the truck, telematics service providers like Vehco had two options: rely on the fleet management system (FMS) standard to access the parameters that the truck manufacturers made available or derive data by reverse engineering the truck’s CANBUS. Vehco opted for the latter because the data provided through the FMS standard was very limited and not sufficiently up-to-date, which ultimately constrained the ability of third parties to innovate.

Despite its somewhat limited design, the prototype rendered much interest when presented at industry conferences and seminars. The truck manufacturers voiced their opposition to this apparent hack, claiming that it compromised the integrity—and thus the safety—of their vehicles. Even though Volvo Trucks regarded the EcoHauler prototype as a warranty infringement, it did not pursue legal action. A lawsuit would have simply generated negative publicity because of Vehco’s start-up status and its commitment to helping the small road haulers increase their efficiency and environmental sustainability. Indeed, many of the IT vendors signed up to collaborate as complementors and supply their infrastructural complements to support the platform development, partly to ensure the compatibility of their own solutions with the evolving platform, and partly to remain apprised of—and possibly to affect—shifts in the competitive landscape. By the summer of 2003, about a dozen industry players were members of the MSI project. Besides Viktoria Institute, Vehco, Gatespace, and a number of road haulers, the founding members of the shared platform initiative were software vendors Hogia, Prolog, Transics, and NL Partner/Locus Scandinavia as well as the truck manufacturers Scania and Volvo Trucks.

Given the history of the EcoHauler prototype, the collective of complementors agreed on promoting Vehco to take the lead and push the continued development work forward. This promotion decision led to a vertical platform architecture (based on the Open Service Gateway Initiative) that was operated and maintained by Vehco. That is, Vehco was allocated the key control points of the platform’s core. However, MSI members became increasingly uneasy with this platform configuration because it gave decision rights over key control points to a single ecosystem complementor. Specifically, Vehco who was awarded this powerful position based on its experience with the EcoHauler, in effect, allows it to mediate the relationship between the two sides of the ecosystem, i.e., customers and complementors.

In addition, the truck manufacturers emphasized that they preferred a platform architecture with a standardized interface that could serve as a layer over their own embedded components with read-only access to a limited set of CANBUS parameters (provided by the FMS standard). Their high status in the shared platform initiative meant that these demands effectively reduced the project scope to merely integrating mobile and stationary systems. While this decision paved the way for the shared platform as a whole to sustain its quest for an appropriate architecture, Vehco found itself in an exigent situation where its significant efforts to find a worthwhile position for embedded technology in systems integration had in fact undermined the lucrative business opportunity it sought to create.

The promotion of a “de facto XML integrator”

On February 16, 2004, a telematics manager from Volvo Trucks took a big step for his own firm and the shared platform initiative. He presented his vision of a platform ecosystem for service innovation that would operate based on modularized digital infrastructures enabled by standardized interfaces. Because he was impressed with how the MSI project had developed its activities and participation, he suggested the timing was right to pursue a concerted standardization effort to create the foundation for such an ecosystem. Virtually, all involved complementors appreciated Volvo’s call for standard development, and it was particularly important that some of the stationary technology vendors agreed on a standardized industry interface that could help resolve the tensions surrounding technology integration. At the same time, though they raised concerns about who would be willing to take responsibility for developing such interface, it appeared no one was ready to take the lead.

The platform initiative, therefore, sought support from the SRHA, but it turned the invitation down due to competence and resource shortages. The leadership vacuum triggered a renewed search for key individuals that could help move the standardization efforts forward. This led to explorations between the MSI complementors and several individuals with established industry relationships and sympathy for the standardization agenda. One such individual was the IT coordinator of TRB Sweden. Enrolling him provided access to relevant knowledge about digital infrastructure within the Swedish road haulage industry and it created an important formal link to many haulage firms. Also, the complementors believed a skillful and experienced digital infrastructure person without any ongoing commitments to the involved parties could potentially play a vital mediating role. They had for a while attempted to identify such a person when a former telematics manager at Scania unexpectedly contacted them. He was at the time running his own business, ASN IT & Management, offering education about transport process innovation through standardized systems integration to individual road haulage firms and regional road haulage associations.

The ASN IT & Management representative identified the architecture of the Pharos Mobile standard as the most promising candidate for moving the platform initiative forward. Although it would add a new level of complexity to rely on this standard, which targeted business processes for larger contractors of haulers rather than small haulage firms, one important conclusion was to adopt XML (extensive markup language) for the interface protocol and web services (WS) as the platform architecture. Most of the involved complementors had experience with WS, and they were either already using XML as the data exchange format or were trying to comply with it. The complementors’ prior experience with WS also reduced the ambiguity surrounding the interface, simply because they understood how it was used and how it affected their data. A vendor of stationary technology, Hogia, had considerable experience with WS-based mobile-stationary interoperability solutions and offered its XML message schema to the MSI project. For compatibility reasons, MSI complementors decided to elevate Hogia’s position and make its proprietary XML schema the starting point for the platform’s interface. The continued development work led to a horizontal platform architecture that distributed decision rights among ecosystem complementors and thus gave them relatively equal opportunities for value capture.

However, in September 2005, the shared platform initiative came to an abrupt and unanticipated halt when Hogia, whose XML standard had served as the baseline for the MSI’s new platform architecture, announced that it wanted to shut down and sue the initiative due to infringement of its intellectual property rights. As development was halted, the rest of the MSI complementors analyzed Hogia’s claim and how to respond. They concluded there was no substance behind the claim. The researchers worked closely with the TRB representative to author an open letter signed by all remaining MSI complementors. The letter declared their intent to go on with the standardization process and invited Hogia to a meeting to reconcile differences. Faced with the collective resistance from the MSI complementors, Hogia eventually withdrew its impending legal action and left the initiative. By opportunistically exploiting its elevated position, Hogia had energized the ecosystem of complementors, and they were more willing than ever to commit resources to the development of a shared platform.

Given the sustained momentum, in the late summer of 2007, the shared platform initiative was formally transformed into the “MSI Group” as a commercial standardization consortium financed via member fees. The primary task was to develop, maintain, and validate the industry standard. The consortium was structured into a board of directors, a strategy team, and a technical committee. The researchers were actively involved in founding the consortium with a particular focus on developing a strategy for intellectual property rights to avoid incidents like the one with Hogia. The reorganization meant TRB took over leadership in MSI development from the researchers. As the MSI Group stabilized and attracted new members, including Barkfors, Consafe Logistics, Cybercomgroup, and Pocketmobile, it came to represent a critical mass of the Swedish road haulage industry.

The promotion of a “third-party route optimizer”

The MSI Group members found that the standard made their lives better and easier. They, therefore, turned their attention towards its diffusion among complementors and haulers alike. In fact, the shared architectural understanding it had created meant that the cycle time of integration projects could be reduced without compromising quality (even true in situations where the MSI standard was not explicitly used). While this was interpreted by some as an indication of successful standard diffusion on the supply side, two haulage firms, Lantmännen and LBC Frakt Värmland, had decided to implement digital infrastructures based on the MSI standard. This meant that the shared platform initiative turned into serious business. Several technology vendors signaled interest in taking on the assignment at LBC Frakt.

However, their offerings typically reflected the use of proprietary interfaces. The managing director of LBC Frakt, therefore, sent a letter to the MSI Group, officially criticizing its members for undermining the standardization effort (this was depicted as ‘the revolution in Värmland’ in the trade press). Although LBC Frakt was disappointed with the vendors, it appreciated the MSI Group had developed into an official industry forum in which these issues could be addressed. Eventually, LBC Frakt selected two vendors on the mobile side and Locus Scandinavia for the stationary part of the digital infrastructure. During the integration process, the MSI architecture’s perceived lack of usability caused considerable debate. LBC Frakt, therefore, concluded the standard provided too little guidance and decided to rely on Locus’ proprietary interface because it had first-hand experience with it. Still, LBC Frakt was determined to support the MSI initiative and decided Locus’ interface should be MSI-adapted through a joint effort together with TRB.

To spread across the industry, the MSI standard had to be adopted and used by technology vendors and road haulers to improve business processes. However, the complementors were considerably more pleased with the standard because of its focus on innovative solutions based on new industry procedures and practices. Informed by the LBC Frakt case, the MSI leadership began pursuing a modularization strategy. The more process-oriented MSI architecture motivated new third-party entrants with high-quality offerings supportive of a specific business process to join the platform ecosystem. One such new entrant was DPS whose route optimization software had been recognized as having one of the best route optimization algorithms in Europe. Indeed, the MSI platform with its modular architecture and the flexible integration it afforded provided the conditions for DPS to consider entering the Swedish road haulage market for the first time.

DPS embraced a leadership position, and the MSI standard was decomposed into four modules: the order management module dealt with scheduling deliveries so that they occurred within the customer-specified time frame and with calculating the delivery costs of an order; the resource management module’s purpose was to store information about the hauler’s heterogeneous array of resources that needed to be tracked and accounted for during an order’s fulfillment; the route optimization module instantiated use cases like sequencing deliveries so that transportation costs could be minimized, taking the delivery window specified by the customer as well as traffic information into consideration; and the reroute module extended the route optimization module by affording the dynamic, just-in-time recalculation of the optimal route as transport conditions changed. Decision rights over each module would be granted to complementors with expertise in the given module’s intended functionality.

However, the completion of the MSI route optimization modules turned out to be a conflict trigger because of the truck manufacturers’ fundamental unwillingness to make sensor data available beyond the requirements of the FMS standard. As owners of the embedded data, they found themselves in a position that allowed them to limit the scope of the route optimization modules, ultimately restricting the value-creation potential of complementors who leveraged the integration potential of the shared platform. Indeed, Volvo Trucks was developing its own route optimization module in-house at the time. Once again refusing to cooperate fully, both Volvo Trucks and Scania decided to exit the MSI Group. In 2011, they instead partnered with DHL to develop a shared platform with similar goals to MSI. While the truck manufacturers’ decision to do so was traced by other MSI complementors to how DPS literally hijacked the standard for its own sake, the four business process modules were still handed over to MSI Group in late 2012. Despite the fact that the platform initiative achieved its goal, many of its complementors made little or no effort to push the diffusion of the modules for their own integration projects. Because their commitment had declined, the MSI Group’s board of directors decided to terminate the platform initiative in the spring of 2013.

Discussion

Recent research in management science has paid increasing attention to coordination within platform ecosystems via standard development (Jones et al. 2021; Miller and Toh 2020). Unfortunately, despite their obvious relationship (Markus and Loebbecke 2013), technology standardization (Lindgren et al. 2021) and platform organizations (Saadatmand et al. 2019) tend to be treated as relatively self-contained areas of concern. In this paper, we bring these areas together by exploring how the development of a technology standard can facilitate the coordination of platform complementors. Given the challenges of creating consensus among such competing complementors, we investigated the implications of the compatibility promotion strategy that Spaeth and Niederhöfer (2022) proposed as an alternative to selective promotion, which has been effectively deployed in the guided evolution of proprietary platforms where the direction of the organization is unilaterally decided by the platform owner (Hukal et al. 2020; Rietveld et al. 2019).

Answering the question “What are the implications of pursuing a compatibility promotion strategy for the development of technology standards in shared platforms?” by analyzing a twelve-year action research study of standard development in the Swedish road haulage industry, we note that such a promotion strategy promises to reduce the risks associated with technology development, and by constraining the decision space, it reduces the amount of negotiation and time needed for platform complementors to arrive collaboratively at a viable standard (Saadatmand et al. 2019). However, unlike selective promotion (Rietveld et al. 2019), compatibility promotion fails to make the promoted complementor better off. In fact, rather counter-intuitively, each time this strategy was deployed in the MSI project we studied, the promoted complementor’s additional efforts (e.g., sharing their intellectual property) were not rewarded, which resulted in the promoted complementors’ untimely departure from the platform.

Our findings reveal that standard development in shared platforms is particularly challenging, as the promotion of a complementor makes the platform ecosystem better off (i.e., the standard continues to evolve), but does not reward the promoted complementor commensurate to their resource expenditures associated with their leadership position in the platform ecosystem. The apparently exploitative nature of compatibility promotion renders it unsustainable as a strategy for developing standards in a shared platform.

By comparing selective promotion as enacted in proprietary platforms with compatibility promotion in shared platforms from an institutional logic perspective (e.g., Friedland and Alford 1991), we note the lack of fit between the collective governance in a shared platform and the market logic of the complementor promotion strategy. Institutional logics are “rules of the game” (Thornton and Ocasio 2008) that provide actors with social meanings (Smets et al. 2015). Following Schultze and Bhappu’s (2021) research on a community-based model of the sharing economy, we view shared platforms as the integration of three institutional logics: market, hierarchy, and community (see Table 1 for the summary). As archetypes of meaning, we draw on these logics to theorize why compatibility promotion in shared platforms will likely be plagued by problematic outcomes. This is because institutional logic is not only distinctive but also potentially contradictory. For example, the market logic of capitalism is produced and reproduced through the accumulation and commodification of human activity at arm’s length. In contrast, the logic of community prevails in the family wherein humans linked by kinship demonstrate loyalty and build trust through the reciprocal exchange (e.g., Venkataraman et al. 2016). This suggests that community-based organizational forms like shared platforms are fundamentally at odds with market-based relations (Ouchi 1980).

Table 1 Selective versus compatibility promotion
Full size table

The market logic, which draws on the institution of capitalism, is characterized by independent, gain-maximizing, rational actors that base their decisions on transparent information and well-defined contractual agreements (Anderson and Anderson 2002; Hennart 1993). Interactions among these actors are characterized by arm’s length transactions, making opportunistic behavior highly likely, simply because market transactions are not subject to the shadow of the future (Axelrod 1984). Competition is the primary market control mechanism. This logic, however, does not work well when incomplete or contingent contracts are necessary or when cost-benefit calculations are complicated by differentiated goods and services (Anderson and Anderson 2002). In these situations, hierarchy logic offers some solutions. Drawing on the institution of state bureaucracy, actors in a hierarchy are interdependent with relatively congruent goals around a specified organizational purpose (Ouchi 1980).

The hierarchically-constrained actors nevertheless seek to maximize value within the authoritative command and control structure of an organization or sharing community, which demands their obedience and conformity to rules and standards (Bakos and Brynjolfsson 1993). They inhabit clearly demarcated roles that are hierarchically ranked (e.g., platform owner versus complementor), enacting embedded relationships characterized by mutual information sharing and reciprocity (Granovetter 1985; Malone et al. 1987). Given incomplete or contingent contracts, performance ambiguity is likely to occur in these governance models. Rules and standards to evaluate the performance of actors, which are frequently reflected in the reputational ratings and performance scorecards implemented in contemporary digital platforms, need to be defined. Bureaucracies, however, fail when there is too much ambiguity in the evaluation of performers (Ouchi 1980), for example, work becoming too interdependent and role boundaries blurring through teamwork arrangements. Under these conditions, the community logic offers a governance model (Venkataraman et al. 2016). Based on the institution of family, coordination is achieved through shared collective identity and solidarity (Bhappu 2000; Yang 1989), which community members develop as a result of intimate shared experiences (Gittel and Douglass 2012). As highly interdependent actors, they are able to evaluate each other’s performance by reading subtle signals (Ouchi 1980).

As summarized in Table 1, the market logic that characterizes complementor promotion is congruent with the proprietary platform’s hierarchical ownership and market-based peer relationships among complementors. However, this strategy of elevating an individual actor conflicts with the community logic of the shared platform. Nevertheless, it is important to note that organizational forms that integrate conflicting institutional logics are potentially productive (Smets et al. 2015), simply because managing paradoxical tensions is likely to generate innovation and value creation (Dunn and Jones 2010; Gibbs 2009; Raey and Hinings 2009). Dialectic management (e.g., Farjoun 2010; Smith et al. 2017), which ignores, suspends, or resolves contradictions (Lindgren et al. 2021), plays a key role in accomplishing organizational goals.

Concluding remarks

By exploring the implications of compatibility promotion to propel the development of technology standards on shared platforms, the research we present in this paper highlights that this strategy does not “lift all the boats” that constitute the digital platform. Rather in a contradictory manner, the promoted complementors are made relatively worse off than their peers, especially in light of the fact that they expend more resources when they take on a leadership role in the shared platform. By drawing on sharing economy research (Schultze and Bhappu 2021), which identifies the mix of contradictory institutional logics that operate on digital platforms, we highlight that the community logic underlying shared platforms is fundamentally at odds with the market-based logic of complementor promotion strategies.

We argue that our exploratory research into this emergent practice of compatibility promotion should not be regarded as the last word on the effectiveness of complementor promotion on shared platforms. Instead of responding to calls to develop dialectic approaches to management (e.g., Farjoun 2010; Smith et al. 2017), we suggest that future research on shared platforms should investigate how and when compatibility promotion strategies are effective in standard development.