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A justice-based governance approach for platform-based ecosystems
Abstract
Platforms are relevant meta-organizations in today's economy, and they are part of our social life and intermediate interactions and promote innovation. However, platforms need some level of governance to promote these interactions and foster the development of complementarities among participants. We argue that a governance model should include four central dimensions: the distribution of the value generated, the process participants decide about these distributions, the rules of interaction, and access to information to assure alignment and improve complementarity among platform members. We call these dimensions "principles," distributive, procedural, interactional, and informational justice. Justice or fairness goes beyond giving each person what they deserve. It includes involving participants in the process, interacting with them, and giving them access to information, all with fairness. Our justice-based governance could foster platform performance, increase network-effect, improve complementarities, and rise transaction activities.
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Extant platform research focuses on how platform owners’ governance behaviors directly affect complementors. This study explicates the multilateral interdependence among different groups of producers within a platform ecosystem. We theorize about how platform owners’ governance design may create frictions between platform providers and complementors. While open governance grants greater autonomy to platform providers, it also cultivates a more complex ecosystem for complementors. Since ecosystem complexity raises the cost of product customization, complementors will be less willing to port an existing complement to a more complex ecosystem, that is, less likely to multihome. The negative effect is weakened as the complementor has greater experience with the destination ecosystem or when the complement exhibits a greater level of modularity. Our analysis of newly launched apps in Apple’s iOS and Google’s Android smartphone ecosystems finds supportive evidence. We discuss implications for the burgeoning literature on platform ecosystems and complementors.
Research summary
Platform ecosystems have spurred new products and services, sparked innovation, and improved economic efficiency in various industries and technology sectors. A distinctive feature of the platform architecture is its modular and interdependent system of core and complementary components bound together by design rules and an overarching value proposition. Accordingly, we conceptualize platforms as meta‐organizations, or “organizations of organizations” that are less formal and less hierarchical structures than firms, and yet more closely coupled than traditional markets. To function successfully, however, platforms require coordination among multiple participants not all of whose interests are aligned. These organizational features of platforms raise many interesting and complex strategic challenges and hold implications for how platforms compete. In this paper, we discuss some of the most salient features of platform ecosystems as meta‐organizations, specifically in terms of the sources of authority or power in the ecosystem, the motivation and incentives a platform creates to attract participants, and its governance and coordination structures. We then consider how papers appearing in this special issue inform us about the effects of these features on platform competition along three distinct dimensions: (a) with traditional incumbents as platforms enter and establish themselves in new markets, (b) with other platforms to secure an advantageous market position, and (c) with the different participants on the platform to share the value that has been created jointly. We close by identifying some promising directions for future research.
Managerial summary
Platform ecosystems have spurred new products and services, sparked innovation, and improved economic efficiency in various industries and technology sectors. A distinctive feature of the platform architecture is its modular and interdependent system of core and complementary components bound together by design rules and an overarching value proposition. This makes platform ecosystems an organizational form on its own (a “meta‐organization”), neither possessing the hierarchical instruments of a firm, nor the largely uncoordinated decisionmaking of markets. Successful platform ecosystems require coordination among multiple participants with possibly conflicting interests. We discuss some of the most salient features of platform ecosystems as meta‐organizations, specifically in terms of the sources of authority or power in the ecosystem, the motivation and incentives a platform creates to attract participants, and its governance and coordination structures. These features affect how platform ecosystems compete: i) with a traditional incumbent, ii) with other platform ecosystems, and iii) between different participants of the same platform ecosystem. The articles published in this special issue speak to different aspects of platform competition from the perspective of organization design.
This article explores what factors drive digital platform firms to set or modify their boundaries. Building on economics, strategic management, and information systems research, I suggest that digital platforms make strategic decisions over three distinct types of interrelated boundaries: (1) the scope of the platform firm (what assets are owned, what labor is employed, and what activities are performed by the firm), (2) the configuration and composition of the platform's sides (which distinct groups of customers have access to the platform), and (3) the digital interfaces (that specify the 2-way exchange of data between the platform firm and each of its sides). In this article, I explore the interdependence between these seemingly separate decisions and the role of some important moderating variables. These moderators include whether the platform is a transaction or an innovation platform, and the extent to which the platform has developed from its initial formation stage. My work explains why we see so much variation in boundaries across platforms and over time.
Crowdwork conducted via digital platforms is a young form of work, but a growing part of the gig economy. Typical for crowdwork is low pay, volatile income streams and no social security benefits. Also, crowdworkers have few possibilities for social comparison or negotiation because they work outside of company organisations. This article examines the question of whether these conditions mean that crowdworkers’ expectations about justice in crowdwork arrangements differ in comparison to their expectations regarding justice in conventional employment relationships. This question is addressed empirically on the basis of 36 qualitative interviews and a survey of 230 crowdworkers. The justice expectations of crowdworkers involved in different types of crowdworking platforms in German-speaking countries were examined. In our sample, crowd work typically serves to supplement – not replace – conventional employment. This explorative research shows that crowdworkers use similar standards of justice regarding work performance in their evaluations of work mediated via crowdwork platforms and conventional employment. It shows that crowdworkers perceive injustices in four specific areas: planning insecurity, lack of transparency in performance evaluation, lack of clarity in task briefings and low remuneration. These areas correspond to the theoretical dimensions of distributive and procedural justice on Colquitt’s (2001) organisational justice scale. These findings have implications for future efforts to regulate crowdwork.
JEL codes: J88; J3
Platforms create value by enabling interactions between consumers and external producers through infrastructures and rules. We define platform data strategy to encompass all data-related rules undertaken by platforms to foster competitive advantage over the long term. Platform firms face growing pressure to increase accountability for how they use data; yet, an explicit treatment of platforms’ data strategies and a systematic discussion of forces influencing such data-related choices are absent in the academic literature. We articulate how a platform’s data strategy varies based on platform type and business circumstances. Given the interdependencies within a platform’s ecosystem, its data strategy must balance incentives of all stakeholders. Besides discussing these topics, the paper identifies promising research opportunities in platform data strategy to better inform future academic research, strategic decision-making, and regulatory analysis.
How do digital platforms govern their users? Existing studies, with their focus on impersonal and procedural modes of governance, have largely neglected to examine the human labor through which platform companies attempt to elicit the consent of their users. This study describes the relationship labor that is systematically excised from many platforms’ accounts of what they do and missing from much of the scholarship on platform governance. Relationship labor is carried out by agents of platform companies who engage in interpersonal communications with a platform’s users in an effort to align diverse users’ activities and preferences with the company’s interests. The authors draw on ethnographic research conducted at AllDone (a for-profit startup that built an online market for local services) and edX (a non-profit startup that partnered with institutions to offer Massive Open Online Courses). The findings leverage variation in organizational contexts to elaborate the common practices and divergent strategies of relationship labor deployed by each platform. Both platforms relied on relationship workers to engage in account management practices aimed at addressing the particular concerns of individual users through interpersonal communications. Relationship workers in each setting also engaged in community management practices that facilitated contact and collaboration among users in pursuit of shared goals. However, our findings show that the relative frequency of relationship workers’ use of account management and community management practices varies with organizational conditions. This difference in strategies also corresponded to different ways of valuing relationship workers and incorporating them into organizational processes. The article demonstrates how variation in organizational context accounts for divergent strategies for governing user participation in digital platforms and for the particular processes through which governance is accomplished and contested.
The growth of digital platforms relies on the generative nature of digital resources and platforms' openness to complementary innovation. These features 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 reveal their distinctive characteristics. Overall, the study demonstrates the potential for unconventional and opportunistic platform strategies that extend beyond more traditional platform competition strategies, such as quality, variety, and network size.
Although R&D networks have been increasingly used by companies to foster innovation through collaboration, there are still challenges regarding how to successfully orchestrate such projects. The goal of this study is to analyse how a hub firm orchestrates an R&D network through collaborative practices. We based our study on the three orchestration subprocesses proposed by Dhanaraj and Parkhe, namely, to foster knowledge mobility, guarantee innovation appropriability, and maintain network stability. To achieve our goal, we analysed the collaborative practices in an R&D network in the semiconductor industry in France. The case consists of an R&D network among 26 companies to create a new transistor. The data include 65 interviews and 192 documents. The study contributes to the literature on network orchestration by showing that specific collaborative practices performed by a hub firm enable a fourth orchestration subprocess—network reconfiguration—which is necessary in long‐lasting and complex R&D networks and also affects the other three subprocesses. Network reconfiguration consists in disassociating and attracting new members to the R&D network to cover knowledge demands, and is performed by the hub‐firm through specific collaborative practices. The results can benefit practitioners by showing which collaborative practices may be useful for a hub firm throughout the development of an R&D network.
Digital platforms are an omnipresent phenomenon that challenges incumbents by changing how we consume and provide digital products and services. Whereas traditional firms create value within the boundaries of a company or a supply chain, digital platforms utilize an ecosystem of autonomous agents to co-create value. Scholars from various disciplines, such as economics, technology management, and information systems have taken different perspectives on digital platform ecosystems. In this Fundamentals article, we first synthesize research on digital platforms and digital platform ecosystems to provide a definition that integrates both concepts. Second, we use this definition to explain how different digital platform ecosystems vary according to three core building blocks: (1) platform ownership, (2) value-creating mechanisms, and (3) complementor autonomy. We conclude by giving an outlook on four overarching research areas that connect the building blocks: (1) technical properties and value creation; (2) complementor interaction with the ecosystem; (3) value capture; and (4) the make-or-join decision in digital platform ecosystems.
Digital platforms are an organizational form made up of a technological architecture and governance mechanisms for managing autonomous complementors. A platform's success depends on their engagement in value creation and capture. Prior studies of such engagement have mainly focused on a platform's governance mechanisms without recognizing their interdependence to its technological architecture. There is therefore a limited understanding of how the interplay between governance and architecture configures platform organizations , and why these configurations produce different levels of complementor engagement. In this paper, our analysis of a 12-year study of a shared platform initiative yields three configurations of platform organizations: vertical, horizontal, and modular. Based on these configurations, we develop propositions that theorize the implications of these organizational forms for complementor engagement. We further propose that these insights , which we derive from a shared platform, are particularly relevant for blockchain-based platforms.
Abstract The objective of this article is to introduce readers to the emerging research stream on business ecosystems, explicating the novelty and the usefulness of ecosystem-based theorizing, and hoping to pave the way for an influential but cumulative body of knowledge. The key tenets within an ecosystem-based perspective are outlined and used to contrast this emerging perspective from other established perspectives of value chains, supply chains, alliances, and networks. The article concludes by discussing the research approaches that can be employed to study ecosystems and the implications for organization design.
This study explores the dimensionality of organizational justice and provides evidence of construct validity for a new justice measure. Items for this measure were generated by strictly following the seminal works in the justice literature. The measure was then validated in 2 separate studies. Study 1 occurred in a university setting, and Study 2 occurred in a field setting using employees in an automobile parts manufacturing company. Confirmatory factor analyses supported a 4-factor structure to the measure, with distributive, procedural, interpersonal, and informational justice as distinct dimensions. This solution fit the data significantly better than a 2- or 3-factor solution using larger interactional or procedural dimensions. Structural equation modeling also demonstrated predictive validity for the justice dimensions on important outcomes, including leader evaluation, rule compliance, commitment, and helping behavior.
The field of organizational justice continues to be marked by several important research questions, including the size of relationships among justice dimensions, the relative importance of different justice criteria, and the unique effects of justice dimensions on key outcomes. To address such questions, the authors conducted a meta-analytic review of 183 justice studies. The results suggest that although different justice dimensions are moderately to highly related, they contribute incremental variance explained in fairness perceptions. The results also illustrate the overall and unique relationships among distributive, procedural, interpersonal, and informational justice and several organizational outcomes (e.g., job satisfaction, organizational commitment, evaluation of authority, organizational citizenship behavior, withdrawal, performance). These findings are reviewed in terms of their implications for future research on organizational justice.
The flexibility offered by the combination of platform and enabling ecosystems allows multiple competing and collaborating organizations from different industries to achieve rapid innovations. This article highlights key technical and business model attributes of the platform and how these can be exploited by the platform leader for achieving improved performance with limited coordination overhead. Research shows that only a few platforms are managed effectively; as it involves balancing conflicting demands related to the platform owner’s interest and overall health of the ecosystems. We discuss the key governance challenges for a sustainable platform leadership strategy that leads to benefits for the platform leader as well as for the ecosystem partners. Research shows that an effective platform governance i.e. decision rights and accountability to encourage desirable behavior in the use of the platform, addresses the above challenges effectively. This article goes on to identify different types of control mechanisms used in the context of platform ecosystem. While doing so, we highlight the important contextual differences related to the application of control mechanism in platform-centric ecosystems. Unlike other inter-organizational partnership (i.e. outsourced software development); ecosystem leaders do not have formal authority over a large number of application developers and other partners (Mukhopadhyay et al., 2016a). We conclude by proposing several complementary research questions for better understanding of the control–governance dimensions of platform ecosystem business models.
Even considering a small-firm network as a new organizational form, few studies analyze how network management practices may influence the performance of member firms. To help overcome this gap, we conducted a survey with 242 firms associated with 49 small-firm networks in Brazil. The results show that collective planning, evaluation, communication, innovation, services offered by the network, leadership, and also the entrepreneurs’ orientation to business development have a positive influence on firms’ performance. The study contributes to the organizational literature and practice as it identifies a set of management practices that influence the performance of firms in small-firm networks.
As digital platforms are transforming almost every industry today, they are slowly finding their way into the mainstream information systems (ISs) literature. Digital platforms are a challenging research object because of their distributed nature and intertwinement with institutions, markets and technologies. New research challenges arise as a result of the exponentially growing scale of platform innovation, the increasing complexity of platform architectures and the spread of digital platforms to many different industries. This paper develops a research agenda for digital platforms research in IS. We recommend researchers seek to (1) advance conceptual clarity by providing clear definitions that specify the unit of analysis, degree of digitality and the sociotechnical nature of digital platforms; (2) define the proper scoping of digital platform concepts by studying platforms on different architectural levels and in different industry settings; and (3) advance methodological rigour by employing embedded case studies, longitudinal studies, design research, data-driven modelling and visualisation techniques. Considering current developments in the business domain, we suggest six questions for further research: (1) Are platforms here to stay? (2) How should platforms be designed? (3) How do digital platforms transform industries? (4) How can data-driven approaches inform digital platforms research? (5) How should researchers develop theory for digital platforms? and (6) How do digital platforms affect everyday life?
Based on an exploratory multiple-case study in two platform ecosystems, we develop a process theory that explains how and why different ways of practicing ecosystem-wide governance are more or less successful in navigating the tension between cocreated value and governance costs. Our process theory shows that how ecosystem-wide rules and values are practiced considerably varies and changes over time. Initially, governance practices follow ecosystem-wide rules; if and how practices shift toward going beyond the rules hinges on specific necessary conditions. Irrespective of which governance route is taken, the tension between cocreated value and governance costs is more successfully addressed if practices are sensitive to ecosystem-wide values.
The online appendix is available at https://doi.org/10.1287/isre.2017.0701 .
Technology platform strategies offer a novel way to orchestrate a rich portfolio of contributions made by the many independent actors who form an ecosystem of heterogeneous complementors around a stable platform core. This form of organising has been successfully used in smartphone, gaming, commercial software, and industrial sectors. Technology ecosystems require stability and homogeneity to leverage common investments in standard components, but they also need variability and heterogeneity to meet evolving market demand. Although the required balance between stability and evolvability in the ecosystem has been addressed conceptually in the literature, we have less understanding of its underlying mechanics or appropriate governance. Through an extensive case study of a business software ecosystem consisting of a major multinational manufacturer of enterprise resource planning software at the core and a heterogeneous system of independent implementation partners and solution developers on the periphery, our research identifies three salient tensions that characterize the ecosystem: standard–variety, control–autonomy, and collective–individual. We then highlight the specific ecosystem governance mechanisms designed to simultaneously manage desirable and undesirable variance across each tension. Paradoxical tensions may manifest as dualities, where tensions are framed as complementary and mutually enabling. Alternatively, they may manifest as dualisms, where actors are faced with contradictory and disabling “either…or” decisions. We identify conditions where latent, complementary tensions become manifest as salient, contradictory tensions. By identifying conditions in which complementary logics are overshadowed by contradictory logics, our study further contributes to the understanding of the dynamics of technology ecosystems, as well as the effective design of technology ecosystem governance that can explicitly embrace paradoxical tensions toward generative outcomes.
Some difficult but important issues have arisen in recent social studies of science concerning temporally emergent phenomena and the decentering of the human subject in scientific practice. This essay seeks a constructive clarification of the issues, and links them together, by delineating and exemplifying a view of science as a field of emergent human and material agency reciprocally engaged by means of a dialectic of resistance and accommodation-the mangle.
Although previous research provides a foundation for developing, maintaining, and exiting relationships, the extant literature
has yet to consider the influence that patterns of economic and social forces have in guiding the future of deteriorating
relationships. To understand better and respond to relationships in decline and to salvage relationships that are destined
to fail needlessly, the authors use the political economic paradigm to identify symptoms of deteriorating relationships and
provide a framework for combining relational forces that best guides relationship retention decisions. They propose a model
based on the theoretical foundations of transactional cost analysis (TCA), social exchange, and distributive justice. Using
relative dependence, interdependence, and mutual dependence to define the economic and social worth of the relationship, they
incorporate dyadic patterns of behavior to illustrate similar and different interpretations and evaluations of fairness and
the impact on relational out-comes. The article culminates with managerial implications and directions for future research.
Although research on trust in an organizational context has advanced considerably in recent years, the literature has yet to produce a set of generalizable propositions that inform our understanding of the organization and coordination of work. We propose that conceptualizing trust as an organizing principle is a powerful way of integrating the diverse trust literature and distilling generalizable implications for how trust affects organizing. We develop the notion of trust as an organizing principle by specifying structuring and mobilizing as two sets of causal pathways through which trust influences several important properties of organizations. We further describe specific mechanisms within structuring and mobilizing that influence interaction patterns and organizational processes. The principal aim of the framework is to advance the literature by connecting the psychological and sociological micro-foundations of trust with the macro-bases of organizing. The paper concludes by demonstrating how the framework can be applied to yield novel insights into traditional views of organizations and to stimulate original and innovative avenues of organizational research that consider both the benefits and downsides of trust.
Governance through the negotiated interaction of a plurality of public, semi-public and private actors seems to provide an efficient means for governing our increasingly complex, fragmented and multi-layered societies. However, the big question is whether governance networks also contribute to the democratic governance of society. Governance network theory and post-liberal theories of democracy claim that there are both democratic problems and potentials associated with interactive network governance. In order to be able to assess, and possibly improve, the democratic performance of governance networks, the authors of this article develop and substantiate an analytical model for measuring the democratic anchorage of governance networks in different political constituencies and in an appropriate set of democratic rules and norms. In addition, it is argued that politicians should play a key role in efforts to ensure the democratic anchorage of governance networks.
Technologies that allow contributions from anywhere and trust of unknown contributors at first thrive in elite communities where people have the technical astuteness to know how to manage them and the ethos of tinkering and mutual assistance. As the platforms' popularity increases and they enter the mainstream, greater numbers and a decline in the average user's skill set make them increasingly worth subverting. The way forward -- for both PCs and smartphones -- lies in a new security architecture that lets users make better-informed decisions about whether to run new software. A user deciding whether to run new code could use that data to make a simple decision, instead of letting the autocratic voice of preprogrammed security software dictate the result. There are many details to work out, but without ways of managing generative platforms without a central gatekeeper, chances seem strong that most people will accept outside control.
Much has been written about networks, strategic alliances, and virtual organizations. Yet these currently popular frameworks provide little systematic assistance when it comes to out-innovating the competition. That's because most managers still view the problem in the old way: companies go head-to-head in an industry, battling for market share. James Moore sets up a new metaphor for competition drawn from the study of biology and social systems. He suggests that a company be viewed not as a member of a single industry but as a part of a business ecosystem that crosses a variety of industries. In a business ecosystem, companies "co-evolve" around a new innovation, working cooperatively and competitively to support new products and satisfy customer needs. Apple Computer, for example, leads an ecosystem that covers personal computers, consumer electronics, information, and communications. In any larger business environment, several ecosystems may vie for survival and dominance, such as the IBM and Apple ecosystems in personal computers or Wal-Mart and K mart in discount retailing. In fact, it's largely competition among business ecosystems, not individual companies, that's fueling today's industrial transformation. Managers can't afford to ignore the birth of new ecosystems or the competition among those that already exist. Whether that means investing in the right new technology, signing on suppliers to expand a growing business, developing crucial elements of value to maintain leadership, or incorporating new innovations to fend off obsolescence, executives must understand the evolutionary stages all business ecosystems go through and, more important, how to direct those changes.
There are many products for which the utility that a user derives from consumption of the good increases with the number of other agents consuming the good. There are several possible sources of these positive con- sumption externalities.1 1) The consumption externalities may be generated through a direct physical effect of the number of purchasers on the quality of the product. The utility that a consumer derives from purchasing a telephone, for ex- ample, clearly depends on the number of other households or businesses that have joined the telephone network. These network externalities are present for other communi- cations technologies as well, including Telex, data networks, and over-the-phone facsimilie equipment. 2) There may be indirect effects that give rise to consumption externalities. For example, an agent purchasing a personal computer will be concerned with the number of other agents purchasing similar hardware because the amount and variety of software that will be supplied for use with a given computer will be an increasing function of the number of hardware units that have been sold. This hardware-software paradigm also applies to video games, video players and recorders, and phonograph equipment. 3) Positive consumption externalities arise for a durable good when the quality and availability of postpurchase service for the good depend on the experience and size of the service network, which may in turn vary with the number of units of the good that have been sold. In the automobile market, for example, foreign manufacturers' sales initially were retarded by consumers' awareness of the less experienced and thinner service networks that existed for new or less popular brands. In all of these cases, the utility that a given user derives from the good depends upon the number of other users who are in the same "network" as is he or she. The scope of the network that gives rise to the consumption
Platforms power the world’s most valuable companies, but it will get harder and harder to capture and monetize their disruptive potential. Today, platform companies are in nearly every market, and they all share common features. They use digital technology to create self-sustaining positive-feedback loops that potentially increase the value of their platforms with each new participant. They build ecosystems of third-party firms and individual contractors that allow them to bypass the traditional supply chains and labor pools required by traditional companies.
Moreover, all platform companies face the same four business challenges. They must choose the key “sides” of the platform (that is, identify which market participants they want to bring together, such as buyers and sellers, or users and innovators). They must solve a chicken-or-egg problem to jump-start the network effects on which they depend. They must design a business model capable of generating revenues that exceed their costs. And finally, they must establish rules for using (and not abusing) the platform, as well as cultivating and governing the all-important ecosystem.
For all their similarities, it is possible to distinguish platforms on the basis of their principal activity. This yields two basic types: transaction and innovation platforms, with some hybrid companies that combine the two.
RESEARCH SUMMARY
Orchestrating complementors' value creation activities is critical to platform owners but is challenging. Emerging literature on platform governance suggests that platform access control can shape complementors' contributions to platforms. We extend this literature by using the coopetition framework from strategic management to examine the relationship between platform gatekeeping, a prominent policy for governing platform access, and knowledge sharing among complementors. Exploiting the iOS 7 jailbreak as an exogenous shock to Apple's gatekeeping policy and tracing iOS and Android app developers' knowledge sharing activity on an online forum, we find causal evidence that a lapse in gatekeeping reduces knowledge sharing among iOS app developers. Further, this effect is mitigated among developers with greater knowledge complexity but magnified among those with greater knowledge routineness.
MANAGERIAL SUMMARY
Platform owners can use governance policies, such as gatekeeping, to control complementors' platform access and shape their value creation activities. This study examines how platform access control affects the interactions among complementors in the form of knowledge sharing. We find that iOS app developers share knowledge less frequently after a lapse in Apple's gatekeeping policy, suggesting that strict platform access control can facilitate complementors' interactions with one another. Further, the decrease in knowledge sharing is more pronounced among app developers with routine knowledge and less so among those with complex knowledge, indicating that complementors' characteristics also matter. This study highlights the value of understanding the impact of the design and deployment of platform governance policies on complementors' interactions and value creation activities more generally.
This article is protected by copyright. All rights reserved.
Purpose: Technology has dramatically changed the nature of interorganizational relationships and the ways partners interact with each other. In the new platform business model, platform technology usage seems to work as a governance mechanism to regulate operations and manage platform builder–platform participant relationships. To respond to these changes, this study aims to examine how platform technology usage in platform operations influenced the relationship quality between the platform builder and platform participants by promoting perceptions of three types of justice (procedural, distributive and informational).
Design/methodology/approach: The authors propose that it is through the perception of three types of justice (procedural, distributive and informational) that platform technology usage exerts its governance effect on the platform relationship. In doing this, the authors seek to answer the following two related research questions in the platform setting: How does platform technology usage drive relationship performance via different types of justice perceptions? Which type of justice affects relationship performance most effectively?
Findings: The results from a survey of 384 participant firms from two of the largest digital platforms for mobile/PC application in China reveal that platform technology usage leads to better relationship performance through enhanced perceptions of procedural, distributive, and informational justice. The positive impacts of procedural justice and distributive justice on relationship performance are greater than that of informational justice, while the impacts of procedural justice and distributive justice show no significant differences.
Originality/value: These findings provide novel insights into the role and mechanisms of platform technology usage in platform relationship management.
The paradox of openness is inherent to all platform ecosystems—the tension in enabling maximum openness to create joint innovation while guaranteeing value capturing for all actors. Governance mechanisms to solve this paradox are embedded into the technical architecture of the platform, addressing the dimensions of access, control, and incentives. Blockchain technology offers unique ways to design novel governance mechanisms through the standardization of interactions. However, the design of such an architecture requires careful consideration of the cost associated with it.
IT governance describes the decision rights and accountability framework used to ensure the alignment of ITrelated activities with the organization's strategy and objectives. Conversely, IT consumerization refers to the process whereby the changing practices and expectations of consumers influence the IT-related activities of workers and managers in organizations. We propose that IT consumerization not only challenges the foundations of IT governance but ultimately also transforms it. To explore this research problem, we utilize the punctuated equilibrium theory and a case study of IT consumerization and the transformation of IT governance in a large global bank. Our findings suggest that the widespread adoption of digital technology in everyday life leads to "everyone's IT," which is a new set of shared beliefs among consumers that highlights democratized access and individualized use of IT. As everyone's IT beliefs begin to alter the IT-related activities of workers, the result is IT governance misalignments that ultimately lead to a punctuated transformation of IT governance that dismantles functional IT governance. The establishment of platform-based governance marks a new equilibrium period. Our mid-range theory contributes to the IS domain with the novel concept of everyone's IT and a grounded explanation of IT governance transformation in the context of IT consumerization. Our theory offers a set of significant research and practical implications.
Open innovation has attracted a significant amount of attention from scholars and practitioners. Prior research on open innovation has mainly focused on collaborative inventing. However, understanding the processes and outcomes of joint inventing is not sufficient for understanding sustained open‐innovation activities and the competitive advantages of the actors involved in open innovation. Instead, an understanding of value creation and value capture is paramount for advancing our understanding of sustained open‐innovation activities. Open innovation requires collaboration among distributed but interdependent actors who rely on each other's capabilities in value co‐creation. Value co‐creation in open innovation is driven not only by actors’ value creation but also by their ability to capture value. While value creation and value capture are discussed in the open‐innovation literature, the advancement of this stream of research is hindered by conceptual ambiguity, especially in relation to the concept of value capture. This article adopts a value perspective on open innovation, offers consistent conceptualizations of value creation and value capture, and outlines potential avenues for further research at the interface of open innovation, value creation, and value capture.
This article is protected by copyright. All rights reserved.
The value-capture problem for innovators in the digital economy involves some different challenges from those in the industrial economy. It inevitably requires understanding the dynamics of platforms and ecosystems. These challenges are amplified for enabling technologies, which are the central focus of this article. The innovator of an enabling technology has a special business model challenge because the applicability to many downstream verticals forecloses, as a practical matter, ownership of all the relevant complements. Complementary assets (vertical and lateral) in the digital context are no longer just potential value-capture mechanisms (through asset price appreciation or through preventing exposure to monopolistic bottleneck pricing by others); they may well be needed simply for the technology to function. Technological and innovational complementors present both coordination and market design challenges to the innovator that generally lead to market failure in the form of an excess of social over private returns. The low private return leads to socially sub-optimal underinvestment in future R&D that can be addressed to some extent by better strategic decision-making by the innovator and/or by far-sighted policies from government and the judiciary.
The default value-capture mechanism for many enabling technologies is the licensing of trade secrets and/or patents. Licensing is shown to be a difficult business model to implement from a value-capture perspective. When injunctions for intellectual property infringement are hard to win, or even to be considered, the incentives for free riding by potential licensees are considerable. Licensing is further complicated if it involves standard essential patents, as both courts and policy makers may fail to understand that development of a standard involves components of both interoperability and technology development. If a technology standard is not treated as the embodiment of significant R&D efforts enabling substantial new downstream economic activity, then rewards are likely to be calibrated too low to support appropriate levels of future innovation.
Purpose
This study investigates customers’ perceptions of the service quality facets of Airbnb accommodation using social exchange theory as a suitable conceptual framework to explain aspects of interactivity between guests and hosts.
Design/methodology/approach
A self-administered questionnaire consisting of 25 accommodation- specific service quality attributes, structured according to Akbaba’s (2006) measurement scale and based on the service quality hierarchical conceptualization described by Brady and Cronin (2001) and Cronin and Taylor (1992), was distributed to Airbnb international guests visiting Phuket, Thailand. The sample was chosen through a two-stage sampling process and the PLS-SEM technique was used for data analysis.
Findings
The results showed that convenience and assurance are critical contributors to the measurement of service quality in remote Airbnb lodgings. The findings further revealed that Airbnb guests are mainly interested in lodgings which have access to certain tourist sights, and in easily accessible information and efficient resolution of problems during their stay. We also found that guests greatly value the convenience and flexibility offered by Airbnb, and that they particularly appreciate the warm hospitality provided by the hosts. Finally, Airbnb guests have very low expectations of the amenities and services available at the lodgings.
Research limitations/implications
Airbnb is one of the most well-known examples of hospitality in the sharing economy and results cannot be generalized to similar accommodation providers in sharing economies. Despite the appropriateness of using the measurement tool provided by Akbaba (2006), it is only one option among others for measuring service quality.
Practical implications
The current study can assist hosts in gaining better knowledge of guests’ decision making processes and in designing effective marketing strategies by focusing on guests’ requirements in terms of service quality. The effective use of competitive strengths and the prioritization of business resources would potentially enhance guests’ positive experiences at the accommodation and at the destination.
Originality/value
Limited numbers of studies have focused on the sharing economy and hospitality and in particular on Airbnb and this is the first study with a focus on service quality issues in terms of Airbnb accommodation.
If you listed the blockbuster products and services that have redefined the global business landscape, you'd find that many of them tie together two distinct groups of users in a network. Case in point: The most important innovation in financial services since World War II is almost certainly the credit card, which links consumers and merchants. The list would also include newspapers, HMOs, and computer operating systems-all of which serve what economists call two-sided markets or networks. Newspapers,for instance, bring together subscribers and advertisers; HMOs link patients to a web of health care providers and vice versa; operating systems connect computer users and application developers. Two-sided networks differ from traditional value chains in a fundamental way. In the traditional system, value moves from left to right: To the left of the company is cost; to the right is revenue. In two-sided networks, cost and revenue are both to the left and to the right, because the "platform" has a distinct group of users on each side. The platform product or service incurs costs in serving both groups and can collect revenue from each, although one side is often subsidized. Because of what economists call "network effects," these platform products enjoy increasing returns to scale, which explains their extraordinary impact. Yet most firms still struggle to establish and sustain their platforms. Their failures are rooted in a common mistake: In creating strategies for two-sided networks, managers typically rely on assumptions and paradigms that apply to products without network effects. As a result, they make many decisions that are wholly inappropriate for the economics of their industries. In this article, the authors draw on recent theoretical work to guide executives negotiating the challenges of two-sided networks.
The digital age has seen the rise of service systems involving highly distributed, heterogeneous, and resourceintegrating actors whose relationships are governed by shared institutional logics, standards, and digital technology. The cocreation of service within these service systems takes place in the context of a paradoxical tension between the logic of generative and democratic innovations and the logic of infrastructural control. Boundary resources play a critical role in managing the tension as a firm that owns the infrastructure can secure its control over the service system while independent firms can participate in the service system. In this study, we explore the evolution of boundary resources. Drawing on Pickering's (1993) and Barrett et al.'s (2012) conceptualizations of tuning, the paper seeks to forward our understanding of how heterogeneous actors engage in the tuning of boundary resources within Apple's iOS service system. We conduct an embedded case study of Apple's iOS service system with an in-depth analysis of 4,664 blog articles concerned with 30 boundary resources covering 6 distinct themes. Our analysis reveals that boundary resources of service systems enabled by digital technology are shaped and reshaped through distributed tuning, which involves cascading actions of accommodations and rejections of a network of heterogeneous actors and artifacts. Our study also shows the dualistic role of power in the distributed tuning process.
Prior research documents the significance of using platform boundary resources (e.g. application programming interfaces) for cultivating platform ecosystems through third‐party development. However, there are few, if any, theoretical accounts of this relationship. To this end, this paper proposes a theoretical model that centres on two drivers behind boundary resources design and use – resourcing and securing – and how these drivers interact in third‐party development. We apply the model to a detailed case study of Apple's iPhone platform. Our application of the model not only serves as an illustration of its plausibility but also generates insights about the conflicting goals of third‐party development: the maintenance of platform control and the transfer of design capability to third‐party developers. We generate four specialised constructs for understanding the actions taken by stakeholders in third‐party development: self‐resourcing, regulation‐based securing, diversity resourcing and sovereignty securing. Our research extends and complements existing platform literature and contributes new knowledge about an alternative form of system development.
The central problems of political philosophy (e.g., legitimate authority, distributive justice) mirror the central problems of business ethics. The question naturally arises: should political theories be applied to problems in business ethics? If a version of egalitarianism is the correct theory of justice for states, for example, does it follow that it is the correct theory of justice for businesses? If states should be democratically governed by their citizens, should businesses be democratically managed by their employees? Most theorists who have considered these questions, including John Rawls in Political Liberalism, and Robert Phillips and Joshua Margolis in a 1999 article, have said "no." They claim that states and businesses are different kinds of entities, and hence require different theories of justice. I challenge this claim. While businesses differ from states, the difference is one of degree, not one of kind. Business ethics has much to learn from political philosophy.
Prior research on digital ecosystems focuses on the focal firm (e.g., a platform owner) and its ecosystem governance. However, there is a dearth of literature examining the non-focal actor, that is, an ecosystem participant who is at the periphery of a digital ecosystem. This paper proposes a theoretical perspective of the non-focal firm's participation across digital ecosystems for cultivating its innovation habitat through capability search and redeem. Capability search involves the location of external capability deemed valuable for extending the firm's innovation habitat. Capability redeem refers to the firm's use of external capability to develop, distribute, and/or monetize its products and services. We generate and sensitize the proposed perspective in the context of Sony Ericsson's innovation habitat by interpreting the mobile device manufacturer's participation across four digital ecosystems (Visual Basic, Java, Digital Music, and Android). Our findings suggest that the non-focal actor cannot rely on a single ecosystem for addressing all relevant layers of innovation. It benefits from pursuing a pluralistic strategy, operating across digital ecosystems to avoid investing all efforts in the same ecosystem. The model of ecosystem capability search and redeem, which is a result of ideographic research explanation, extends current perspectives on digital ecosystems and contributes to the emerging literature in the digital age.
There has been an increasing amount of research conducted on issues of procedural justice. Although this research has demonstrated that the type of procedure used to allocate outcomes has an independent influence on people's judgments of the fairness of a decision, there is growing empirical evidence that such judgments are influenced by the enactment of the procedure as well. Fairness concerns raised about the propriety of a decision maker's behavior during the enactment of procedures are representative of a desire forinteractional justice. In this paper, we present three studies that examine the effects of giving acausal account, or a justification, versus not providing a justification, on judgments of interactional fairness and endorsement of a decision maker's actions. In Study I, a laboratory study, ratings of interactional fairness and support for a manager were higher when subjects received a causal account that claimed mitigating circumstances for a manager's improper action than when they did not receive such a causal account. A second laboratory study replicated the same pattern of findings in two different organizational contexts. In addition, it was found that the perceived adequacy of the causal account was a critical factor explaining its effect. In Study 3, a field setting, ratings of both interactional fairness and procedural fairness were higher when a manager provided anadequate causal account to justify the allocation of an unfavorable outcome. The discussion focuses on the implications of these findings for research on interactional and procedural justice.
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This paper attempts to explain why innovating firms often fail to obtain significant economic returns from an innovation, while customers, imitators and other industry participants benefit Business strategy — particularly as it relates to the firm's decision to integrate and collaborate — is shown to be an important factor. The paper demonstrates that when imitation is easy, markets don't work well, and the profits from innovation may accrue to the owners of certain complementary assets, rather than to the developers of the intellectual property. This speaks to the need, in certain cases, for the innovating firm to establish a prior position in these complementary assets. The paper also indicates that innovators with new products and processes which provide value to consumers may sometimes be so ill positioned in the market that they necessarily will fail. The analysis provides a theoretical foundation for the proposition that manufacturing often matters, particularly to innovating nations. Innovating firms without the requisite manufacturing and related capacities may die, even though they are the best at innovation. Implications for trade policy and domestic economic policy are examined.
In a laboratory study, 102 undergraduate students performed a clerical task for which they were either equitably paid or underpaid. The payment was explained using either high or low valid information in either a high or low interpersonally sensitive manner. Subjects then took their own pay and were led to believe the experimenter would not be able to determine exactly how much they actually took. It was found that equitably paid subjects took precisely the amounts they were allowed to take, whereas underpaid subjects took more than they were permitted (i.e., they stole). The degree of stealing was moderated by the validity of the information given (high valid information reduced stealing more than low valid information) and the degree of interpersonal sensitivity shown (high sensitivity reduced stealing more than low sensitivity). These effects combined additively, such that theft was greatest in the low valid information/low sensitivity condition and least in the high valid information/high sensitivity condition (in which the mean amount taken was not significantly higher than the permitted amount). The practical and theoretical implications of these findings are discussed.
This paper investigates the production technology facing computerized credit unions in Canada. A full system of translog cost equations is estimated in order to test for economies of scale, economies of scope, and other production characteristics in a multiproduct context. The regression results indicate that most of the credit unions in our sample experience significant increasing returns to scale as they expand their level of output. There is also evidence of cost complementarity or economies of scope in their mortgage and other lending activities. As a result, legislation which limits the ability of credit unions to grow and diversify will likely raise the operating costs of this important group of financial institutions. Additional structural tests of the most general translog specification suggest that none of the restrictive production conditions commonly imposed by other researchers using Cobb‐Douglas and CES specifications provide a valid representation of credit union technology. The results of many earlier studies are therefore open to question.