There has been a dramatic explosion of platform business models, fuelled by the Internet and mobile technologies, and rapid advances in analytics (e.g., Wirtz and Zeithaml, 2018; Wirtz et al., 2018). The success of platforms like Airbnb and Uber has resulted in a proliferation of research that examines the characteristics of platform business models; characteristics that differentiate them from traditional pipeline business models and that provide platforms with competitive advantages (e.g., Benoit et al., 2017; Kumar et al., 2018; Parker et al., 2016; Wirtz et al., 2019). While such research is undoubtedly useful in building theory, in practice, there is increasing evidence of a phenomenon we refer to as the convergence of business models. To competitive effectively in a rapidly changing environment, businesses are recognizing that the characteristics associated with their primary business model—pipeline or platform—need to be dynamic and malleable. For example, while platform businesses have flourished due to the benefits they derive from the ability to scale exponentially through direct and indirect network effects, ignoring the potential benefits associated with pipeline business models would be limiting to a platform’s future growth trajectory. Similarly, pipeline business have recognized that to stave off the threats to their positions as dominant incumbents, they must leverage the characteristics of platform business models.
Using case studies from the service industry, we explore how two contrasting processes—integration and hybridization—are contributing to the convergence of business models. We argue that the simultaneous integration of pipeline-like characteristics into platform business models and hybridization of pipeline business models by incorporating the characteristics of platform business models is fundamentally altering how value is created and co-created in the new economy. In view of Andreassen et al.'s (2018) recognition that value creation in the new economy is not about a choice of either platform or pipeline business model, but rather a continuum, we explore and put forth thought-provoking questions about the nature, dynamics, and optimal configurations of convergence business models, their impacts on the nature of competition within an industry, and wider consumer, societal, and economic impacts. In the end, we hope to identify key characteristics that contribute to the success of such convergence. Our study has significant theoretical implications for the strategic management of service businesses, emphasizing the need for embedding strategic agility to accelerate business model renewal in a rapidly changing business environment, and identifying the key determinants of business model synergy and sustainable competitive advantage. From a practitioner perspective, our study points to the key aspects of business model development that leaders must consider in strategic decisions pertaining to product development, business process management, customer engagement, innovation, and strategic partnerships.
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Wirtz, J. So, K.K.F., Mody, M., Liu, S. and Chun, H. (2019), “Platforms in the Peer-to-Peer Sharing Economy”, Journal of Service Management, forthcoming.