Conference Agenda

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Session Overview
Session
20-AM-01: ST3.2 - Digital Platforms: opportunities and challenges for research, practices, and society
Time:
Thursday, 20/Jun/2019:
8:30am - 10:00am

Session Chair: Tommaso Buganza, Management Engineering
Session Chair: Laurent Muzellec, Trinity College Dublin
Session Chair: Sébastien Ronteau, AUDENCIA
Session Chair: Daniel Trabucchi, Politecnico di Milano
Location: Amphi Painlevé (Polytechnique)

Session Abstract

Over the last years, digital platforms gained significant momentum in the business environment, having a significant impact on the market (e.g., Libert et al., 2016; Choudary et al., 2016).

Companies like AirBnb, Uber and so on challenged existing businesses and the status-quo of their industries, challenging the rules of the game.

Those companies operate according two(or multi)-sided business models, known as “Two-Sided Market” in Economics, where "one or several platforms enable interactions between end-users, and try to get the two (or multiple) sides ‘on board’ by appropriately charging each side” (Rochet and Tirole, 2006, p. 645). In other words, these businesses act as match-makers between two different groups of customers: travelers and hosts for Airbnb or riders and drivers for Uber, creating indirect network effects (Katz and Shapiro, 1985).

This concept gained initial attention in the economic literature (Rochet and Tirole, 2006; Parker and Van Alstyne, 2005; Rysman, 2009), while similar phenomena – such as business ecosystems and industry-wide platforms (Iansiti and Levien, 2004; Gawer and Cusuman, 2014) – were being studied in the management field. Recently, also management scholars started digging in the specificities of these Two or Multi-Sided Platforms (e.g., Muzellec et al., 2015; Trabucchi et al., 2017; 2018; Perks et al., 2017; Täuscher and Laudien, 2018).

These platforms have several peculiarities: starting from interconnecting two different (or more) groups of customers that need to be both on board to perform the service itself (Stummer et al., 2018); they need to design a double value proposition (Muzellec et al., 2015) and they need to orchestrate complex networks where value is created and captured by many players at the same time (Perks et al., 2017).

Business models based on this structure are being boosted by digital technologies (such as mobile apps or the blockchain) and cultural trends (such as sharing or gig economy). Furthermore, there is still the need for rigorous and theoretically relevant research, being also practice based, in order to enhance the knowledge for all the players (scholars, practitioners, policy makers). Therefore, this track aims to enlarge the discussion on the topic, welcoming submissions which take different perspectives on this phenomenon enclosed in a digital context. On the one hand, these platforms are challenging traditional models in the management literature (Amit and Zott, 2015), getting on board different kinds of customers at the same time, and relying on peculiar kinds of network externalities. On the other, they offer important challenges to entrepreneurs and managers that work on this structure, having, for example, different barriers regarding the launch phase, but also different opportunities to be exploited, such as a lean scale-up and technology standards behind business ecosystems. Furthermore, from the society perspective, these models may enable different forms of consumption (e.g., sharing economy) or even of work (e.g., gig economy). This track aims to get together fresh contributions in these three perspectives, in order to enlarge the knowledge on how the Two or Multi-Sided Business Model can unveil opportunities and overcome challenges for research, practices, and society.


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Presentations

Sharing Economy in a Highly Regulated Market: The Case of Uber in Taiwan

Yachi Chiang

National Taipei University of Technology, Taiwan

Context

The author will take the case of Uber in Taiwan to illustrate and analyze how a highly regulated domestic market reacts to a global sharing economy model enabled by digital technology.

Literature

Putting the sharing economy into perspective

Is sharing the solution? Exploring public acceptability of the sharing economy

Sharing Economy: Review of Current Research and Future Directions

The Sharing Economy and Digital Platforms: A Review and Research Agenda

Regulating the Sharing Economy

Fair and efficient regulation of the sharing economy

Literature Gap

most literature focuses on how to regulate sharing economy, the characteristic of the market in which the sharing economy business model is involved seems missing.

Research Questions

As the taxi industry is a highly regulated market in Taiwan, the writer wants to find out whether this market would function better with or without Uber.

Methodology

documentary research and qualitative interviews.

Empirical Material

interviews with representatives from Uber, taxi industry , the government agency and up to 5 experienced consumers.

Results

the developments of the taxi industry reacting to the intervention of Uber in legal and economic aspects.

Contribution to Scholarship

To enrich the literature in the debate of how domestic market should react to a digital-enabled sharing economy business.

Contribution to Practice

To find out whether the taxi industry market is expanded or threatened by its commonly perceived competitor.

Fitness

Sharing economy is one of the most prominent example , in which a matching platform is enabled, accelerated by digital technology.

Bibliography

Putting the sharing economy into perspective

Is sharing the solution? Exploring public acceptability of the sharing economy

Sharing Economy: Review of Current Research and Future Directions

The Sharing Economy and Digital Platforms: A Review and Research Agenda

Regulating the Sharing Economy

Fair and efficient regulation of the sharing economy



User entrepreneurship in digital economy and their antecedents to opportunity identification

Shahab Zare, Andrea Piccaluga, Alberto Di Minin

Institute of Management and Department EMbeDS/DEXRAI, Sant'Anna School of Advanced Studies

Context

This research aims to study the user entrepreneurship phenomenon in the digital economy. The focus would be on the pre-startup phase for these entrepreneurs by using effectuation and opportunity identification frameworks.

Literature

The entrepreneurship in the digital age is being accelerated thanks to the fewer entry costs than the old-fashioned industries (OECD, 2018). The weak appropriability regime in some clusters of the digital economy together with the ubiquitous knowledge and experiences from the usage of available services flow the ideas to become established opportunities (Agarwal & Shah, 2014).

In this paper, we aim to investigate the prominent factors affecting the opportunity identification phenomenon for so-called user entrepreneurs. Theories of opportunity discovery and opportunity creation will constitute the theoretical lens for capturing the important factors led to the identification of opportunities (Alvarez & Barney, 2007). Further, we use effectuation theory to explain how user entrepreneurs make decisions when it comes to entrepreneurship in the digital age (Sarasvathy, 2001).

Literature Gap

Regardless of the performance of the start-ups in the digital economy and their impact on the economy, there is still a lack of knowledge about how the opportunities are being identified in this sector.

Research Questions

How would the users decide and act for identifying business opportunities?

Methodology

While our understandings from the literature brought us some hypothesis, this topic of research is more exploratory in nature and therefore it can be addressed better qualitatively. Accordingly, we selected Angellist as the database to look for the start-ups in the digital economy.

Empirical Material

Through an in-depth analysis of the history of the start-ups that were available on their websites, we selected eight start-ups which their emergence happened in order to satisfy a usage need captured by its founder. We carried out (and are still performing) semi-structured in-depth interviews with the founders of those start-ups to better understand how the identification of opportunity happened and to frame their decision-making process while creating the venture.

Results

As yet, we are in progress with the interviews and no analysis has been made. Therefore, we cannot describe any results.

Contribution to Scholarship

The expected contributions of our research are twofold. From the academic point of view, we aim to expand the tenets of the effectuation theory (Sarasvathy, 2001) and the user entrepreneurship phenomenon (Shah & Tripsas, 2007, 2016). Furthermore, our research will shed light on opportunity discovery and opportunity creation theories by examining their antecedents for user entrepreneurs (George et al, 2014).

Contribution to Practice

On the other hand, the implications for the policymakers would be related to the entrepreneurship in the digital economy. We believe that user entrepreneurship has been stemmed in this sector and as previous scholars in the user innovation/ user entrepreneurship fields have pointed out, the drivers and the consequences of such a phenomenon is different from other incumbent typologies of entrepreneurs (Shah & Tripsas, 2007; Von Hippel, 2005). Therefore it requires more attention, and a distinction is needed to not hamper it and to make it easier for the ideas to get flourished.

Fitness

This paper is mainly connected to the R&D Management conference’s theme 3 by focusing on the entrepreneurship in the Digital Economy but also is relevant to the theme 8 as user innovation is embedded in the Open Innovation phenomenon.

Bibliography

Agarwal, R., & Shah, S. K. (2014). Knowledge sources of entrepreneurship: Firm formation by academic, user and employee innovators. Research Policy, 43(7), 1109-1133.

Alvarez, S. A., & Barney, J. B. (2007). Discovery and creation: Alternative theories of entrepreneurial action. Strategic entrepreneurship journal, 1(1‐2), 11-26.

George, N. M., Parida, V., Lahti, T., & Wincent, J. (2016). A systematic literature review of entrepreneurial opportunity recognition: insights on influencing factors. International Entrepreneurship and Management Journal, 12(2), 309-350.

OECD (2018), Towards the Implementation of the G20 Roadmap for Digitalisation: Skills, Business Dynamics and Competition; Report prepared at the request of the 2017 G20 German Presidency, http://www.oecd.org/g20/OECDreport_Implementation_G20_Roadmap.pdf

Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of management Review, 26(2), 243-263.

Shah, S. K., & Tripsas, M. (2007). The accidental entrepreneur: The emergent and collective process of user entrepreneurship. Strategic entrepreneurship journal, 1(1‐2), 123-140.

Shah, S., & Tripsas, M. (2016). When do user innovators start firms? A theory of user entrepreneurship. Revolutionizing innovation: Users, communities and open innovation, 285-307.

Von Hippel, E. (2005). Democratizing innovation: The evolving phenomenon of user innovation. Journal für Betriebswirtschaft, 55(1), 63-78.



Competitive advantage for digital platforms in asset heavy industries

Marc Van Dyck, Dirk Lüttgens

RWTH Aachen University, Germany

Context

Companies in asset heavy industries face a shift from selling hardware to launching own digital platforms. These platforms differ from the more widely analyzed consumer platforms due to their layered architecture. Therefore, we explore the role of network effects and platform strategies to gain competitive advantage in the agricultural industry.

Literature

We build on two distinct literature strands: network economics and its implications on platform strategy (e.g., Rochet and Tirole 2003), and on the resource-based view in ecosystems (e.g., Alexy et al. 2018). Platform literature has studied strategies to leverage existing and induce new direct and indirect network effects. Strategic decisions include which side to discount (Parker and van Alstyne 2005), entry timing and quality (Zhu and Iansiti 2012), and design choices such as openness (Boudreau 2010; Eisenmann et al. 2009). One essential difference of asset heavy digital platforms with a layered architecture is that competitive advantage needs to be assessed on an ecosystem level since the critical resources do not solely rest within one firm (Dattée et al. 2018; Jacobides et al. 2018). Alexy et al. (2018) showed how strategic openness can lead to competitive advantage. These insights can be adopted for industrial platforms to extend traditional platform theory.

Literature Gap

While extant knowledge on digital platforms is largely based on analyses of platforms in asset light industries, empirical evidence from industrial platforms is scant. This lack is surprising as the economics of layered platforms to achieve competitive advantage differ substantially. Given the rise of these platforms, more research is warranted.

Research Questions

We aim to integrate platform strategies with RBV in ecosystems to assess: Under which conditions do platform businesses in asset heavy industries lead to competitive advantage? Subsequently, we explore the role of network effects, propensity of Winner-take-all outcomes, and platform strategies with special focus on strategic openness.

Methodology

This study follows a two-phased approach: First, a qualitative multiple-case design is conducted in accordance with the exploratory nature of the topic. Second, the insights from the case study inform a simulation study. The aim of the in-depth inductive research approach (Gioia et al. 2013) is to disentangle relevant decision factors and competitive dynamics. Primary data will be conducted through semi-structured interviews whereas secondary data will be based on media documentation, websites and documents provided by the interviewees. Based on the insights an optimization model will simulate the decisions under uncertainty (e.g., Gorissen et al. 2015).

Empirical Material

The agricultural industry serves as an example for three reasons: First, while deeply rooted in the production of physical products farming is increasingly digitized (Bovensiepen et al. 2016), representing typical asset heavy digital platforms with a layered architecture. Second, digitized agriculture will create new value pools requiring a shift in business model and completely redefining the competition (Dressler 2015). Third, food and agribusiness does not only have a massive economic footprint but also a significant social and environmental relevance and digital offerings could be part of an answer for securing sufficient, safe and healthy food (Kritikos 2017). We follow an embedded multiple-case design based on a literal replication logic (Yin 2018). We study two cases: one machinery company and one producer of seeds and crop protection. Both represent key players within the agricultural value chain, are key partners to farmers, at the same time positioned upstream, hence not directly consumer-facing, and their focal product is of physical nature. Our study is based on interviews with executives of the focal companies, customers, suppliers, investors, and complementors. To corroborate our findings, we include extensive secondary data, such as customer usage data, market analyses, internal reports, etc.

Results

This study sheds light on the role of network effects in asset heavy industries and the subsequent implications on platform strategies to gain competitive advantage. Our research will identify the relevant parameters and strategic decisions (e.g., openness, pricing, entry timing) to maximize market share for certain scenarios. Special focus is put on the question of strategic openness. Our hypothesis is that a value migration strategy (i.e. commoditizing the physical layer through openness and shifting competition towards a digital platform) will create network effects, which in turn increases market share. Thus, it adapts existing knowledge on platform strategies to a new type of platforms and empirical context. Thereby, unsolved questions are explored, such as the tension of adoption and appropriability (West 2003) and the relative importance of platform quality and network effects (Zhu and Iansiti 2012). In addition, the simulation study allows to model decisions under uncertainty based on the identified parameters. It will also help to identify the appropriate levers to reach the tipping point of network effects required to create a sustaining competitive advantage (clarity cut-off point) (Dattée et al. 2018).

Contribution to Scholarship

With our paper, we are expanding the network economics and platform strategy literature as well as the resource-based view in ecosystems. By focusing on asset heavy industries, our study extends existing research to asset heavy industries with a layered architecture in which the ecosystem approach and network effects are untested. The integration of platform strategies with the RBV-approach allows us to enrich the knowledge on network economics and market dynamics with a special focus on openness questions. Thereby, we follow an integrated approach as proposed by Gawer (2014). Our findings thus not only help to better depict the economic mechanics of digital platforms in industrial settings but also sheds light on unsolved strategy issues for digital platforms in general.

Contribution to Practice

Companies in asset heavy industries increasingly embrace the platform play. Yet, shifting from a product focus to a business model based on network effects involves a significant leap for incumbent players. Specifically, the question of openness triggers resistance. In addition, they often cannot afford the cash burn of consumer platforms to achieve critical mass. It is therefore crucial to assist the decision making under uncertainty for managers in industrial contexts. Our results on market dynamics, such as WTA propensities, will also inform policymakers on regulatory measures which are especially important in the agricultural industry.

Fitness

Digital platforms in asset heavy industries fundamentally change the business model towards openness in ecosystems. Moreover, the agricultural industry studied here is highly relevant for our society. Hence, this research lies at the core of the innovation challenge and enlarges the perspective on digital platforms.

Bibliography

Alexy, Oliver; West, Joel; Klapper, Helge; Reitzig, Markus (2018): Surrendering control to gain advantage: Reconciling openness and the resource-based view of the firm. In Strat Mgmt J 39 (6), pp. 1704–1727.

Boudreau, Kevin (2010): Open Platform Strategies and Innovation: Granting Access vs. Devolving Control. In Management Science 56 (10), pp. 1849–1872.

Bovensiepen, Gerd; Hombach, Ralf; Raimund, Stefanie (2016): Qu vadis, agricola? Smart Farming: Nachhaltigkeit und Effizienz durch den Einsatz digitaler Technologien. PricewaterhouseCoopers AG. Dusseldorf.

Dattée, Brice; Alexy, Oliver; Autio, Erkko (2018): Maneuvering in Poor Visibility: How Firms Play the Ecosystem Game when Uncertainty is High. In AMJ 61 (2), pp. 466–498.

Dressler, Norbert (2015): Business opportunities in Precision Farming: Will big data feed the world in the future? Roland Berger Strategy Consultants GmbH. Munich.

Eisenmann, Thomas R.; Parker, Geoffrey; van Alstyne, Marshall W. (2009): Opening Platforms: How, When and Why? In Annabelle Gawer (Ed.): Platforms, Markets and Innovation. Cheltenham: Edward Elgar Publishing, pp. 131–162.

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

Gioia, Dennis A.; Corley, Kevin G.; Hamilton, Aimee L. (2013): Seeking Qualitative Rigor in Inductive Research. In Organizational Research Methods 16 (1), pp. 15–31.

Gorissen, Bram L.; Yanıkoğlu, Ihsan; den Hertog, Dick (2015): A practical guide to robust optimization. In Omega 53, pp. 124–137.

Jacobides, Michael G.; Cennamo, Carmelo; Gawer, Annabelle (2018): Towards a theory of ecosystems. In Strat Mgmt J 39 (8), pp. 2255–2276.

Kritikos, Mihalis (2017): Precision Agriculture in Europe. Legal, social and ethical considerations. European Parliamentary Research Service. Brussels. Available online at http://www.europarl.europa.eu/RegData/etudes/STUD/2017/603207/EPRS_STU(2017)603207_EN.pdf.

Parker, Geoffrey; van Alstyne, Marshall W. (2005): Two-Sided Network Effects: A Theory of Information Product Design. In Management Science 51 (10), pp. 1494–1504.

Rochet, Jean-Charles; Tirole, Jean (2003): Platform Competition in Two-Sided Markets. In Journal of the European Economic Association 1 (4), pp. 990–1029.

West, Joel (2003): How open is open enough? In Research Policy 32 (7), pp. 1259–1285.

Yin, Robert K. (2018): Case study research: Design and methods. 6th ed. Thousand Oaks, CA: SAGE.

Zhu, Feng; Iansiti, Marco (2012): Entry into platform-based markets. In Strat Mgmt J 33 (1), pp. 88–106.



 
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