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Value-Creation Dynamics in Platform Ecosystem: A Firm Theory Lens

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Title:Value-Creation Dynamics in Platform Ecosystem: A Firm Theory Lens
Authors:Kim, Dohoon
Firm theory
Game model
Multi-sided platform
Value circulation
Date Issued:04 Jan 2017
Abstract:This paper studies platform ecosystems, a novel business entity built upon a platform coordinating the interactions between suppliers and users, particularly in the IT service sectors. Borrowing words from two core firm theories---resource-based view (RBV) and transaction cost view (TCV)---, we propose that the platform ecosystem works at the boundary between “market and hierarchy.” To show this, we develop a conceptual, stylized, dynamic model for the platform ecosystem with typical notions in RBV and TCV: in particular, installed-base, player heterogeneity, and platform’s investment as primary ingredients. Our findings from equilibrium analyses and simulations largely confirm that both RVB and TCV are valid for understanding a platform ecosystem. We, however, also identify some contingencies where RBV is limited, and propose a hypothesis that the platform’ investment is more crucial for fostering an ecosystem. This implies that the platform starts from the point near market and maneuvers the ecosystem toward a hierarchy, utilizing its investment as a driver.
Pages/Duration:10 pages
Rights:Attribution-NonCommercial-NoDerivatives 4.0 International
Appears in Collections: Managing Platforms and Ecosystems Minitrack

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