Innovation and breaching strategies in multi-sided platform markets: Insights from a simulation study

2015 | International Conference on Information Systems | Citations: 0

Authors: Ozer, Gorkem; Anderson, Edward

Abstract: This study explores how multi-sided digital platforms achieve and sustain superi ... Expand

Abstract: This study explores how multi-sided digital platforms achieve and sustain superior performance positions in turbulent markets. Specifically, the effects of three major strategies are studied: (1) a complementarity-based innovation strategy, (2) a breaching strategy where a platform expands into rival territories by introducing its offerings in rival platforms to gain access to rivals’ consumers without having to switch them over, (3) the joint use of these strategies. Multi-sided platform markets tend to exhibit turbulence; hence, platform strategies need to focus on achieving and sustaining superior performance positions for longer periods. We use agent-based simulation models to show that innovation and breaching strategies contribute to platform performance. Multisided platforms that pursue a breaching strategy in addition to engaging in innovations achieve higher performance positions than those that only engage in innovations. Our analyses also generated insights about the importance of a fit between the decision rules that platforms follow in implementing their strategies and consumer decision structures. Collapse

Topics: innovation management digital platform mobile application switching cost network effect

Methods: experiment simulation statistical hypothesis test agent based simulation descriptive statistic

Theories: complex adaptive system theory of bounded rationality rational choice theory economic theory of complementarity