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Research Summary: Platform owners sometimes enter complementors' product spaces and compete against them. Using data from Amazon.com to study Amazon's entry pattern into third-party sellers' product spaces, we find that Amazon is more likely to target successful product spaces. We also find that Amazon is less likely to enter product spaces that require greater seller efforts to grow, suggesting that complementors' platform-specific investments influence platform owners' entry decisions. While Amazon's entry discourages affected third-party sellers from subsequently pursuing growth on the platform, it increases product demand and reduces shipping costs for consumers. We consider the implications of these findings for complementors in platform-based markets. Managerial Summary: Platform owners can exert considerable influence over their complementors' welfare. Many complementors with successful products are pushed out of markets because platform owners enter their product spaces and compete directly with them. To mitigate such risks, complementors could build their businesses by aggregating nonblockbuster products or focusing on products requiring significant platform-specific investments to grow. They should also develop capabilities in new product discovery so that they could continually bring innovative products to their platforms.

Research Summary: With the recent growth of the sharing economy, regulators must frequently strike the right balance between private and public interests to maximize value creation. In this article, we argue that political competition is a critical ingredient that explains whether cities accommodate or ban ridesharing platforms and that this relationship is moderated in more populous cities and in cities with higher unemployment rates. We test our arguments using archival data covering ridesharing bans in various U.S. cities during the 2011–2015 period. We supplement these data with semistructured interviews. We find broad support for our arguments while mitigating potential endogeneity concerns. Our study has important implications for nonmarket strategy, entrepreneurship and innovation, and public‐private partnership literatures. In addition, our findings inform policy debates on the sharing economy. Managerial Summary: Entrepreneurs and businesses oftentimes face severe regulatory barriers when commercializing innovative products and services even if the innovations are generally beneficial for consumers and the broader society. This research focuses on the political determinants of regulation to provide a better understanding of why some markets are more receptive to innovative products while other markets are more hostile to them. Using the banning of ridesharing companies (e.g., Uber and Lyft) in various U.S. cities during the 2011–2015 period, we find that elected politicians facing less political competition (i.e., not easily replaceable, serving multiple terms, longer tenure in office) were more likely to ban ridesharing companies and favor, potentially displaceable, local taxicab companies. Our research has implications for navigating the political barriers to entry.

This paper examines the relative importance of platform quality, indirect network effects, and consumer expectations on the success of entrants in platform-based markets. We develop a theoretical model and find that an entrant's success depends on the strength of indirect network effects and on the consumers' discount factor for future applications. We then illustrate the model's applicability by examining Xbox's entry into the video game industry. We find that Xbox had a small quality advantage over the incumbent, PlayStation 2, and the strength of indirect network effects and the consumers' discount factor, while statistically significant, fall in the region where PlayStation 2' s position is unsustainable.

Strategy scholars have documented in various empirical settings that firms seek and leverage stronger institutions to mitigate hazards and gain competitive advantage. In this paper, we argue that such “institution-seeking” behavior may not be confined to the pursuit of strong institutions: firms may also seek weak institutions to mitigate hazards. Using panel data from the global smartphone industry and recent patent wars among key industry rivals, we examine how smartphone vendors that are not directly involved in patent litigation strategically respond to increased litigation risks in this industry. We find that as patent wars intensify, smartphone vendors not involved in any litigation focus more of their business in markets with weaker intellectual property (IP) protection because of institutional arbitrage opportunities. This strategic response is more pronounced for vendors whose stocks of patents are small and whose home markets have weak-IP systems. Our study is the first to examine the relationship between heterogeneity in national patent systems and firms’ global strategies. It provides a more balanced view of firms’ institution-seeking behavior by documenting how they make strategic use of weaker institutions.

Many scholars argue that when incentivized by ad revenue, content providers are more likely to tailor their content to attract \"eyeballs,\" and as a result, popular content may be excessively supplied. We empirically test this prediction by taking advantage of the launch of an ad-revenue-sharing program initiated by a major Chinese portal site in September 2007. Participating bloggers allow the site to run ads on their blogs and receive 50% of the revenue generated by these ads. After analyzing 4.4 million blog posts, we find that, relative to nonparticipants, popular content increases by about 13 percentage points on participants' blogs after the program takes effect. About 50% of this increase can be attributed to topics shifting toward three domains: the stock market, salacious content, and celebrities. Meanwhile, relative to nonparticipants, participants' content quality increases after the program takes effect. We also find that the program effects are more pronounced for participants with moderately popular blogs, and seem to persist after participants enroll in the program. This paper was accepted by Pradeep Chintagunta, marketing.

To achieve both a large number of platform users and the sustainability of service intermediation platform ecosystems, this study attempts to clarify appropriate platform fee settings and promising market types. It focuses on hotel-booking platforms and platform-based markets. We conduct agent-based simulation experiments with the conditions of (a) platform fee setting, (b) supply and demand balance, and (c) the consumer type categorized as “mandatorily” purchasing consumers (e.g., business travelers whose purchase of a hotel service is mandatory) and “optionally” purchasing consumers (who can refuse services if their requirements are not satisfied). Our simulation results reveal that when the platforms focus on mandatorily purchasing consumers, they could acquire larger platform users through fee settings, depending on the balance of supply and demand; however, they could not maintain ecosystem sustainability in any of the cases. When the platform focuses on optionally purchasing consumers, it can achieve both a large number of platform users and ecosystem sustainability with platform fee settings of consumer incentives, especially in excessive supply markets.

Physical intermediary firms, such as logistics firms, are the foundation of marketplace platform ecosystems. This study introduces the case of a delivery crisis caused by the withdrawal of major logistics firms from the Japanese marketplace platform. To address such a problem, this study considers the application of an “ecosystem strategy”. We define an ecosystem strategy in this situation, as “the strategy by which the platform owner cooperates with logistics firms to standardize logistics services and provides a platform system to improve cooperation among them”. We constructed an agent-based simulation system customized by a dataset of Japanese platform-based markets to test the effectiveness of the proposed strategy. The results indicate that the introduction of the ecosystem strategy postponed the start of the collapse. It also increased the number of platform users by roughly 1.10 times and increased the total profits of logistics firms about 1.22 times. Additionally, it removed the trade-off relationship between platform users and the profits of logistics firms and allowed the maximization of both. This study contributed to the research stream of platform ecosystems by defining an ecosystem strategy, including physical intermediary firms, and verifying the effectiveness of the strategy for ecosystem evolution and sustainability.

As the sharing economy has grown rapidly and replaced the traditional businesses, new rules and norms for data and digital trade have emerged divergently in many countries. Such divergence in global e-commerce policies may be a major barrier to the internationalization of the sharing economy business. This paper aims to develop an internationalization theory that addresses how the sharing economy firms can internationalize under the condition of the divergence of global e-commerce policies. Drawing on Hayek’s knowledge economy approach, we build a new internationalization theory for the sharing economy firms that facilitate autonomously self-organized business ecosystems and adapt to the lack of harmonized rules and norms for the sharing economy. We first theorize on the attributes of the digital platform-based transactions for the internationalization of the sharing economy firms and then provide some insights into the current international debates of e-commerce policies. Our theory offers two main insights: (1) the competitive advantages of the sharing economy firms stem mainly from digital platform algorithms to catalyze digital platform-based transactions between autonomous actors; (2) the divergence of global e-commerce policies and different internet regimes in different countries may affect the internationalization of business models based on such digital platform-based transactions.

The existence of network effects not only changes traditional product diffusion patterns but also has significant impacts on individuals’ decision behaviors. Previous studies on competitive product diffusion have focused on macro-level diffusion speed and effects while neglecting the micro-level impacts of individual heterogeneity and social interaction on product diffusion. This paper introduces the individual heterogeneities and social interactions of consumers into the competitive product diffusion model on the basis of a two-sided market framework and complex network theory. We proposed a small world network model and behavioral game theory. Specifically, the small world network model was used to build interactions between users, and behavioral game theory was utilized to describe the interactions between users. In our model, the direct network effect was distinguished from the indirect network effect on the basis of the synergy of multiple complementary products. The results show that the final distribution often presented a situation wherein two products coexisted, but the market share was very different. In an asymmetric first-mover situation, the direct network effect dominated the indirect network effect. Moreover, the dominant position of one product at present can be changed by the other under certain conditions. Finally, when the switching and learning costs were high, the market maintained its concentration, and the prior platform was unable to dominate the market. A decrease in the costs raised the prior platform’s market share and the speed of market occupation.

Long distance passenger transport markets are facing important changes as new entrants, e-Platform based bus services retailer (PBSR) operators, are challenging the railway incumbents applying judo economic strategies. Traditionally, European policymakers tended to favour railway services over road services in the long-haul markets, often leading the rail operators in monopolistic-alike positions. Recently, several countries deregulated their national intercity bus markets, gradually introducing intermodal competition in the sector. The competition led to important improvements in service quality, but it also had negative impacts on rail operators’ profitability, especially after PBSR operators started to work, due to their disruptive business model based on aggregative online platforms and production externalization. PBSR companies (e.g. Flixbus, BlaBlaBus) are characterized by high flexibility and low production costs, which use as advantage against the incumbents. The rail operators are instead characterized by high indivisibility, high production costs and, usually, big sizes. Losses in either revenues or market shares could easily force them into reducing services quantity or even exit the market. Our paper aims to analyse these new competitive relations in the intercity intermodal market, focusing on resulting impacts on market shares, demand satisfaction and social welfare. Since the bus operators present limited capacity due to technical feasibility (e.g. minimum headway) and the need to limit road congestion (to preserve service quality), the mobility right fulfilment is put in jeopardy. We modelled the competitive relations through game theory, excluding high speed rail from the perimeter to preserve service comparability. Profit levels and optimal social welfare are then studied through simulations. Results confirm that for increasing PBSR production capacity, railway operators tend to have fewer profits or be forced to leave the market, resulting in unsatisfied demand. Furthermore, from a social point of view, the rail monopoly seems to be, under specific circumstances, preferred to a duopoly.