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Platform Scope and Value Creation in Digital Platforms

Ramya K Murthy and Anoop Madhok
2021
Working Paper No
653
Body

Digital platform ecosystems are at the core of value creation in the digital era and a vital part of the digital strategy of firms. The generative nature of digital technologies makes it difficult for a platform sponsor to conceptualize and produce all potential product variations. Hence, co-creating value with autonomous third-party complementors is imperative. However, platform sponsors face unique uncertainties in enabling such value co-creation as often both the complementors and their value-enhancing complements are unknown ex-ante. We demonstrate how platform scope, encompassing three elements – platform technology, sponsor, and market scope, helps the platform sponsor manage uncertainties in value co-creation by attracting the right set of complementors and fostering a predictable set of complements. We discuss the implications of the scope choices for value co-creation and digital strategy of firms and highlight key areas for future research.

Key words
platform scope, digital platforms, value creation, digital strategy, firm boundaries
WP No. 653.pdf (697.86 KB)

Platform Scope and Value Creation in Digital Platforms

Author(s) Name: Ramya K Murthy and Anoop Madhok, 2021
Working Paper No : 653
Abstract:

Digital platform ecosystems are at the core of value creation in the digital era and a vital part of the digital strategy of firms. The generative nature of digital technologies makes it difficult for a platform sponsor to conceptualize and produce all potential product variations. Hence, co-creating value with autonomous third-party complementors is imperative. However, platform sponsors face unique uncertainties in enabling such value co-creation as often both the complementors and their value-enhancing complements are unknown ex-ante. We demonstrate how platform scope, encompassing three elements – platform technology, sponsor, and market scope, helps the platform sponsor manage uncertainties in value co-creation by attracting the right set of complementors and fostering a predictable set of complements. We discuss the implications of the scope choices for value co-creation and digital strategy of firms and highlight key areas for future research.

Keywords: platform scope, digital platforms, value creation, digital strategy, firm boundaries
WP No. 653.pdf (697.86 KB)