The promising future of digital platform startups
The entrepreneurial landscape has been significantly reshaped by the emergence of digital platforms. A closer look at the key components of this ecosystem provides valuable insights into future trends.
This article is part of the ‘Inspiring Transformations’ series promoted by Esade Entrepreneur Institute for its 30th anniversary.
The digital platform revolution has ushered in new entrepreneurial pathways, fostering profound organizational transformation and societal changes (Wormald et al., 2023). Digital platform startups, characterized by varying typologies – from business models to digital infrastructures, intermediaries, and governance arrangements – have significantly influenced the entrepreneurship landscape (Uzunca et al., 2018). Their structures range from decentralized to distributed platforms, leveraging technologies like blockchain and cryptocurrencies.
Harnessing complementors
A pivotal area of study is the strategic use of complementors, firms that enhance the platform's value proposition (Subramanian et al., 2021). This includes understanding the balance between vertical and horizontal complementarities, where the former concerns the platform's own services, and the latter relates to services offered by complementors. Building trust and a reliable reputation system is crucial to foster collaborations, managing conflicts, and streamlining ecosystem governance.
Complementors are firms that enhance the digital plaform's value proposition
For instance, Amazon Kindle's success against Sony's reader was partly attributable to its effective complementor governance, i.e., getting publishers on board to share their intellectual property used on the device. Thus, digital platform startups must consider their approach to managing these collaborations in light of regulations, intellectual property rights, and antitrust laws.
Transforming work
The role of digital platforms in the transformation of work is another research hotbed. Digital labor platforms introduce a new 'boss': algorithms. This innovation comes with calls for increased transparency, effective regulatory approaches, and the challenge of leveraging emerging technologies like AI and blockchain. With the gig economy rising, platforms must devise strategies to ensure sustainable competitive advantages, promote knowledge sharing, and nurture collaboration (Burtch et al., 2018).
Impacting broader ecosystems
Digital platform startups must also contemplate strategic diversification and internationalization while evaluating their network effects and ecosystem dynamics (Uzunca et al., 2018). This includes understanding multihoming strategies and their implications on competition, user loyalty, and ecosystem dynamics (Wormald et al., 2023).
Digital labor platforms introduce algorithms as a new boss
Simultaneously, the role of non-market strategies in influencing regulatory environments, industry standards, and dominance in business ecosystems cannot be underestimated (Uzunca et al., 2018).
Future frontiers
Future research will also grapple with the advancements in AI, self-driving cars, new medical treatments, AR/VR technologies, renewable energy, fintech, and space exploration. These domains provide novel avenues for digital platform startups to innovate and contribute to society (Wormald et al., 2023).
References and recommended readings
- Uzunca, B., Rigtering, J.P.C., & Ozcan, P. (2018). Sharing and Shaping: A Cross-Country Comparison of How Sharing Economy Firms Shape Their Institutional Environment to Gain Legitimacy. Academy of Management Discoveries, 4(3), 248-272.
- Burtch, G., Carnahan, S., & Greenwood, B.N. (2018). Can You Gig It? An Empirical Examination of the Gig Economy and Entrepreneurial Activity. Management Science, 64(12), 5497-5520.
- Subramanian, H., Mitra, S., & Ransbotham, S. (2021). Capturing Value in Platform Business Models that Rely on User-Generated Content. Organization Science, 32(3), 804-823.
- van Angeren, J., & Karunakaran, A. (2023). Anchored Inferential Learning: Platform-Specific Uncertainty, Venture Capital Investments by the Platform Owner, and the Impact on Complementors. Organization Science, 34(3), 1027–1050.
- Wormald, A., Shah, S. K., Braguinsky, S., & Agarwal, R. (2023). Pioneering digital platform ecosystems: The role of aligned capabilities and motives in shaping key choices and performance outcomes. Strategic Management Journal, 44(7), 1653-1697.