Platform Owners and Complementors: the Emergence and Evolution of Platform Firms
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Platform Owners and Complementors: The Emergence and Evolution of Platform Firms and The Performance Implications for Organizational Learning, Strategic Alliance, and Vertical Integration Behaviors of Platform Participants by Kenan Guler, A Dissertation submitted to the Graduate School-Newark Rutgers, The State University of New Jersey In partial fulfillment of the requirements for the degree of Doctor of Philosophy Graduate Program in Organization Management written under the direction of Dr. Douglas J. Miller and approved by ____________________________ ____________________________ ____________________________ Newark, New Jersey May 2020 Copyright page: 2020 Kenan Guler ALL RIGHTS RESERVED ABSTRACT Platform Owners and Complementors: The Emergence and Evolution of Platform Firms and The Performance Implications for Organizational Learning, Strategic Alliance, and Vertical Integration Behaviors of Platform Participants By Kenan Guler, Dissertation Director: Dr. Douglas J. Miller This dissertation examines the impacts of platform firms and platform-mediated business ecosystems in the modern society by utilizing both qualitative and quantitative research methodologies. Investigating the emergence and evolution of platform firms, the qualitative chapters of the dissertation construct two different grounded theories of platform firms. The first qualitative chapter builds a theory of the emergence of platform firms. Analyzing 52 publicly available interviews with platform entrepreneurs, managers, and venture capitalists, I develop a theory and a process model showing how platform firms come into existence over four consecutive stages: (1) Inefficient Markets and Incumbents, (2) Entrepreneurial Motivation and Enabling Factors, (3) Efficiency-Enhancing Means, and (4) Platform Firms. ii Collecting 52 publicly available interviews with platform entrepreneurs, managers, and venture capitalists and 34 review, forum, and analyst articles, I examine the evolution of platform firms in the second chapter of my dissertation. In particular, the process model I built in the second chapter shows that the evolution of platform firms consists of the following stages: (1) Platform Growth, (2) Competition, (3) Adaptive Behaviors, (4) Platform Sustainability, (5) Rebranding Challenges, and (6) Platform Failure. On the other hand, the quantitative chapters of the dissertation utilize a large-scale video game dataset. The third chapter of my dissertation investigates the performance consequences of alliance and vertical integration behaviors of platform owners and complementor firms. I develop a framework for examining competitive and collaborative behaviors among platform participants noting that platform owners’ entry into complementors’ space should not always be viewed as an act of competition. The chapter found a positive relationship between alliance behaviors of platform participants and product performance, and a weakening moderating effect of platform maturity on the alliances between platform owners and complementor firms. Bridging the longstanding exploration-exploitation literature to the platform literature, the last chapter of my dissertation investigates the relationship between organizational learning activities – exploration and exploitation – and alliance performance of platform participants. In particular, the chapter shows that ambidexterity in strategic alliances through partner specialization is positively associated with alliance performance, and finds iii platform maturity negatively moderates the positive effects of ambidextrous alliances on alliance performance. iv Acknowledgement I would like to thank my dissertation advisor Dr. Douglas J. Miller for his consistent support, guidance, comments, and recommendation during my PhD years. His valuable guidance, advice, and work ethic will always be a lighthouse for the rest of my academic career. Furthermore, I would also like to express my sincere gratitude to Dr. Mitchell P. Koza, Dr. Michael L. Barnett, and Dr. David McIntyre for their guidance and comments on my dissertation. I am also thankful for my wife, Asli, and my daughter, Asmin, who gave me unlimited support, pleasure, happiness, and inspiration. Finally, I want to thank my parents, whose wisdom and support helped me excel throughout my education years. v Table of Contents CHAPTER 1. Introduction ................................................................................................1 CHAPTER 2. Toward a theory of platform firm emergence ...........................................8 CHAPTER 3. An evolutionary theory of platform firms ................................................47 CHAPTER 4. Entry into complementors’ space: vertical integration and alliances of platform owners and complementor firms ........................................................................83 CHAPTER 5. Balance across firms: exploration and exploitation in alliances between platform participants ......................................................................131 CHAPTER 6. Summary and conclusion .......................................................................188 vi List of Tables TABLE 2.1. Illustrative sample data .................................................................................44 TABLE 2.2. Grounded theory coding and explanation ....................................................45 TABLE 2.3. Main categories coding description and illustrative quotes .........................46 TABLE 3.1. Illustrative sample data .................................................................................79 TABLE 3.2. Grounded theory coding and explanation ....................................................80 TABLE 3.3. Main categories coding description and illustrative quotes .........................81 TABLE 4.1. Control variables ........................................................................................123 TABLE 4.2. Descriptive statistics and correlation matrix ..............................................124 TABLE 4.3. Selection and base models ..........................................................................126 TABLE 4.4. FGLS regression models of product performance for all companies ........127 TABLE 4.5. FGLS regression models of product performance for platform owners ....128 TABLE 4.6. FGLS regression models of product performance for complementor firms ..........................................................................................................................................128 TABLE 5.1. Control variables ........................................................................................177 TABLE 5.2. Descriptive statistics and correlation matrix ..............................................178 TABLE 5.3. FGLS regression models of alliance performance .....................................180 TABLE 5.4. FGLS regression models of alliance performance (Robustness check) .....181 TABLE A1. Selection model and regression models of alliance performance .............187 vii List of Illustrations FIGURE 2.1. Google scholar results for platform firms over years .................................41 FIGURE 2.2. A model of platform firm existence ...........................................................41 FIGURE 2.3. Data coding structure..................................................................................42 FIGURE 3.1. An evolutionary model of platform firms ..................................................76 FIGURE 3.2. Data coding structure..................................................................................77 FIGURE 4.1. Main hypotheses .......................................................................................122 FIGURE 4.2. Moderation hypotheses.............................................................................122 FIGURE 5.1. Predictive margins of alliance performance .............................................176 viii 1 CHAPTER 1: INTRODUCTION A recent surge of platform research shows that the modern capitalist economy is shaken by platform revolution (Parker and Van Alstyne, 2017; Parker, Alstyne, and Choudary, 2016) and the "taken for granted" competition in the business environment has been transformed into a platform-mediated one (Eisenmann, Parker, and Van Alstyne, 2010; Halaburda, Jan Piskorski, and Yıldırım, 2017). This transformation has not only expanded the boundary of traditional firms to facilitate transaction among firms and individuals who previously did not have an opportunity to transact with each other (Baldwin and Woodard, 2009; Eisenmann et al., 2010; Evans and Schmalensee, 2008; Hagiu, 2006; McIntyre and Srinivasan, 2017; Rochet and Tirole, 2006) but also has blurred the line between “markets” and “firms,” the concepts that explain the “raison d’etre” (the most important reason of existence) of the modern capitalist firm (Coase, 1937, 1970; Williamson, 1975, 1985). Despite the increasing number of insightful studies in the platform literature (e.g., Jacobides, Cennamo, and Gawer, 2018; McIntyre and Srinivasan, 2017; Parker and Van Alstyne, 2017; Rietveld and Eggers, 2018; Rietveld, Schilling, and Bellavitis, 2018), little attention has been paid to the emergence and evolution of platform firms. Similarly, notwithstanding a few insightful studies (Kapoor and Agarwal, 2017; Rietveld and Eggers, 2018; Rietveld et al., 2018), our understanding of how platform participants achieve and sustain competitive advantage is limited. Building upon the preceding literature stream, this dissertation