The Platform Business Model and Strategy: A Dynamic Analysis of the Value Chain and Platform Business A thesis submitted to the University of Manchester for the degree of Doctor of Philosophy in the Faculty of Humanities 2015 Junic Kim Manchester Business School Manchester Institute of Innovation Research TABLE OF CONTENTS List of Tables .............................................................................................................. 7 List of Figures ............................................................................................................ 9 List of Abbreviations ............................................................................................... 11 Abstract .................................................................................................................... 13 Declaration ............................................................................................................... 14 Copyright Statement ............................................................................................... 14 Acknowledgements ................................................................................................. 15 The Author ............................................................................................................... 16 Preface: New step of My Research Journey at Manchester ............................... 18 Chapter 1 Introduction: A Study of Platform Business Model ......................... 20 1.1. Introduction ..................................................................................................... 20 1.1.1. Motivation for the Study ........................................................................... 23 1.1.2. What are a Platform and a Platform Business Model? .......................... 26 1.2.Research Questions and Objectives ................................................................. 30 1.3.Summary of the Findings ................................................................................. 32 1.4.Research Methodology and Data Collection.................................................... 34 1.5.Structure of the Study....................................................................................... 36 Chapter 2 Platform Business Model: Transformation of the Value Chain and the Market Environment ....................................................................................... 40 2.1. Introduction ..................................................................................................... 42 2.2. Business Model Concept and Definitions ....................................................... 44 2.2.1. Attending to Business Models .................................................................. 45 2.2.2. Defining a Business Model ....................................................................... 46 2.2.3. Business Models for e-Business ............................................................... 48 2 2.3. What is a Platform Business Model? ............................................................. 51 2.3.1. The Concept of the Platform and the Platform Business Model .............. 52 2.3.2. The Importance of the Platform Business Model .................................... 55 2.3.3. The Systematic Nature of the Platform Business Model ......................... 56 2.3.3.1. Two-sided Market Theory ..................................................................... 57 2.3.3.2. Direct and Indirect Network Effects (or Externalities) ......................... 61 2.3.3.3. Business Ecosystem ............................................................................... 64 2.4. Analysis of Various Perspectives on the Platform Business ........................... 65 2.4.1. Analysis of Platform Research Literature Review ................................... 66 2.4.2. Different Disciplinary Perspectives ......................................................... 68 2.4.2.1. Operations Management ....................................................................... 69 2.4.2.2. Industrial Economics ............................................................................. 71 2.4.2.3. Business Strategy ................................................................................... 73 2.4.3. Interdisciplinary Research ...................................................................... 79 2.5. Conclusions: Literature Gaps and Research Objectives ................................ 80 2.5.1. Literature Gaps ........................................................................................ 81 2.5.2. Research Objectives ................................................................................. 83 Chapter 3. Methodology .......................................................................................... 87 3.1. Research Approach ......................................................................................... 89 3.2. Three Elements Approaches ........................................................................... 91 3.2.1. Quantitative Method Strategy .................................................................. 92 3.2.2. Qualitative Method Strategy .................................................................... 93 3.2.3. Mixed Method Strategy ............................................................................ 96 3.2.4. A Choice of Research Method: Qualitative Research Strategy ............... 98 3.3. Research Questions and Procedures ............................................................. 101 3.3.1. Research Questions ................................................................................ 101 3 3.3.2. Multiple-Case Study Method .................................................................. 106 3.4. Conclusions ................................................................................................... 108 Chapter 4. Research Design and Data Collection ............................................... 110 4.1. Case Selection ............................................................................................... 111 4.2. Data Collection Strategy ............................................................................... 114 4.2.1. Secondary Data ...................................................................................... 115 4.2.2. Primary Data: In-depth Interview and Focus Group Interview ............ 116 4.3. Data Recording Procedures and Ethics ......................................................... 124 4.3.1. Data Recording Procedures ................................................................... 124 4.3.2. Ethics ...................................................................................................... 125 4.4. Acquisition of Validity and Reliability ......................................................... 127 4.4.1. Verification of Research Validity ........................................................... 127 4.4.2. Acquisition of Research Reliability ........................................................ 128 4.5. Conclusions ................................................................................................... 129 Chapter 5. Data Analysis ...................................................................................... 131 5.1. Multiple-Case Study Analysis ...................................................................... 134 5.2. Data Compilation; The Database .................................................................. 139 5.3. Data Description............................................................................................ 141 5.4. Classification ................................................................................................. 143 5.5. Connections ................................................................................................... 145 5.5.1. Pattern Matching ................................................................................... 147 5.5.2. Conceptual Framework .......................................................................... 150 5.6. Conclusion .................................................................................................... 152 4 Chapter 6. Findings ............................................................................................... 155 6.1. Types of Platform Business Model ............................................................... 159 6.1.1. Value Chain Starts form Supply Side: ‘Supplier’ Type .......................... 161 6.1.1.1. Value Chain’s External Expansion ..................................................... 163 6.1.1.2. Value Creation and Network Effect .................................................... 165 6.1.2. Value Chain Starts form Demand Side; Tailor Type ............................. 166 6.1.2.1. Value Chain’s Reverse Flow .......................................................... 167 6.1.2.2. Value Creation and Network Effect ................................................ 168 6.1.3. Value Chain Starts form Both Side; Facilitator Type ........................... 169 6.1.3.1. Value Chain’s Integration .............................................................. 171 6.1.3.2. Value Creation and Network Effects .............................................. 172 6.2. Platform Establishment and Growth Strategy ............................................... 173 6.2.1. Entry Stage; How Should a Platform Business Service be Chosen? ..... 175 6.2.1.1. External Analysis; Platform Potential ...........................................