How do Digital Platforms Compete? Developing a Framework Explaining Competition Outcomes

Abstract

Digital platforms are transforming almost every industry today. They are slowly finding their way into the mainstream information systems literature. The current literature on digital platforms offers proficient lenses on platform businesses and their potential competitive advantages. However, little attention has been paid to the competition between digital platforms within the same market, that is, the factors and drivers that influence the competition and explain how and why specific competition outcomes evolve over time. This is unfortunate, since more knowledge about what drives digital platform competition would be highly valuable for researchers and practitioners confronted by the complexity of managing them. This paper proposes an analytical framework for explaining and predicting digital platform competition outcomes by identifying and analyzing factors and its interrelationships influencing the competition in digital platform markets. This research study presents a multicase study comprising the five cases of Hungry.dk, MyHammer, Lendino, Fiverr and Graduateland in which context the framework is applied to. The study reported in this paper contributes to digital platform research and practitioners in three ways: First, we combine the economical view of digital platform competition research by identifying four main influencing factors and combining these into one framework. The four identified influencing factors are network intensity, differentiation, multi-homing & switching costs and pricing model. Second, we use the developed framework to explain how the factors lead to competition outcomes. Third, we derive implications that advances current knowledge about digital platform competition and discuss briefly the impact of the research findings.