The New Normal: Market Cooperation in the Mobile Payments Ecosystem

    Research output: Contribution to journalJournal articleResearchpeer-review

    Abstract

    The introduction of mobile payments is one of many innovations that are changing the payment market. This change involves new payment service providers entering this lucrative market, and meanwhile, the existing stakeholders are trying to defend their oligopolistic positions. The mobile payment market cooperation (MPMC) framework in this article shows how the digitalization of payments, as a technology innovation, affects the competition and collaboration among traditional and new stakeholders in the payment ecosystem at three levels of analysis. We do this by integrating theories of market cooperation with the literatures on business and technology ecosystems. The MPMC framework depicts technology-based market cooperation strategies in the context of recent battles in the mobile payments ecosystem. In these battles, the competitors can use technology either in defensive build-and-defend strategies to protect market position, or in offensive battering-ram strategies for ecosystem entry or position improvement. Successful strategies can lead to: (1) Ricardian rents, based on operational efficiency advantages traceable to the firm’s position relative to suppliers and monopoly power; and (2) Bainian rents, resulting from the extent the firm is able to resist price competition in the market. We validate the framework that we propose through three case studies of technology-based market cooperation in the mobile payments ecosystem.
    The introduction of mobile payments is one of many innovations that are changing the payment market. This change involves new payment service providers entering this lucrative market, and meanwhile, the existing stakeholders are trying to defend their oligopolistic positions. The mobile payment market cooperation (MPMC) framework in this article shows how the digitalization of payments, as a technology innovation, affects the competition and collaboration among traditional and new stakeholders in the payment ecosystem at three levels of analysis. We do this by integrating theories of market cooperation with the literatures on business and technology ecosystems. The MPMC framework depicts technology-based market cooperation strategies in the context of recent battles in the mobile payments ecosystem. In these battles, the competitors can use technology either in defensive build-and-defend strategies to protect market position, or in offensive battering-ram strategies for ecosystem entry or position improvement. Successful strategies can lead to: (1) Ricardian rents, based on operational efficiency advantages traceable to the firm’s position relative to suppliers and monopoly power; and (2) Bainian rents, resulting from the extent the firm is able to resist price competition in the market. We validate the framework that we propose through three case studies of technology-based market cooperation in the mobile payments ecosystem.
    LanguageEnglish
    JournalElectronic Commerce Research and Applications
    Volume15
    Issue number5
    Pages305-318
    ISSN1567-4223
    DOIs
    StatePublished - 2015

    Keywords

      Cite this

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      The New Normal : Market Cooperation in the Mobile Payments Ecosystem. / Henningsson, Stefan; Hedman, Jonas.

      In: Electronic Commerce Research and Applications, Vol. 15, No. 5, 2015, p. 305-318.

      Research output: Contribution to journalJournal articleResearchpeer-review

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