New Work and Value Creation in the Platform Economy: A Taxonomy and Preliminary Evidence

Abstract

Digital platform firms are among the most valuable firms in the world due, in large part, to the ecosystems of complementors that have emerged around them. We explore the contradictory impact that platforms have on entrepreneurship. The ecosystem metaphor used to describe the network of interdependencies among the members is intrinsically flawed because it obscures the god-like powers of the platform owners. In fact, complementors are dependent entrepreneurs whose businesses and existence is largely determined by the platform owner. We show that digital platforms ease entrepreneurial entry by lowering entry costs and providing boundary resources to attract and support complementors. And yet, businesses dependent upon digital platforms are extraordinarily precarious. The reasons for this precariousness include the extraordinary visibility that platform owners have over all participants, an ability to unilaterally change the terms and conditions of participation, and even become a direct competitor to entrepreneurs dependent upon the platform. We describe the limited strategies that dependent entrepreneurs can utilize in an attempt to mitigate their dependence. We suggest that the relegation of entrepreneurs to dependence requires a new way of thinking about entrepreneurship as platforms continue their march to centrality in the global economy.

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