Understanding the boundary decision of digital platform enterprises

Abstract

PurposeBoundary decision is an important but underexplored theme in digital platform research. The boundary decision of digital platform enterprises (DPEs) differs from traditional organizations because of cross-side network effects (CNEs). This study intends to investigate whether transaction cost economics (TCE) and resource-based view (RBV), as classical organization boundary mechanisms, are still applicable for DPEs.Design/methodology/approachTo unfold the research problem, this study conducts a fuzzy-set qualitative comparative analysis (fsQCA) on the samples of 21 platform business units.FindingsThe results show that the classical boundary decision theory still applies in the context of DPEs, but the cross-side network effects will affect boundary decision of DPEs.Originality/valueThis study provides a new framework – integrates TCE, RBV and CNEs – to analyze boundary decision of DPEs. This paper also contributes to research on both organization boundary decision and platform governance.

Theories of digital platforms for supply chain management: a systematic literature review

“…However, Lou et al (2021) do not question whether transaction cost economics is a suitable theory to explain digital platforms or not. Lou et al (2021) use transaction cost economics to explain make-strategies of digital platforms in the light of asset specificity and information asymmetry. High asset specificity can lead to a lock-in-problem between two parties resulting in make-decisions by the firm.…”

“…Theories of digital platforms platforms. For instance, Lou et al (2021) incorporate the resource-based view to account for competence advantages such as technology, operation experience, training and marketspecific resources as explanatory factors for boundary decisions of digital platforms. Lou et al (2021) find that platforms with high competence advantages, tend to pursue a makestrategy.…”

“…For instance, Lou et al (2021) incorporate the resource-based view to account for competence advantages such as technology, operation experience, training and marketspecific resources as explanatory factors for boundary decisions of digital platforms. Lou et al (2021) find that platforms with high competence advantages, tend to pursue a makestrategy. Sedera et al (2016) also apply the resource-based view to model and test the relationship between innovation creation, enterprise systems and digital platforms.…”

“…, Kohtam€ aki et al (2019),Lou et al (2021),Randhawa et al (2018),Sedera et al (2016) Resource-based viewBaronian (2020),Davis and DeWitt (2021),Hennart (2019), Jacobides et al (2018), Kohtam€ aki et al (2019), Lou et al (2021), Vakeel et al (2021) Transaction cost economics Banalieva and Dhanaraj (2019), Hennart (2019), Li et al (2019), Nambisan et al (2019), Nambisan and Luo (2021), Stallkamp and Schotter (2021), Zeng et al (2019) Internalization theory Eisenmann et al (2011), Karimi and Walter (2015), Koch and Windsperger (2017), Nambisan et al (2019) Dynamic capabilities Nambisan and Luo (2021), Vakeel et al (2021), Zeng et al (2019) Network theory Afuah (2013), Brouthers et al (2016), Chen et al (2018) Social network theory Brouthers et al (2016), Koch and Windsperger (2017), Vakeel et al (2021) Structural holes theory Sandberg et al (2020), Torres Pena and Breidbach (2021) Complex adaptive systems theory Sandberg et al (2020), Shaw and Allen (2018) Complexity theory Brouthers et al (2016), Nambisan et al (2019) Internationalization process theory Hennart (2019), Nambisan et al (2019) OLI theory Klein et al (2016),Spulber (2018) Principal agent theoryCui et al (2021),Cutolo and Kenney (2021) Resource orchestration theoryKoch and Windsperger (2017),Randhawa et al (2018) Service-dominant logic theoryKromidha and Li (2019),Tiwana and Bush (2014) Signaling theoryAnderson et al (2014),Parker and van Alstyne (2005) Theory of two-sided-marketsNambisan and aki et al (2019) …”

Digital platform enterprises and boundary decision

“…With CNEs indicating a departure from the typical bureaucratic organizations, some uncertainty persists about boundary decisions of DPEs. Lou et al (2021) consequently suggest the issue should be further investigated through a framework which considers CNEs in addition to TCE and RBV lenses. It is speculated that the presence of network effects will confirm that various mechanisms combine to influence DPE strategic decisions.…”