Boundary Decision And Openness Governance Of Internet Platform Enterprise:a Platform Duality Perspective

In the 1990s, the internet and the information technology facilitated the world-famous E-commerce enterprises like eBay, Amazon and Alibaba. Although these E-commerce enterprises directly connecting the demand side and supply side had developed rapidly, the power of the platform wasn't shown absolutely at that time and E-commerce was seen as a relatively independent industry. With the rise of the technology of cloud computing and mobile Internet, Internet platform model continually expands and stretches into catering, traffic, finance and even manufacture, reminding people that the platform may become the dominant organizational form in 21st century. However, as the platform economic further developed, practitioners have different opinion on the platform. The supporters are becoming more confirmed while criticizers are also persistent. Platform winner-take-all effect and the following problems of the monopoly and innovation inhibition have become the most concerning issue. At the mean time, the practitioners'differences in understanding of the nature of platform result in the opposite orientation in strategic decision. Some suggest to make the product and service by themselves, while others lay the key in cultivating the ability of matching supply and demand. The product and service of platform should be provided by the market. Jingdong and Alibaba are two typical representatives of them. One kind of the platform enterprises aimed at satisfying diverse demand of the users and raising the market share, adopting a low-threshold open strategy and another kind put the quality before the quantity to prevent over-competition adopting a high-threshold open strategy. The two strategies both have high-performance cases in reality, such as Android and IOS operation system. Explaining the divergence in understanding of the platform and the differences in strategic decision has become the most important direction of theoretical research.Based on the managerial practice, combing with the literature review, the research questions have been proposed, including what is platform (the attribute), how do platform enterprise make boundary decision and openness governance, how do the two strategic decisions evolve along the platform life time cycle. Firstly, this paper uses exploratory case study and constructs the overall analysis framework. Secondly, the study focus on the boundary selection and openness governance of the platform enterprise, in addition, several hypotheses are raised and the data are collected to examine the hypotheses using fsQCA. At last, I expand the research in temporal dimension, using a longitude case study to examine the stage difference of the two strategic decisions. Main findings include:(1) Abandoning the dual-division of platform's transaction attribute and innovation attribute, this paper takes a duality perspective to investigate the platform strategic decision. In theoretical perspective, Coase tradition regards firm as collection of contract, emphasizing the transaction cost. While in Alchian tradition firm's value is generated through factor combination innovation. In the industrial practice, all platforms have both attribute of factor transaction and value creation, the two attributes are not exclusive and have different intensity causing observation distortion and misunderstanding.(2) Integrating the TCE and RBV explaining logic, this paper clarifies the inner mechanism of platform enterprise'boundary selection. Boundary selection in transaction attribute is based on the explaining logic of TCE, while boundary selection in innovation attribute is based on the explaining logic of RBV. Since the duality of transaction attribute and innovation attribute, it is difficult to explain the boundary selection of platform enterprise in sole viewpoint. The findings of this paper show that both the explaining logic of TCE and RBV have the explanatory power in the context of platform, but it is the interaction of TCE, RBV and indirect network effect that determines the boundary selection.(3) By dimension specifying and context condition introducing, this paper explains the paradoxical relationship between the platform openness and the performance. On account of the paradoxical relationship between platform openness and performance, this paper tries to explain the paradox by specifying dimension of platform openness and introducing the context in which condition they take effect. Based on the duality of platform, this paper introduces the degree of user demand diversity from transaction attribute and the degree of knowledge complexity from innovation attribute as the moderator of the relationship between platform openness and performance. The result shows that the demand-side platform openness and supply-side platform openness should be matched with user demand diversity and knowledge complexity in order to improve the platform performance.(4) Based on the platform life cycle, this paper explores the difference of boundary selection and openness governance before and after the critical point and its reasons. Based on platform life cycle of platform network effect, the longitude case study shows that before the critical point, to attract user fast platform enterprise will adopt make-by-self strategy and high degree of openness governance, and after the critical point the boundary selection and openness governance is decided by the bargain power and integration capability of platform enterprise.The contributions of this paper include:(1) in the research perspective, this paper takes a duality perspective of transaction attribute and innovation attribute to investigate the platform strategic decision in boundary and openness; (2) in the research content, releasing the platform research from industry economics analysis concerning pricing and monopoly regulation, this paper tries to make a dialogue with classic theory from organizational and strategic field; (3) in the research methodology, this paper solves the problems in early platform research such as unclear research questions, difficulty in data collecting and lack of dynamic investigation through using mixed method combing the qualitative and quantitative methods.However, some improvement can be made in the future. As to the methodology, large sample empirical investigation can be conducted with the increase of the number of platform enterprises, and the evolution of platform can be studied through simulation which can be more clear and direct. Some topics may gain more interest in the future. Future research should pay more attention on the co-opetition platform enterprises and its influence on the decision makers, the micro-behavior perspective can be introduced into the platform research and the crucial role of upper managers on strategic decision should be further explored.