THREE ESSAYS ON COMPETITIVE STRATEGIES FOR DIGITAL PLATFORM BUSINESSES

As businesses in many industries adopt the platform business model, many aspects of the traditional business are going through a shake-up, including competition and strategies for gaining competitive advantage. When platforms are competing with each other, the network effects due to having a strong installed base create a strategic advantage and shape the competition. Additionally, another level of competition in the world of platforms is between complementors on a given platform which is also influenced by the presence of the network effects. In the three studies of this dissertation, we focus on competitive strategies for digital platform businesses. In the first essay, we look at competition between platforms and examine the emergence of Winners-Take-Some (WTS) market outcome in IT platform markets, where such markets are expected to yield a Winner-Takes-All (WTA) outcome. We use the cyclical video game console market as an appropriate context to investigate the influential factors in the market outcome in platform markets. We find a consistent increase in multi-homing among the most popular video-games that can pave the way for the emergence of WTS outcome. In the second essay, we are turning our focus to the strategies that platforms can adopt to improve emerging success metrics such as user engagement. We examine how digital content platforms can improve users’ engagement by providing popularity information signals. We evaluate the effect of conflicting and aligned information signals on users’ engagement in the context of music content platforms. We find that conflicting popularity information signals are more effective in increasing user engagement than the aligned popularity information signals. In the third essay and in the context of mobile app platforms, we focus on the competition between complementors. We study the role of app category characteristics on the performance of mobile app developers who offer apps in those categories and strive to gain competitive advantage. We evaluate category concentration and category popularity as two important factors and find that respectively, they negatively and positively influence new app’s performance for a given developer. We find that the negative effect of category concentration is stronger than the positive effect of category popularity