How to avoid platform traps

Companies as diverse as Apple, Facebook, and Uber all have transformed industries through platform business models. But the increasing popularity of platform strategies masks a difficult truth: Such strategies are hard to execute well — and are prone to several common pitfalls. Drawing on recent empirical quantitative analysis as well as real case examples, the article discusses in particular three of such main pitfalls, or platform traps

Being better vs. being different: differentiation, competition, and pricing strategies in the Spanish hotel industry

We study the effects of vertical and horizontal differentiation on pricing policy in a large sample of hotels in Spain. We show that hotels with more stars (i.e., vertically differentiated) offer smaller discounts over listed prices, in addition to charging higher prices. Similarly, hotels that belong to a branded chain (i.e., horizontal differentiation) also charge higher prices and provide smaller discounts. We show how the degree of local competition moderates the effect of differentiation on pricing policy, but only for vertical differentiation. Differentiation indeed protects hotels from the pressure to reduce prices as competition increases, but being better seems to be more effective than just being different

A bird in the hand is worth two in the bush: Technology search strategies and competition due to import penetration

Research Summary Do firms respond to tougher competition by searching for completely new technological solutions (exploration), or do they work to defend their position by improving current technologies (exploitation)? Considering the different times to fruition for exploration versus exploitation, in the presence of heightened competition, we argue that firms might not be able to wait for the benefits of technological exploration to materialize. With a panel data set of U.S. manufacturing firms, we show that tougher competition, due to import penetration, leads to a decrease in technological exploration and an increase in technological exploitation. These effects are heterogeneous across industries, firms, and time. To obtain exogenous variation in competition we rely on both instrumental variable regressions and a difference-in-differences design exploiting large changes in import tariffs. Managerial Summary A firm's R&D strategy is one of the fundamental determinants of success or failure when responding to competitive threats. In this study, we examine how firms change the knowledge sources used in their R&D efforts in response to substantial increases in import penetration in their domestic market. We find that in the years that immediately follow an increase in import penetration, firms tend to rely more on familiar knowledge in the development of innovations and less on knowledge sources that were not previously used. This switch in R&D strategy also appears to be temporary (reversed in later years), and it is positively associated with an increased likelihood of survival.Juan Santaló acknowledges financial supportfrom the Spanish Ministerio de Ciencia, Innovación y Universidades and the Agencia Estatal deInvestigación (AEI: 10.13039/501100011033; project grant: PID2019-111422GB-I00). RaffaeleMorandi Stagni acknowledges support from the Spanish Ministerio de Ciencia, Innovación yUniversidades (grants: PGC2018-096316-B-I00, RTI2018-097033-B-I00), from FEDER (UNC315-EE-3636), and from Comunidad de Madrid (Programa Excelencia para el ProfesoradoUniversitario, convenio con Universidad Carlos III de Madrid, V Plan Regional de InvestigaciónCientífica e Innovación Tecnológica)

Product-market competition and resource redeployment in multi-business firms

Research summary This article investigates how diversified firms reallocate internal non-scale free resources when one of their product business units (BUs) experiences increased exposure to international competition driven by a sharp decrease in trade tariffs. On average, firms tend to fight, by reallocating resources toward the BU affected by the trade shock and away from other BUs within the same firm. Two variables moderate this first-order effect with opposite signs. The level of sunk costs of the assets allocated to the BU affected by the shock is a positive moderator of resource reallocation to it. The presence of technological synergies between the BU affected and the rest of BUs instead moderates the relationship negatively. This negative moderation seems to only take place when competition increases the value of technology as a competitive resource. Managerial summary An important question in the strategic decision-making process of diversified firms is how to react to competitive threats that affect one business unit but not the others. Should managers allocate more resources to the affected business or should they instead reduce their commitment and use the same resources in the remaining operating sectors? In this article, we examine firms’ reallocation decisions following increases in foreign competition due to import tariff cuts. Our results show that firms tend to allocate more resources to the business affected by the tariff cut and less to the businesses unaffected. Furthermore, we find evidence that this behavior is positively associated with performance.Raffaele Morandi Stagni and Juan Santaló acknowledge financial support from the Spanish Ministerio de Ciencia, Innovación y Universidades (project grants PGC2018-096316-B-I00,RTI2018-097033-B-I00 and ECO2016-78980-P) and from FEDER (UNC315-EE-3636

Digital Platforms Regulation: An Innovation-Centric View of the EU’s Digital Markets Act

We conceptualise innovation as new interactions being created by the digital platform, in contrast to coordination which facilitates existing interactions or market transactions. We apply this framework to the DMA to assess two of the most contentious practices: self-preferencing and data-sharing. We show that these practices differ hugely in the extent to which they replace existing interactions (little to negative innovation effect), sustain existing interactions (moderate, positive innovation effect), or trigger new interactions (large, positive innovation spillovers). We thus derive that the business model agnostic approach to digital platforms taken in the DMA risks treating practices that increase the value created by an interaction equally to those that simply shift the distribution of value

Evaluación de la satisfacción y efectividad del apósito de hidrocoloide Sureskin® II en el tratamiento de las heridas agudas y crónicas Assessment of the satisfaction and effectiveness of the hydrocoloid dressing Sureskin® II in the treatment of acute and chronic wounds

Objetivo: Valorar el grado de satisfacción percibido por el paciente y el comportamiento general con un apósito de hidrocoloide (Sureskin®II) en el tratamiento de úlceras agudas y crónicas en la práctica clínica diaria. Métodos: Estudio observacional de series de casos clínicos, multicéntrico, prospectivo y abierto, en pacientes afectos de úlceras agudas y crónicas. La duración del estudio fue de hasta 20 cambios de apósito o hasta la curación. En la visita inicial se valoraron las características clínico-morfológicas de la lesión, en todas las visitas sucesivas de cambio de apósito se valoró la evolución de la lesión y el grado de satisfacción del paciente, y en la visita final se valoraron las características finales de la lesión y el comportamiento del apósito, así como la valoración global del grado de satisfacción, tanto por parte del paciente como por el del investigador. Resultados: Se incluyeron 428 pacientes con una edad media de 74 años. Al final del estudio el tamaño de la úlcera disminuyó significativamente, desde el inicio del tratamiento hasta su finalización. La epitelización aumentó del 35,2% al 86,8%. Se encontraron diferencias estadísticamente significativas (pObjective: To evaluate the degree of patient satisfaction and overall behaviour using a hydrocolloid dressing (Sureskin®II) in the treatment of acute and chronic ulcers in daily clinical practice. Methods: By means of an observational, multicentric, prospective, open study of a series of clinical cases on patients afflicted with acute and chronic ulcers. This study lasted through 20 dressing changes or until the ulcers were cured. During the initial visit, the clinical-morphological characteristics of the lesion were evaluated, on all subsequent visits and as dressings were changed, the evolution of the lesion and the degree of patient satisfaction was evaluated, and during the final visit, the final lesion characteristics and behaviour of the dressing were evaluated, along with the overall degree of satisfaction of both the patient and the investigators. Results: This study evaluated 428 patients whose average age was 74. At the end of the study the size of these ulcers had significantly reduced from the start to the end of the treatment.Epithelisation increased from 35.2% to 86.8%. Statistically significant differences were found (p< 0.0001) in pain intensity (reduced by 60%), exudates level (reduced by 50%), perilesional erythema (reduced by 65.2%) and skin maceration (reduced by 57.2%) between the initial and the final visit. The investigators' degree of satisfaction reached 95% mainly due to how adaptable and easy to remove the dressing was, as well as its overall behaviour.The overall patient satisfaction was over 8 on an ordinal scale from 0 to 10; 90% of patients felt very satisfied with regard to ease of use (dressing change) and 87% stated that Sureskin®II allowed them to carry on their daily activities more comfortably. Conclusion: Sureskin®II provided a high degree of satisfaction for the patients being treated, proving effective in healing and accelerating this process