Networks, platforms, and strategy: Emerging views and next steps

TLDR

Research shows that platform‑mediated networks influence users and complementors, and that network effects create value in industries such as social networks and video games, offering firms opportunities to build dominant platforms. This review outlines existing views on platform‑mediated networks and proposes a future research agenda that focuses on the relative influence of network effects and platform quality, drivers of indirect network effects, complementor attributes, and leveraging complementor dynamics for competitive advantage. The authors synthesize perspectives from industrial organization, technology management, and strategic management to examine current views on network effects and platform emergence, identifying areas for future research. © 2016 John Wiley & Sons, Ltd.

Abstract

Research summary : A substantial and burgeoning body of research has described the influence of platform‐mediated networks in a wide variety of settings, whereby users and complementors desire compatibility on a common platform. In this review, we outline extant views of these dynamics from the industrial organization ( IO) economics, technology management, and strategic management perspectives. Using this review as a foundation, we propose a future research agenda in this domain that focuses the on the relative influence of network effects and platform quality in competitive outcomes, drivers of indirect network effects, the nature and attributes of complementors, and leveraging complementor dynamics for competitive advantage . Managerial summary : In many industries, such as social networks and video games, consumers place greater value on products with a large network of other users and a large variety of complementary products. Such “network effects” offer lucrative opportunities for firms that can leverage these dynamics to create dominant technology platforms. This article reviews current perspectives on network effects and the emergence of platforms, and offers several areas of future consideration for optimal strategies in these settings . Copyright © 2016 John Wiley & Sons, Ltd.