Strategic and Competitive Uses of Information & Digital Technologies (SCUIDT)

Paper Type

Complete

Paper Number

1363

Description

Platform-based ecosystems attract diverse independent sellers and buyers to trade products or services. As such transaction platform ecosystems grow, the quality of the goods sold in these ecosystems may vary increasingly, leading possibly to customer dissatisfaction, declining sales, or even the collapse of the whole ecosystems. In this study, we examine two governance mechanisms that can help control the quality of the goods sold in transaction platform ecosystems: centralized control by the platform owners and distributed control by platform participants. Data collected on international package tours at Trip.com indicates that both centralized control (e.g., platform-assessed quality ratings) and distributed control (e.g., customer-generated quality ratings) can boost sales. Further analysis suggests that centralized control complements distributed control and their relative effectiveness reverses when the volume of customer reviews changes. Therefore, the study expands the concept of distributed governance from its original focus on decision rights partitioning to the realm of control portfolio configuration, where the platform owner, sellers, and buyers can jointly control product quality, so that sales can grow and platform ecosystems can thrive.

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Aug 9th, 12:00 AM

Effects of Centralized and Distributed Quality Control on Sales of Experience Goods in a Transaction Platform Ecosystem

Platform-based ecosystems attract diverse independent sellers and buyers to trade products or services. As such transaction platform ecosystems grow, the quality of the goods sold in these ecosystems may vary increasingly, leading possibly to customer dissatisfaction, declining sales, or even the collapse of the whole ecosystems. In this study, we examine two governance mechanisms that can help control the quality of the goods sold in transaction platform ecosystems: centralized control by the platform owners and distributed control by platform participants. Data collected on international package tours at Trip.com indicates that both centralized control (e.g., platform-assessed quality ratings) and distributed control (e.g., customer-generated quality ratings) can boost sales. Further analysis suggests that centralized control complements distributed control and their relative effectiveness reverses when the volume of customer reviews changes. Therefore, the study expands the concept of distributed governance from its original focus on decision rights partitioning to the realm of control portfolio configuration, where the platform owner, sellers, and buyers can jointly control product quality, so that sales can grow and platform ecosystems can thrive.