Paper Number

1211

Paper Type

Complete

Description

Prior research has expanded our understanding of the platform business and its success factors, but scant attention has been paid to the launch of digital platforms by “pipeline” firms. Our study examines the effect of a firm’s status on the strategic decision to launch a digital platform and its consequences. By analyzing panel data of Fortune China 500 companies, we found that high-status incumbents are more likely to add a digital platform than their low-status counterparts, indicating that status can be seen as a promoter of launching digital platforms. However, once a digital platform is added, high-status firms are slower in improving performance than their low-status counterparts. Thus, status may serve as an inhibitor of a firm’s dedication to the new platform business. This research contributes to our understanding of the social contingency of digital transformation and the important constraints that must be overcome for incumbent firms to successfully transit.

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Dec 12th, 12:00 AM

When Do Firms Add Digital Platforms? Organizational Status as an Enabler to Incumbents’ Platformization

Prior research has expanded our understanding of the platform business and its success factors, but scant attention has been paid to the launch of digital platforms by “pipeline” firms. Our study examines the effect of a firm’s status on the strategic decision to launch a digital platform and its consequences. By analyzing panel data of Fortune China 500 companies, we found that high-status incumbents are more likely to add a digital platform than their low-status counterparts, indicating that status can be seen as a promoter of launching digital platforms. However, once a digital platform is added, high-status firms are slower in improving performance than their low-status counterparts. Thus, status may serve as an inhibitor of a firm’s dedication to the new platform business. This research contributes to our understanding of the social contingency of digital transformation and the important constraints that must be overcome for incumbent firms to successfully transit.

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