Browsing by Author "Scholten, Simone"

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Open Access
Platform-based innovation management : a framework to manage open innovation in two-sided platform businesses
(2011) Scholten, Simone; Spath, Dieter (Prof. Dr.)
Today’s global economy migrates from vertically integrated enterprises towards specialized enterprises. In consequence, companies have to closely interoperate with partners and competitors to flexibly satisfy the customers’ demand for individual product and service solutions, speed and high levels of product and service quality. In order to cope with these challenges, many companies implement open modular platform concepts, enabling them to create platform ecosystems around their offerings. As a result, an increasing number of companies strives for ‘platform leadership’, which represents a company’s strategic intention to provide the platform for other companies to build and deploy products and services. This process cannot be reduced to simple outsourcing decisions, but is part of renewed strategies of Open Innovation in an increasingly dynamic economic climate. Opening up dedicated interfaces to external complementary development resources, however, changes the company’s business model from formerly being ‘single-sided’ to then being ‘two-sided’. Two-sided platform businesses, therefore, differ significantly in their economic rational and strategic behavior from non-platform businesses, as indirect network externalities become crucial to their success. Indirect network externalities imply that the more buyers are attracted to a platform, the more valuable the platform becomes to sellers. In reciprocity, the more sellers are attracted to it. In turn, the more sellers are offering innovative complementary products and services of suitable quality on top of the platform, the higher is the variety and the likelihood to match individual customer requirements. As a result, the broader the customer choice of complementary offerings on top of the platform is, the greater is the utility customers are able to derive from the platform and the greater the platform’s profitability for the platform owner and its complementors. This requires platform owners to manage and sustain a continuous supply of external innovative complementary products and services to secure the profitability of their investments into an open modular platform concept. These insights indicate that the management of innovational efforts in open modular platform contexts is no longer confined to the legal boundaries of an organization. Given the differences between platform and non-platform businesses, the present work argues that the peculiarities of two-sided platform business models require significant modifications to the platform owner’s innovation management and innovation process in order to achieve competitive advantage in dynamic platform markets. Correspondingly, the present work seeks to (a) explore the peculiarities of innovation management in two-sided platform businesses and (b) to develop a platform-based innovation management framework that guides the platform owner in holistically managing open innovation efforts within the context of its platform leadership strategy.