Research Summary

Overview

by Feng Zhu

Description

Professor Zhu’s research interests center on technology strategy and innovation in platform-based markets, which represent a large and rapidly growing share of the economy. He examines the challenges in managing and growing platform-based businesses. Platform-based markets—ranging from operating systems to ad-sponsored media—must bring on board multiple groups of participants and effectively manage these groups in order to be successful. In his work, Professor Zhu developed a model to determine conditions under which a new platform can successfully enter a market where the incumbent has a significant installed-based advantage and empirically tested these conditions using data from the video game industry. He also empirically examined how open-content platforms such as Wikipedia can take advantage of the multi-sidedness of the market to overcome free-riding problems as they grow. In several other projects, he studied how platforms can dynamically adjust their strategies on each side of the market in response to the entry of a competitor. His latest research looks at how patent wars in the smartphone industry affect market shares of platform providers such as Apple’s iOS and Google’s Android system.

In a related stream of research, Professor Zhu studies firms’ choices between multi-sided, platform-based and one-sided business models. Choosing between a multi-sided business model and a one-sided business model involves trade-offs. For example, it is not always optimal for firms to choose ad-sponsored business models, as advertisers produce a negative effect on the consumers’ side. In several projects, Professor Zhu has analyzed firms’ choices of fee-based and ad-sponsored business models. His analysis demonstrates the importance to an incumbent firm of considering modifications to its business model when competing with new entrants. In another study, he considers how the adoption of ad-sponsored business models affects content providers’ incentives. His empirical evaluation, using data from blogs, finds that ad revenue results in more popular content—and further that about half of the shift is based in more emphasis on the stock market, celebrities, and salacious content—but that it does not result in less niche content. Professor Zhu’s latest work in this area examines whether open-content platforms that are based mostly on voluntary contributors (e.g., Wikipedia) help achieve a neutral point of view better than traditional forms of content production (e.g., Britannica, an encyclopedia authored by experts).