More from the Author

• Article | Journal of Economics & Management Strategy

  Friends or Foes? Examining Platform Owners' Entry into Complementors' Spaces

  Feng Zhu

  As platform owners continue to expand their ecosystems, many of them have started to provide consumers with their own complementary applications. These moves position the platform owners as direct competitors to their complementors. This paper surveys empirical studies that examine the direct entry of platform owners into complementors’ product spaces. It finds that both the motivation and impact of such entries on complementors are multifaceted. The motivation behind platform owners’ direct entry goes beyond value capture, and the impact of platform entry on complementors varies across empirical settings. It identifies several future research directions that can help advance our understanding of the relationships between platform owners and complementors.

  Keywords: platform; complementors; Market Platforms; Market Entry and Exit; Competition;

  Citation:

  Zhu, Feng. "Friends or Foes? Examining Platform Owners' Entry into Complementors' Spaces." Special Issue on Platforms. Journal of Economics & Management Strategy 28, no. 1 (Spring 2019): 23–28.  View Details

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• Article | Harvard Business Review | January–February 2019

  Why Some Platforms Thrive and Others Don't

  Feng Zhu and Marco Iansiti

  In the digital economy, scale is no guarantee of continued success. After all, the same factors that help an online platform expand quickly—such as the low cost of adding new customers—work for challengers too. What, then, allows platforms to fight off rivals and grow profits? Their ability to manage five aspects of the networks they’re embedded in:
  
  • network effects, in which users attract more users
  • clustering, or fragmentation into many local markets
  • the risk of disintermediation, wherein users bypass a hub and connect directly
  • vulnerability to multi-homing, which happens when users form ties with two or more competing platforms
  • network bridging, which allows platforms to leverage users and data from one network in another network
  
  When entrepreneurs are evaluating a digital platform business, they should look at these dynamics—and the feasibility of improving them—to get a more realistic picture of its long-term prospects.

  Keywords: Technology Platform; Competition; Network Effects; Competitive Strategy;

  Citation:

  Zhu, Feng, and Marco Iansiti. "Why Some Platforms Thrive and Others Don't." Harvard Business Review 97, no. 1 (January–February 2019): 118–125.  View Details

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• Working Paper | HBS Working Paper Series | 2018

  Marketplace Scalability and Strategic Use of Platform Investment

  Jin Li, Gary P. Pisano and Feng Zhu

  The scalability of a marketplace depends on the operations of the marketplace platform as well as its sellers’ cost structures and capacities. When fixed costs of entry are high, sellers with small capacities may be deterred from entering the market because of their inability to leverage economies of scale. In this study, we explore one strategy that a marketplace platform can use to enhance its scalability: providing an ancillary service to sellers to reduce their fixed costs. In our model, a platform can choose whether and when to provide this service to sellers. When the platform provides the service, it encourages the entry of small sellers. However, it diminishes large sellers’ incentives to make their own investment, thus reducing their potential output. When the output reduction by the large sellers is substantial, the platform may not want to provide the ancillary service even if it could do so at no cost. To encourage entry while mitigating output reduction, the platform may choose to strategically delay providing the service.

  Keywords: marketplace; scalability; platform strategy; Platform Investment; Market Platforms; Market Entry and Exit; Strategy;

  Citation:

  Li, Jin, Gary P. Pisano, and Feng Zhu. "Marketplace Scalability and Strategic Use of Platform Investment." Harvard Business School Working Paper, No. 19-063, December 2018.  View Details

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