A Profit Framework Model for Digital Platforms Based on Value Sharing and Resource Complementarity

Abstract

With the advent of the smart economy, Chinese digital platform companies have begun the process of digital innovation. The sudden outbreak of the COVID-19 epidemic in early 2020 has added a strong impulse to the acceleration of this process, highlighting the unique characteristics of the platform economy in resource allocation. Although digital platforms have already entered people’s daily lives, the profit mechanism of digital platforms remains a black box to be cracked for the industry. The main contribution of this paper is to propose a framework model for the profit mechanism of digital platforms, which to a certain extent solves the problems essential to the digital realm faced by many traditional enterprises in the Internet age—knowing that the profit theory of traditional monopolies is not suitable for the rapidly changing internet economy, but that most of the time people still must use it. In this new profit framework, we first use the symbiotic logic of value sharing to explain the underlying logic of platform profitability; secondly, from the perspective of resource complementarity, we find that the key to digital platform companies’ profitability lies in the symbiotic synergy between platform companies and massive userbases; lastly, our study finds that the profit condition of platform enterprises is digital capability, not system possession. This article will analyze the bottom layer of the digital economy and, by identifying the various drawbacks of the traditional industrial economic monopoly theory, propose three key factors for the profitability of platform companies in the digital age: flexible strategy, digital capabilities, and symbiotic synergy capabilities. On this basis, a theoretical model of the profit of a digital platform is constructed. Research shows that the hybrid structure of digital platforms and the need for external diversification together lead to a platform’s resilience strategy. The realization process of the platform’s strategic flexibility and the process of consumers obtaining the residual value will lead to an explosion in network effects, causing the platform and users to complete value co-creation and realize value sharing. The implementation of a flexible platform strategy also promotes the further development of a differentiation strategy and a more-refined division of labor for manufacturers, lowers the barriers-to-entry in the industry, and enables the platform and the manufacturers to realize value co-creation. On the one hand, platform enterprises can obtain greater market performance; on the other hand, users’ personalized needs can be more satisfied.

Comprehensive Evaluation of Digital Strategies and Its Impact on Company Performance

“…The hypothesis proposed a positive relationship between the use of the digital platform, specifically in the context of e-commerce, and the extent of company performance. The study's confirmation of this relationship aligns with prior research [55], [56], highlighting the potential of e-commerce platforms to positively impact various dimensions of company performance, including increased sales, improved net profit, enhanced business metrics, and expanded market share. These results underscore the significance of e-commerce platforms in contributing to business value creation and overall performance improvement in the digital age.…”

Digital Platform and Company Performance: A Review of How Digital Platforms Can Improve Company Performance

“…Büyüközkan and Göç er refer to a business model as a statement, a description, a presentation, an architecture, a conceptual tool or model, a structural template, a method, a framework, a pattern, and a set [9]. Deng indicates that the new leaders of the digital platform are much more likely to be platform corporations that emphasize digital innovation, and these companies may help with resource and information sharing, social innovation, and full employment [10]. Service innovation is an important transformation.…”

“…Its net revenues for the first quarter of 2023 were RMB 243 billion [16]. According to Deng, a small number of nodes (selected by users) gather a large number of links in the network environment [10]. Obviously, users tend to choose more wellknown nodes, and a large number of links can provide more opportunities for these nodes to be discovered than before.…”

“…Obviously, users tend to choose more wellknown nodes, and a large number of links can provide more opportunities for these nodes to be discovered than before. It is easy to understand that JD, as a key node, connects a large number of merchants and consumers [10]. The JD platform will allow more buyers to participate as more and more sellers join, thereby increasing the profit opportunities for platform enterprises [10].…”

Regulatory Effect on Information Sharing of Industrial Internet Platforms Based on Three Differentiated Game Scenarios

“…These layers help enterprises visualize their business processes in different aspects, assisting them in making accurate predictions and analyses. Regarding the theoretical framework of industrial internet platforms, scholars have explored the perspectives of organizational behavior, industry, economics, technology, and management [39][40][41][42][43][44][45][46][47][48][49][50][51][52][53]. Unfortunately, these theories have not been explored together from a technical and socio-legal perspective.…”