Pioneering digital platform ecosystems: The role of aligned capabilities and motives in shaping key choices and performance outcomes

Abstract

We inductively analyze rich qualitative and quantitative data on the global census of pioneering mobile money firms to examine how firm characteristics shape digital platform ecosystem configuration choices regarding (a) internal versus external integration and (b) the creation of network externalities through open versus closed end-user access. In contrast to received wisdom, we find pioneering firms were equally likely to engage in external and internal integration; moreover, diversifying entrants were less likely to internally integrate than startups. We uncover the important role of motives, in addition to capabilities, for creating alignment between pioneering firms and their partners. Such alignment was key for addressing path-dependent implementation challenges through experimentation and navigating nascent industry uncertainty for success. Managerial Summary: Our study showcases how enterprising firms pioneered and diffused mobile money, a digital platform that improves access to financial services. The successful take-off and growth of this industry, as revealed by our inductive analysis, was contingent on aligned capabilities and motives among All authors contributed equally, and names are arranged in reverse alphabetical order.

Renewing the resource‐based view: New contexts, new concepts, and new methods

“…One stream of work in this area focuses on the effect that the digital nature of products and services has on the economics of competition. On the one hand—as exemplified by the Giustiziero et al paper in this issue—the scale‐free nature of digital offerings and the resulting negligible marginal costs (Levinthal & Wu, 2010), combined with the global reach of digital markets (Wormald, Shah, Braguinsky, & Agarwal, 2022) and various types of network effects associated with many digital contexts (Loh & Kretschmer, 2023; Parker & Van Alstyne, 2005; Zhu & Iansiti, 2012), suggests that digitization may create an impetus for hyperscaling, as a small number of firms (or potentially just one firm) come to dominate the market. On the other hand, digitization is also associated with lower costs of experimentation as entry barriers related to fixed costs are lowered (Jin & McElheran, 2017; Waldfogel, 2018), low‐cost experimental techniques become available (Koning, Hasan, & Chatterji, 2022), and conventional knowledge constraints are overcome (Tajedin, Madhok, & Keyhani, 2019), as well as with improved access to detailed real‐time customer data, suggesting the potential for greater learning‐by‐doing (Chen, Wang, Cui, & Li, 2021) and the opportunity for small and start‐up firms to overcome their traditional disadvantages (Wormald, Agarwal, Braguinsky, & Shah, 2021) by targeting valuable niches in the market (Benner & Waldfogel, 2023; Dushnitsky, Piva, & Rossi‐Lamastra, 2022).…”

“…It would be important to examine the resources and capabilities that underpin such niche strategies, whether they be based on network structure (Afuah, 2013; Lee, Lee, & Lee, 2006), quality of complementors (Cennamo & Santalo, 2013; Llanes, Mantovani, & Ruiz‐Aliseda, 2019), customization to niche preferences (Dushnitsky et al, 2022), or superior innovativeness (Panico & Cennamo, 2022). To what extent is the choice of strategy in a digital marketplace driven and enabled by the firm's existing complementary resources (Miller & Toh, 2022; Wang & Miller, 2020; Wormald et al, 2022)? Can (and should) firms redeploy resources from one segment to the other as market conditions change or technologies evolve (Kretschmer & Claussen, 2016)?…”

“…For instance, how do the relationships between firms in a distributed organization change as new actors join the ecosystem (Zhang & Guler, 2020) or as competition between distributed organizations pushes firms to choose one ecosystem over the other (Ranganathan et al, 2018) or to invest in multi‐homing so as to remain redeployable across ecosystems (Li & Zhu, 2021)? What strategies may firms within an ecosystem adopt to best manage the inclusion or exclusion of other actors so as to maximize value creation (Moeen, Agarwal, & Shah, 2020; Panico & Cennamo, 2022), and what dynamic and integrative capabilities may enable these strategies (Helfat & Raubitschek, 2018; Wormald et al, 2022)?…”

The theory‐based view: Entrepreneurial microfoundations, resources, and choices

“…The third and last argument suggests that, even if outside asset owners can be persuaded to make these specialized investments, the choice to not own these assets creates a bargaining setup in which outside asset owners can appropriate substantial portions of the value that the entrepreneur orchestrates (Williamson, 1975). Of course, well‐crafted alliances may also enable firms to support and protect these specialized investments (Gulati, 1995; Wormald et al, 2022). But, in many circumstances, ownership of these unique and specialized assets may be essential for both value creation and value capture.…”