Platform Exploitation: When Service Agents Defect with Customers from Online Service Platforms

Abstract

Online, pure-labor service platforms (e.g., Zeel, Amazon Home Services, Freelancer.com ) represent a multibillion-dollar market. An increasing managerial concern in such markets is the opportunistic behavior of service agents who defect with customers off platform for future transactions. Using multiple methods across studies, the authors seek to explain this platform exploitation phenomenon. In Study 1, a theories-in-use approach clarifies why and when platform exploitation occurs and derives some hypotheses. Study 2 empirically tests these hypotheses using data from a healthcare platform that connects nurses and patients. The results indicate that high-quality, long-tenured service agents may enhance platform usage, but customers also are more likely to defect with such agents. Platform exploitation also increases with greater customer–agent interaction frequency (i.e., building stronger relationships). This phenomenon decreases agents’ platform usage, due to capacity constraints caused by serving more customers off platform. These effects are stronger as service price increases (as higher prices equate to more fee savings), as service repetitiveness increases, and as the agent’s on-platform customer pool comprises more repeat and more proximal customers. Finally, we use two scenario-based experiments to establish some managerial strategies to combat platform exploitation.

Digital platform regulation: opportunities for information systems research

“…Platform owners respond to increasing the network's benefit to one market side by reducing prices on the other side to attract a user group particularly valuable to start or maintain network effects (Parker and van Alstyne, 2005; Rochet and Tirole, 2003). Designing and maintaining effective subsidizing strategies is challenging because the non-subsidized market side will try to draw the subsidized side away from the platform (Zhou et al. , 2021).…”

The Platformization of Brands

“…Nurturing partnerships also tend to be demanding and costly to maintain because brands need to manage third-party businesses as well as high-intensity consumer crowdsourcing and -sending. Their interactions may create new challenges such as complementors defecting with consumers (Zhou et al 2021), and consequently, the value captured from the platform-monetary or otherwise-may be insufficient to justify its continuation. A case in point is Under Armour, which recently discontinued parts of its brand flagship platform Connected Fitness to focus on a more concentrated set of functionalities (Under Armour 2020).…”

“…That is, while our discussion focused on consumer-platform interactions, it would be fruitful to explore the individual subassemblages emerging from consumer-supplier interactions and their consequences for the platform. For example, consumers may build close relationships with third parties that may even culminate in defection from the platform (Zhou et al 2021). Thus, future research should explore how brands can monitor consumer-supplier relationships and deploy governance mechanisms that prevent such exploitative behaviors.…”

“…Thus, future research should explore how brands can monitor consumer-supplier relationships and deploy governance mechanisms that prevent such exploitative behaviors. Researchers should also consider the moderating role of relationship states, as exploitative behaviors may be more common in the ad hoc consumer-platform relationships studied by Zhou et al (2021) but less likely in intimate consumer-platform relationships. Future studies might also extend our conceptualization beyond the individual consumer to collectives such as families and groups of friends as relevant actors on the platform (Price and Epp 2015).…”

Communication in the Gig Economy: Buying and Selling in Online Freelance Marketplaces

“…Online freelance marketplaces, such as Upwork, Fiverr, and PeoplePerHour, have already prompted massive transformations in business-to-business (B2B) markets (Constantinides, Henfridsson, and Parker 2018;Zhou et al 2021). In particular, they allow buyers to post gigs, or short-term service projects, which initiate reverse auctions in which interested freelance workers submit bids to offer their services (Jap 2007).…”