Authors: Emmanuel Baudoin; Mathilde Aubry; Patrick Loux; Sébastien Tran
According to the growing body of literature dedicated to the study of two-sided markets, the pricing policy applied by the platform provider is recognized as a key driver of the platform’s adoption. Used strategically, an appropriate pricing policy can lower the barriers to entry for at least one side of the market and stimulate the activation of cross-network externalities which will attract new users from the other side of the market. Yet, positing the central role of the pricing policy in shaping the future success of a two-sided platform is a debatable proposition. First, it is theoretically rooted in the industrial economics literature which typically focuses on how the price may influence behaviors as a key coordination mechanism (Parker and Van Alstyne, 2005: Rochet and Tirole, 2003). Second, it has been inspired by and confirmed for empirical settings where the platform’s adoption problem is mostly seen from a consumer’s standpoint, either in C2C (e.g. online dating) or in B2C (e.g. video game consoles) contexts (Liu, 2010). By contrast, when a two-sided platform allows transactions to be made between businesses (i.e. in B2B contexts), the platform’s adoption decision for a specific organization sometimes requires the implementation of a technological process innovation. This, in turn, entails collective learning and reorganization efforts. In such situations, the possibility that other factors than the pricing policy could influence the platform’s adoption pattern cannot be ruled out. To investigate this avenue of research, our paper explores the case of a dematerialisation platform for B2B transactions between construction industry firms and public contracting authorities. Different qualitative materials, including 28 semi-structured interviews, were gathered over a two-year period. Our findings highlight two main contributions to the existing literature on two-sided markets. First, this paper reveals new boundary conditions within which the pricing policy of a platform provider loses its ability to coordinate and stimulate users’ adoption behaviors. Under these specific circumstances, inter-organizational collaboration in the selection of a unique platform emerges as a key condition to produce cross-network externalities, and therefore as a major source of technological change in the area of a radical process innovation. Second, we show that the gains stemming from the adoption of a dematerialisation platform follow a non-linear path. Specifically, an increase in the volume of new users in one side of the market first reduces the utility of the platform for the other side of the market. Indeed, it causes the contracting parties to duplicate some transactions while incurring reorganization costs. As the number of users increases, the adoption path reaches a tipping point above which using a dematerialisation platform creates gains compared with using and exchanging paper documents.
Journal: n.a. (n.a. – n.a.)
Web Address: n.a.
Publish Year: 2016
Conference: Poznan, Poland (2016)