Menu

Editor’s Introduction 28(2)

Vladimir Zwass
International Journal of Electronic Commerce,
Volume 28, Number 2, 2024, pp. 145-147.

This issue of the International Journal of Electronic Commerce is the Special Issue on Transformation and Sustainability of Digital Platforms and Ecosystems, guest edited by Roberta Cuel, Federica Ceci, Ilias Pappas, and P. K. Senyo.

Digital platforms and ecosystems are a preeminent contemporary form of transformation of business firms and other organizations that has emerged with the progression of the Internet and other dominant information technologies. They require close attention in e-commerce research.

Digital platforms are the information systems that enable business models and organizational activities providing intermediation and allied services to two or more market participants (in the basic case, buyers and sellers). The term “platform” is also applied to the firms built around digital platforms (as distinguished from the pure software platforms, say, iOS [7]. The essential potency of the platform model derives from the network effects, owing to which all users benefit from an addition of a new user. This advantage is combined with the vanishingly small marginal cost of adding that user in a software-enabled environment. The convenience, the breadth of offerings, and low cost of access to platforms undergird the user-side adoption and continuance. The extent of the network effects is an ongoing target of research [1].

Organizational transformation from pipeline value chains to a platform-based design is by now common in many industries, and is the subject of the issue’s articles. Automobile manufacturers, for example, establish such platforms to serve the present and potential customers, to collaborate with the partners and suppliers, and to attract the capabilities they themselves may not have, such as battery and software development. As another of many examples, Target has rolled out recently a large retail platform in order to recapture its threatened market share [4].

The platformization movement has also given birth to mega-platforms of surpassing global reach, which are the most visible domains of activity. Among the prominent platform types are the transactional platforms (such as Amazon), social media platforms (think Facebook), search platforms that indirectly lead the seekers of information to sellers (e.g., Google), and crowdsourcing platforms that include crowdfunding (such as GitHub or Kickstarter). The last type of platform builds on the highly contributing capability of the Internet–Web to enable market participation by the unaffiliated public, which expands economic activity. Beyond those, there are myriad platforms in most of the human pursuits. Monetization is done via direct participation fees, sales markup, and advertising revenue. In most cases, it does not include the unaffiliated co-creators of value.

Along with the effects of economies of scale and the network effects, the growth of these platforms is self-reinforcing owing to the data collection that feeds the analytics and the training of the large language models. These effects are studied in e-commerce research (e.g., [3]). Data ownership helps in expanding the current relationships and in attracting further participants to the platforms, with the longitudinal and horizontal data creating a potent barrier to entry.

In spite of these barriers, the entrenchment of platforms is threatened by the potential new entrants as well as by the exiting competitors, particularly by the firms that are able to utilize more effectively the ever-emerging waves of new transformational information technologies. Cloud computing has provided rapid scalability and flexibility in the use of computing resources. At present, generative artificial intelligence (AI) offers an opportunity to such competitors to challenge the existing platforms [2]. Frontier AI will challenge the leading platforms continually in the foreseeable future.

Along with recognition of the advantages of platformization, the mega-platforms raise concerns attaching to the foreseeable lock-in of participants, preemption of more open marketplaces, and the nontransparent rule-setting in large swaths of human activities. The threat to market competition and to innovation is recognized by the regulatory attention, particularly in the European Union. At the same time, the recognition of benefits, beyond the obvious recognition by the marketplace, extends to the benefits of value co-creation in crowdsourcing [8], mass activation of otherwise unavailable funds in crowdfunding, common access to information and knowledge via search engines, and the creation and maintenance of human relationships on social media platforms. If you can imagine the world without the platforms during the recent pandemic, better do not.

The articles of this issue analyze a variety of pursuits in the platformization domain in the organizational scope. Beyond that, some of the articles investigate platform ecosystems, which consist of platform owners, their business partners, complementors (such as independent developers), and users [6]. Depending on the nature of the platform, the latter are other organizations and individuals in various roles, notably customers.

This Special Issue illustrates well the necessity to include in the research attention of our interdisciplinary field all three components of e-commerce: B2C (e-retail), B2B (interorganizational), and intraorganizational. Take a platform for tethered goods, that is, the durable goods with embedded software (as most new cars are, for example, as well as computing equipment and smartphones, to mention only the most obvious) [5]. The goods are tethered to the vendors for software updates and require business and research attention that encompasses many internal vendor activities.

Let us now read the guest editors’ Introduction for their discussion of the organizational transformation with platforms and ecosystems, and for their presentation of the articles they have included in this Special Issue.

References

[1] Hinz, O., Otter, T., & Skiera, B. (2020). Estimating network effects in two-sided markets. Journal of Management Information Systems, 37(1), 12-38.
[2] Internet search: Seeking change. The Economist, February 11, 2023, 53–55.
[3] Liu, Y., Zheng, Y., Wei, J., & Yang, Y. (2023). The use of Inside-Out and Outside-In big data analytics on E-Platforms: performance impacts and heterogeneity analysis. International Journal of Electronic Commerce, 27(1), 36-65.
[4] Nassauer, S. Target tees up turnaround plan. The Wall Street Journal, March 6, 2024, B1–B2.
[5] Shankar, R. Tethered durable goods and installed base degradation via software updates: Implications for product policy. Journal of Management Information Systems, 41, 2 (2024), forthcoming.
[6] Tiwana, A. Platform Ecosystems: Aligning Architecture, Governance, and Strategy. Amsterdam: Morgan Kauffman, 2014.
[7] Um, S., Zhang, B., Wattal, S., and Yoo, Y. Software components and product variety in a platform ecosystem: A dynamic network analysis of WordPress. Information Systems Research, 34, 4 (2024), 1339–1374.
[8] Zwass, V. Co-Creation: Toward a taxonomy and an integrated research perspective. International Journal of Electronic Commerce, 15, 1 (2010), 11–48.