Now showing 1 - 4 of 4
  • Publication
    Generativity and Profitability on B2B Innovation Platforms: A Simulation-based Theory Development
    ( 2024-06)
    Kazem Haki
    ;
    Hüseyi̇n Tanriverdi̇
    ;
    Dorsa Safaei
    ;
    ; ;
    Firms generate innovations to profit from market opportunities, which are newly identified customer needs not yet being met in the market. The rising complexity of market opportunities requires collaboration among multiple partner firms. However, this multipartner collaboration increases transaction and production costs when generating innovations. To address these challenges, incumbents build B2B innovation platforms with mechanisms to reduce partners’ transaction and production costs. We do not yet know if and when partners would choose to use the incumbent’s traditional service innovation model or the B2B innovation platform and how this choice would affect the generativity and profitability of innovations for the incumbent and the partners. We used agent-based modeling and simulation to develop a theory to address these questions. We found that the complexity of market opportunities interacts with the B2B innovation platform’s transaction and production mechanisms to jointly affect whether partners use the platform and when the incumbent and partners achieve generativity and profitability. When the complexity of market opportunities is low, partners use the traditional service innovation model. As complexity increases to medium or high levels, partners begin to use the B2B innovation platform mechanisms to address the transaction and production challenges presented by the complexity of market opportunities. However, there are limits to how much the platform mechanisms can address these challenges. The complexity of market opportunities inhibits the emergence of network effects on B2B innovation platforms and limits the generativity and profitability of platform partners. There are diminishing benefits of investing in the platform’s transaction and production mechanisms, and complexity affects whether the platform owner or the partners profit from innovations generated on the platform.
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    Scopus© Citations 2
  • Publication
    PLATFORM OVER MARKET – WHEN IS JOINING A PLATFORM BENEFICIAL?
    Firms struggle to meet dynamically changing customers’ needs. One challenge is to navigate a complex search space to find resources needed for innovations that meet customers’ needs. Another challenge is to acquire the resources at lower costs than revenue opportunities to yield profitability. Digital platforms promise to address these challenges better than the market by providing search matching capabilities and modular, reusable resources. We examine whether platforms improve innovation performance and profitability of firms better than the market, as assumed. Using agent-based modeling and simulation, we find that firms perform better in the market when environmental complexity is low. As environmental complexity increases, firms start to perform better on the platform than in the market, specifically when the platform owner remarkably invests in search matching and modularity capabilities. The study advances our understanding of the environmental conditions under which platforms could be superior or inferior to the market.