How users drive platform value

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)peer-review

View graph of relations

Author(s)

Detail(s)

Original languageEnglish
Title of host publicationICIS 2020 Proceedings
PublisherAssociation for Information Systems
ISBN (Print)9781733632553
Publication statusPublished - Dec 2020
Externally publishedYes

Publication series

NameInternational Conference on Information Systems, ICIS

Conference

Title41st International Conference on Information Systems (ICIS 2020)
LocationVirtual
PlaceIndia
Period13 - 16 December 2020

Abstract

Extant research has popularized the perspective that strong network effects produce “winner-take-all” outcomes. Platforms with large user bases, however, have both succeeded and failed. The central question is: When is a large user base insufficient to dominate a market? In answer, we develop a model of inter-temporal effects and within-period network effects. The within-period effect only yields contemporaneous user attraction, while the inter-temporal effect contributes to user stickiness across periods. Strong within-period effects that do not persist can stall platform value. Using Groupon data, we estimate these two effects on users' participation choices. Our results show that the inter-temporal effect of Groupon's customer base is weak which causes poor user stickiness. Thus, common marketing practices to attract customers offer inferior returns compared to platform designs that increase stickiness. Overall, these findings remind managers not to overemphasize user acquisition when network effects do not persist and instead focus on platform design.

Research Area(s)

  • Investment, Network effects, Platform design, Platform value, Stickiness, System generalized method of moments, User acquisition, User base, Winner-take-all

Citation Format(s)

How users drive platform value. / Zhou, Zhou; Zhang, Lingling; Van Alstyne, Marshall.

ICIS 2020 Proceedings. Association for Information Systems, 2020. 2539 (International Conference on Information Systems, ICIS).

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)peer-review