The US Local Newspapers in the Digital Age: How Do Platforms Adapt to Technological Change?

The questions of whether and which incumbent firms can adapt to technological change has been studied from diverse theoretical perspectives, and studies have offered boundary conditions under which a certain incumbent firm may be better positioned to adapt to technological change. These questions, however, have yet to be studied in the context of multi-sided platforms. In this paper, we examine how multi-sided platforms respond to a technological change for which different platform sides have heterogeneous preferences. Using archival data on all U.S. local newspapers between 1997 and 2014, we study how U.S. local newspapers responded to the digital revolution and analyze their subsequent performances. In contrast to existing work on multi-sided platforms that assumes away differences in firm resources, we propose that multi-sided platforms may differ in how they allocate their resources across the multiple sides of the platforms, and we argue that such differences may affect their adaptation strategy during a technological change. © 2019 Academy of Management