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From banking to multi-industry platform economy

Written by I. Immonen

Paper category

Master Thesis


Business Administration>Banking & Insurance




Master Thesis 2.1. Platform There are several different terms about platform introduced in the literature. For example, Ardolino, Saccani, & Perona (2016) used the terms "multilateral market", "multilateral network", "multilateral platform" or simply "platform" in their paper. Therefore, we need to define different terms and their differences. Multilateral platform is a commonly used term in the literature. According to Ardolino et al. (2016), “multilateral platforms are designed to facilitate and enable interaction between different user groups”. On the other hand, (Hagiu & Wright, 2015) defines a multilateral platform as “an organization that creates value mainly by realizing direct interaction between two (or more) different types of affiliated customers”. According to Hagiu (2014), multilateral platforms have three typical characteristics. One is that the platform has technical support. Second, it facilitates interaction between different customers or user groups. Finally, the platform adds value through network effects. Examples of multilateral platforms are Facebook, Amazon, eBay, Google, Airbnb, etc. (Ardolino et al., 2016). It can be seen from the listing that digitalization has made it possible for more and more multilateral platforms to appear and grow in the market. Both Kazan & Damsgaard (2013) and Evans & Schmalensee (2008) believe that the core task of a multilateral platform is to provide a common meeting place, promote interaction between members, and set rules for each participant. According to Ardolino et al. (2016), the success of the platform largely depends on the contributions of external users. In addition, the functions of multilateral platforms are very complex because different participants in the platform have very special relationships (Sriram, Bravo, and Shriver, 2015). Digitization makes the market possible. Multi-platforms are developing in great strides. According to Campbell-kelly, Garcia-swartz, Lam, and Yang (2015), the evolution of markets with multilateral platforms is often unstable and unstable. However, they pointed out that competition between different platforms often brings benefits to all customers. On the platform. As mentioned above, multilateral platforms are complex entities. Although, some aspects of defining them are repeated in the literature. Therefore, in this article, a platform is widely understood as the infrastructure or rules of the market, which brings together buyers and sellers of products or services (Van Alstyne et al., 2016). In addition, the platform creates value for all participants through matching (Parker et al., 2016). Finally, this article focuses on platforms based on digital technology. The following chapters are organized as follows. First of all, platform development is discussed in chapter 2.1.1. Secondly, I reviewed the characteristics of the digital platform. 2.1.1 Platform development The platform economy is usually regarded as a modern phenomenon brought about by digitalization. What is often forgotten is that platforms have existed for centuries, many of which do not require any digital products or services to work. According to Ardolino et al. (2016, p. 257) "There were also multilateral platforms before the Internet era". According to (Baldwin & Woodard, 2008), the development of the platform can be divided into three periods. The first platform appeared in the era of new product development, creating a platform containing similar products, services or technologies to serve as many customers as possible. The framework is derived from Piezunka (2011). E.g. The automobile manufacturing technologies of General Motors or Nokia phones are good examples of platforms where the same technology is modified to serve multiple customer groups. In the second stage introduced by Baldwin & Woodard (2008), the platform can be regarded as a controller and is in a controlling position in the business network. At this point, "a platform can be viewed as a product, service, or technology, developed by one or more companies, and used as a foundation for other companies to build on their own products, services, or technology. At this point, The difference between platform as a general technology is significant. A good example of the platform mentioned above is the Internet Explorer browser (Baldwin & Woodard, 2008). Windows provides a browser in its operating system for free, although there is no profit, But it caused great harm to its competitors. Later, Internet Explorer gained the position of market leader. In the third and final period, the platform economy can be regarded as what we understand today. Platforms are two or more The market in which participants provide and trade products or services (Ailisto et al., 2015). The interesting thing about this definition is that digitization is not mentioned. For example, Van Alstyne, Parker, and Choudary (2016) use shopping malls and newspapers as examples of platforms. Another On the other hand, Armstrong (2006) and Gazé & Vaubourg (2011) used exhibitions, newspapers, bars, employment agencies, dating agencies and real estate agencies as examples of multilateral platforms. The common point of all these examples is that they all support the production of products or services Trade between consumers and consumers. Although our definition of platform covers a wide range of different types of markets, we will focus on digital platforms and digital markets. 2.1.2 Digital platforms and digital platform economics According to Seppälä et al. (2015) According to the statement, a digital platform refers to an information technology system that enables different participants, including customers, service providers, and other stakeholders, to create new value across organizational boundaries. Read Less