Why Controls Are Used in Platform Ecosystems?: An Analytic Hierarchy Process Approach to Rank Roles of Control Mechanisms in Platform Ecosystems

Why Controls Are Used in Platform Ecosystems?: An Analytic Hierarchy Process Approach to Rank Roles of Control Mechanisms in Platform Ecosystems

Sandip Mukhopadhyay (Management Development Institute (MDI), Gurgaon, India and IBM India, Gurgaon, India), Shahrokh Nikou (Åbo Akademi University, Turku, Finland) and Harry Bouwman (Delft University of Technology, Delft, Netherlands and Åbo Akademi University, Turku, Finland)
Copyright: © 2016 |Pages: 19
DOI: 10.4018/IJESMA.2016070101
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Abstract

Existing literature on control in software development context considers only the principal-agency relationship between controller and controlee. However, the principal-agency relationship cannot be assumed between ecosystems leader and partners, which are independent organizations. This paper aims to study the critical role played by inter-organizational control mechanisms in a mobile platform ecosystems. Based on an Analytic Hierarchy Process (AHP) approach with 38 experts with diverse backgrounds, this research aims to identify and prioritise the most important roles of control portfolio in the platform ecosystems. Though traditionally controls are primarily used to coordinate between partners with divergent objectives, ecosystems leaders use control primarily to capture a higher share of value of the service. The findings provide further insights on two other roles of control in platform ecosystems: (i) accessing complementary resources and (ii) managing interdependency between partners. This research extends organizational control theory to the context of emerging platform-based ecosystem.
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1. Introduction

With the advances of feature-rich mobile phones equipped with high computing power and mobile network technology, mobile communication has spread and diffused into our daily lives, both in modern western economies as well as emerging economies. Business managers are also aware that the future growth of revenues in the mobile telecommunication industry will be driven by innovative mobile value-added services, rather than by subscriber growth alone (Gerpott, 2011). A consumer survey (IBM Global Telecommunications Consumer Survey, 2014) shows that in emerging markets, users are planning to spend more on mobile services in the next two to three years, while reducing consumption in many other areas, such as electronics. The same survey also indicates that, at a global level, almost one-third of the users are planning to reduce their usage of voice and text (SMS) services, while increasing their usage of the Internet, mobile applications and over-the-top (OTT) services such as Viber and WhatsApp.

Other than individuals, enterprises from different industries are also transforming their businesses with the help of mobile services to: (i) achieve their business objectives such as differentiation and personalisation of customer experience (ii) extend their business to the workforce mobile and customers and (iii) improve operational efficiency as well as customer intimacy (IBM Institute for Business Value, 2012). A number of studies conducted by the World Bank, International Finance Corporation (IFC) and other international agencies have identified mobile technology as a medium for achieving objectives like financial inclusion, increase in GDP in developing nations, reduction in financial transaction costs, and bringing more transparency and effectiveness in government spending (World Bank, Information and Communications for Development: Maximizing Mobile, 2012).

Three important developments are helping this trend of increased adoption and usage of mobile services by individuals, corporate and governmental agencies: (i) extensive improvement and rapid enhancements in mobile phone features, and an associated reduction in costs (Becker et al., 2012) (ii) the technological evolution of mobile networks, which makes it easier to carry large volumes of digital traffic (Dekleva et al., 2007) and (iii) the emergence of new business models for mobile services centred around ecosystems and platforms (Basole and Karla, 2011; Basole and Rouse,2008; Bouwman et al., 2008; Nikou, et al., 2014; Tiwana et al., 2010). In mobile ecosystems, multiple partners work together by combining their resources and capabilities to ensure (higher number of) innovations in a shorter time-span. From an academic point of view this trends lead to question about how business models and constituting mobile ecosystems are getting formed and evolved over the time. Other than the mobile domain perspectives, the research related to platform and ecosystems is also gaining momentum due to two other reasons. The first among is that digital ecosystems constitute one of the most dynamic and exciting source of innovation in today’s world (Eaton et al., 2011). The other factor is that competition and innovation in Information Systems (IS) is continuously shifting from stand-alone systems towards platform based ecosystems (Tiwana et al., 2010).

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