The influence of platform service innovation on value co-creation activities and the network effect

The purpose of this paper is to explore the properties of platform service innovation and its relationship to value co-creation activities and the network effect. This is done over the course of a platform’s evolution through three stages: emergence, expansion and maturity.

Based on grounded theory, this study adopts a multiple case study research design. An in-depth analysis of the case data is done using ATLAS.TI software.

At the emergence stage, platform service innovations focus on building infrastructure. Platform owners stimulate the network effect directly via platform service innovations, rather than indirectly via value co-creation activities. At the expansion stage, the platform service innovations focus on building relationships among platform owner and different sides of participants. Platform owners stimulate the network effect indirectly, via value co-creation activities, rather than directly via platform service innovations. At the maturity stage, platform service innovations focus on building an environment for the platform ecosystem. Platform owners stimulate the network effect indirectly, via value co-creation activities rather than directly.

This research contributes to the service innovation literature by exploring the properties of platform service innovation and its relationship to value co-creation activities and the network effect from a longitudinal perspective. The principal managerial implication is that platform managers need to consider the developmental stage of the platform, as a mismatching of stage of development (emergence/expansion/maturity) and focus (an orientation toward building infrastructure, relationships or environment) may lead to a failure to stimulate or enhance the network effect.