The Impact of Openness on the Market Potential of Multi-Sided Platforms: A Case Study of Mobile Payment Platforms

Journal of Information Technology, Vol. 30, Issue 3, pp. 260-275, 2015

31 Pages Posted: 28 Jul 2015 Last revised: 4 Apr 2017

See all articles by Jan Ondrus

Jan Ondrus

ESSEC Business School

Avinash Collis

University of Texas at Austin - McCombs School of Business

Kalle J. Lyytinen

Case Western Reserve University - Weatherhead School of Management

Date Written: March 24, 2015

Abstract

A multi-sided platform can only succeed if a critical mass of users can join. This is a necessary, but not sufficient, condition for a platform's success. However, there is a limited understanding of the factors that contribute to reaching such critical mass. In this study we identify ways to determine the market potential of a platform and to reach critical mass. We particularly enrich past studies by exploring how the openness of a platform influences market potential. We examine openness at three levels – provider, technology, and user level – and ask the question: to what extent can opening (or closing) each level increase or decrease a platform’s market potential? The provider level recognizes the strategic involvement of key stakeholders that provide a platform. The technology level is concerned with the interoperability of a platform across different technologies. The user level relates to what extent a platform discriminates different segments of the customer base. On the basis of analytical modeling and theoretical analysis, we formulate four propositions concerning the effects of openness on platforms’ market potential. We illustrate the strength of propositions through a confirmatory case study, which is informed by five theoretically sampled cases. The cases illustrate cogently the effects of opening different levels of a multi-sided platform. In conclusion, we propose a decision model that can assist decision making concerning the opening of a platform to catalyze its growth.

Keywords: mobile platforms; multi-sided; openness; market potential; critical mass; ignition; mobile payments

Suggested Citation

Ondrus, Jan and Collis, Avinash and Lyytinen, Kalle J., The Impact of Openness on the Market Potential of Multi-Sided Platforms: A Case Study of Mobile Payment Platforms (March 24, 2015). Journal of Information Technology, Vol. 30, Issue 3, pp. 260-275, 2015 , Available at SSRN: https://ssrn.com/abstract=2636266

Jan Ondrus (Contact Author)

ESSEC Business School ( email )

3 Avenue Bernard Hirsch
CS 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France

Avinash Collis

University of Texas at Austin - McCombs School of Business ( email )

Austin, TX
United States

HOME PAGE: http://www.avinash.info

Kalle J. Lyytinen

Case Western Reserve University - Weatherhead School of Management ( email )

10900 Euclid Ave.
Cleveland, OH 44106-7235
United States

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