IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v131y2021icp196-205.html
   My bibliography  Save this article

How machine learning activates data network effects in business models: Theory advancement through an industrial case of promoting ecological sustainability

Author

Listed:
  • Haftor, Darek M.
  • Costa Climent, Ricardo
  • Lundström, Jenny Eriksson

Abstract

A firm’s business model accounts for direct and indirect network effects, where the network size is a key enabler of value creation and appropriation. Additional conception of a business network’s contribution is provided by a recent advancement of the theory of data network effects, where machine learning is used to analyze large data sets to learn, predict, and improve. The more learning there is, the more value is generated, producing ever more data and learning and creating a virtuous circle. For the first time, this study combines the theory of data network effects with business model theory. The contribution lies in extending a business model’s lock-in effects through direct and indirect network effects to encompass data network effects. This paper provides a case study that supports the theoretical advancement and illustrates how this form of machine learning can increase profitability while reducing negative ecological impacts in an industrial context.

Suggested Citation

  • Haftor, Darek M. & Costa Climent, Ricardo & Lundström, Jenny Eriksson, 2021. "How machine learning activates data network effects in business models: Theory advancement through an industrial case of promoting ecological sustainability," Journal of Business Research, Elsevier, vol. 131(C), pages 196-205.
    • Handle: RePEc:eee:jbrese:v:131:y:2021:i:c:p:196-205
    DOI: 10.1016/j.jbusres.2021.04.015
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S014829632100254X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2021.04.015?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    2. Matthew T. Clements & Hiroshi Ohashi, 2005. "Indirect Network Effects And The Product Cycle: Video Games In The U.S., 1994–2002," Journal of Industrial Economics, Wiley Blackwell, vol. 53(4), pages 515-542, December.
    3. Sivarajah, Uthayasankar & Kamal, Muhammad Mustafa & Irani, Zahir & Weerakkody, Vishanth, 2017. "Critical analysis of Big Data challenges and analytical methods," Journal of Business Research, Elsevier, vol. 70(C), pages 263-286.
    4. Christoph Zott & Raphael Amit, 2008. "The fit between product market strategy and business model: implications for firm performance," Strategic Management Journal, Wiley Blackwell, vol. 29(1), pages 1-26, January.
    5. Herbert A. Simon, 1996. "The Sciences of the Artificial, 3rd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691914, December.
    6. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, June.
    7. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2003. "Is performance driven by industry‐or firm‐specific factors? A new look at the evidence," Strategic Management Journal, Wiley Blackwell, vol. 24(1), pages 1-16, January.
    8. Church Jeffrey & Gandal Neil & Krause David, 2008. "Indirect Network Effects and Adoption Externalities," Review of Network Economics, De Gruyter, vol. 7(3), pages 1-22, September.
    9. Farrell, Joseph & Saloner, Garth, 1986. "Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation," American Economic Review, American Economic Association, vol. 76(5), pages 940-955, December.
    10. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    11. Anita M. McGahan & Michael E. Porter, 2002. "What Do We Know About Variance in Accounting Profitability?," Management Science, INFORMS, vol. 48(7), pages 834-851, July.
    12. Parayre, Roch, 1995. "The strategic implications of sunk costs: A behavioral perspective," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 417-442, December.
    13. Kevin J. Boudreau, 2012. "Let a Thousand Flowers Bloom? An Early Look at Large Numbers of Software App Developers and Patterns of Innovation," Organization Science, INFORMS, vol. 23(5), pages 1409-1427, October.
    14. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    15. Bharat N. Anand & Tarun Khanna, 2000. "Do firms learn to create value? The case of alliances," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 295-315, March.
    16. Hal R Varian, 2014. "Beyond Big Data," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 49(1), pages 27-31, January.
    17. Christoph Zott & Raphael Amit, 2007. "Business Model Design and the Performance of Entrepreneurial Firms," Organization Science, INFORMS, vol. 18(2), pages 181-199, April.
    18. Richard P. Rumelt, 1991. "How much does industry matter?," Strategic Management Journal, Wiley Blackwell, vol. 12(3), pages 167-185, March.
    19. Feng Zhu & Qihong Liu, 2018. "Competing with complementors: An empirical look at Amazon.com," Strategic Management Journal, Wiley Blackwell, vol. 39(10), pages 2618-2642, October.
    20. Danny Miller, 1992. "Environmental Fit Versus Internal Fit," Organization Science, INFORMS, vol. 3(2), pages 159-178, May.
    21. Allan Afuah, 2000. "How much do your co‐opetitors' capabilities matter in the face of technological change?," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 397-404, March.
    22. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-841, August.
    23. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & David P. McIntyre & Arati Srinivasan, 2017. "Networks, platforms, and strategy: Emerging views and next steps," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 141-160, January.
    24. Raghu Garud & Henri A. Schildt & Theresa K. Lant, 2014. "Entrepreneurial Storytelling, Future Expectations, and the Paradox of Legitimacy," Organization Science, INFORMS, vol. 25(5), pages 1479-1492, October.
    25. Raphael Amit & Christoph Zott, 2001. "Value creation in E‐business," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 493-520, June.
    26. Clements, Matthew T., 2004. "Direct and indirect network effects: are they equivalent?," International Journal of Industrial Organization, Elsevier, vol. 22(5), pages 633-645, May.
    27. Kulins, Christopher & Leonardy, Hannes & Weber, Christiana, 2016. "A configurational approach in business model design," Journal of Business Research, Elsevier, vol. 69(4), pages 1437-1441.
    28. Jeffrey H. Dyer & Kentaro Nobeoka, 2000. "Creating and managing a high‐performance knowledge‐sharing network: the Toyota case," Strategic Management Journal, Wiley Blackwell, vol. 21(3), pages 345-367, March.
    29. David J. Teece & Gary Pisano & Amy Shuen, 1997. "Dynamic capabilities and strategic management," Strategic Management Journal, Wiley Blackwell, vol. 18(7), pages 509-533, August.
    30. Feng Zhu & Marco Iansiti, 2012. "Entry into platform‐based markets," Strategic Management Journal, Wiley Blackwell, vol. 33(1), pages 88-106, January.
    31. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wai-Ming To, 2022. "A Bibliometric Analysis of World Issues—Social, Political, Economic, and Environmental Dimensions," World, MDPI, vol. 3(3), pages 1-20, August.
    2. Ji-Hyun Lee & Su-Yol Lee, 2022. "Effect of the Absence of Unethical Controlling Shareholders on Firm Value and the Moderating Role of Corporate Governance: Evidence from South Korea," Sustainability, MDPI, vol. 14(6), pages 1-15, March.
    3. Haftor, Darek. M. & Climent Costa, Ricardo, 2023. "Five dimensions of business model innovation: A multi-case exploration of industrial incumbent firm’s business model transformations," Journal of Business Research, Elsevier, vol. 154(C).
    4. Rômy Bergman & Antragama Ewa Abbas & Sven Jung & Claudia Werker & Mark de Reuver, 2022. "Business model archetypes for data marketplaces in the automotive industry," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 747-765, June.
    5. Krämer, Jan & Shekhar, Shiva & Hofmann, Janina, 2022. "Regulating Algorithmic Learning in Digital Platform Ecosystems through Data Sharing and Data Siloing: Consequences for Innovation and Welfare," 31st European Regional ITS Conference, Gothenburg 2022: Reining in Digital Platforms? Challenging monopolies, promoting competition and developing regulatory regimes 265645, International Telecommunications Society (ITS).
    6. Katherinne Salas-Navarro & Paula Serrano-Pájaro & Holman Ospina-Mateus & Ronald Zamora-Musa, 2022. "Inventory Models in a Sustainable Supply Chain: A Bibliometric Analysis," Sustainability, MDPI, vol. 14(10), pages 1-21, May.
    7. Roberta Angelis, 2022. "Circular Economy Business Models: a Repertoire of Theoretical Relationships and a Research Agenda," Circular Economy and Sustainability,, Springer.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Costa Climent, Ricardo & Haftor, Darek M., 2021. "Business model theory-based prediction of digital technology use: An empirical assessment," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    2. Costa Climent, Ricardo & Haftor, Darek M., 2021. "Value creation through the evolution of business model themes," Journal of Business Research, Elsevier, vol. 122(C), pages 353-361.
    3. Seok-Soo KIM, 2021. "Sustainable Growth Variables by Industry Sectors and Their Influence on Changes in Business Models of SMEs in the Era of Digital Transformation," Sustainability, MDPI, vol. 13(13), pages 1-21, June.
    4. Haftor, Darek. M. & Climent Costa, Ricardo, 2023. "Five dimensions of business model innovation: A multi-case exploration of industrial incumbent firm’s business model transformations," Journal of Business Research, Elsevier, vol. 154(C).
    5. Zeng, Jing & Khan, Zaheer & De Silva, Muthu, 2019. "The emergence of multi-sided platform MNEs: Internalization theory and networks," International Business Review, Elsevier, vol. 28(6), pages 1-1.
    6. Bruno Jullien & Alessandro Pavan & Marc Rysman, 2021. "Two-sided markets, pricing, and network effects," Post-Print hal-03828345, HAL.
    7. Shi, Xianwei & Liang, Xingkun & Luo, Yining, 2023. "Unpacking the intellectual structure of ecosystem research in innovation studies," Research Policy, Elsevier, vol. 52(6).
    8. Inoue, Yuki, 2021. "Indirect innovation management by platform ecosystem governance and positioning: Toward collective ambidexterity in the ecosystems," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    9. Liu, He & Li, Xuerong & Wang, Shouyang, 2021. "A bibliometric analysis of 30 years of platform research: Developing the research agenda for platforms, the associated technologies and social impacts," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    10. Yan Jingwen & Azmawani Abd Rahman & Tong Tong, 2022. "Research on the Impact of BMI on Enterprise Performance Based on the Antecedence of Risk Perception," Sustainability, MDPI, vol. 14(23), pages 1-22, November.
    11. Cenamor, Javier, 2021. "Complementor competitive advantage: A framework for strategic decisions," Journal of Business Research, Elsevier, vol. 122(C), pages 335-343.
    12. Joost Rietveld & J. P. Eggers, 2018. "Demand Heterogeneity in Platform Markets: Implications for Complementors," Organization Science, INFORMS, vol. 29(2), pages 304-322, April.
    13. Joan Enric Ricart & Yuliya Snihur & Carlos Carrasco-Farré & Pascual Berrone, 2020. "Grassroots Resistance to Digital Platforms and Relational Business Model Design to Overcome It: A Conceptual Framework," Strategy Science, INFORMS, vol. 5(3), pages 271-291, September.
    14. Jan Frederic Nerbel & Markus Kreutzer, 2023. "Digital platform ecosystems in flux: From proprietary digital platforms to wide-spanning ecosystems," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-20, December.
    15. Banerji, A. & Dutta, Bhaskar, 2009. "Local network externalities and market segmentation," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 605-614, September.
    16. Gastón Llanes & Andrea Mantovani & Francisco Ruiz-Aliseda, 2019. "Entry into Complementary Good Markets with Network Effects," Strategy Science, INFORMS, vol. 4(4), pages 262-282, December.
    17. van de Kaa, Geerten & Papachristos, George & de Bruijn, Hans, 2019. "The governance of platform development processes: A metaphor and a simulation model," Technological Forecasting and Social Change, Elsevier, vol. 138(C), pages 190-203.
    18. Daniel Birke, 2009. "The Economics Of Networks: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 762-793, September.
    19. Edward G. Anderson & Geoffrey G. Parker & Burcu Tan, 2014. "Platform Performance Investment in the Presence of Network Externalities," Information Systems Research, INFORMS, vol. 25(1), pages 152-172, March.
    20. M. Moore, 2021. "Collaboration in Coworking Spaces: Impact on Firm Innovativeness and Business Models," Papers 2111.09866, arXiv.org.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:131:y:2021:i:c:p:196-205. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.