Dynamics in Platform Ecosystems

Platform business models are gaining rapid traction in today’s world. As of 2016, the four most valuable companies—Apple, Google, Amazon and Microsoft—have been using this business model. So do some of the most promising start-ups, including Uber and AirBnB. These providers of multi-sided platforms have a common goal, which is to match producers and consumers in order to create value through their interactions. The evolving ecosystems around a platform business are characterized by network effects among the groups of stakeholders, as each market side is influenced by the other side of the platform. A goal of the platform owner is to create and exploit as many monetization opportunities as possible. As the main revenue source, usually, is based on the interactions on or access to the platform, managing the demand and the supply side is at the core of platform management. One example of an uprising area of business that leverages a platform business model is crowdfunding platforms. These multi-sided markets try to facilitate the interaction of individuals who seek funding for a specific project, with a crowd of people that is willing to invest in the idea. The idea behind the model has been around for a long time, but due to reduced transaction cost is now available on a global scale. As of November 2016, Kickstarter, one of the most famous players in the business of reward-based crowdfunding, has already raised 2.7 billion USD in total pledges and has funded over 114,000 projects. This dissertation tries to shed light on the dynamics that are at work in a platform ecosystem by investigating distinct behaviors of platform participants and observing the impact on other stakeholders and the platform ecosystem as a whole. Each of the papers included in this dissertation focuses on a certain participant or dynamic of the platform ecosystem. With the first article, the theoretical basis of asymmetric information between consumers and producers in a crowdfunding environment is established. Furthermore, it shows that the opinion expressed in the form of electronic Word-of-Mouth (eWOM) and the observable popularity information (e.g. decision-making of other participants) serve as credible quality signals, subsequently influencing consumers’ decision-making. Also, popularity information and eWOM differ significantly in terms of effectiveness over time. Both factors, eWOM and popularity information, can therefore be seen as means to reduce information asymmetries in platform ecosystems. Since the importance of popularity information and eWOM is known to producers, an incentive to manipulate these performance indicators can be deducted. We therefore suspected that producers might establish non-genuine indicators of eWOM or popularity information. Article 2 then identifies a manipulation strategy of project creators on Kickstarter, who illegally alter the number of Facebook Shares their campaign supposedly has. After identifying the fraudulent campaigns, we were able to observe the resulting effects of non-genuine social information on consumer decision-making over time, showing that a short-term gain can be achieved, whereas the total effect is indeed harmful to the campaign. Contrary to the deliberately fake social information sent by the producers, the third article then concerns non-explicit campaign characteristics in the form of personality traits of producers. Here we were able to extract the Big Five personality traits of a project creator from the campaign description and the included video and to analyze their effectiveness for influencing potential consumers. The influence was measured by means of project adoption by the crowd and diffusion on Facebook. Finally, article 4 investigates a governance decision made by the platform provider. Under the condition of a natural experiment, we were able to observe and analyze how a policy change by the platform owner with regard to their gatekeeping strategy can influence a platform ecosystem as a whole, as well as certain participants in particular. The policy change, made by Kickstarter in 2014, lowered the barrier for entering the platform for pro-ject creators, resulting in a shift in average quality, number of projects and platform revenue. Implications for future research and practice are discussed in depth for each article and summarized in the final chapter.