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The Resource-Based View of Competitive Advantage in Two-Sided Markets

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  • Mingchun Sun
  • Edison Tse

Abstract

Using two-sided markets as a specific market context, we show that cross-group network effects can turn the participants of a two-sided network into critical resources. In two-sided markets such as payment cards and personal computer operating systems, two groups of agents interact with each other via a common network platform; the value of joining the network for agents in one group depends on the number of participants in the other group. In these markets, resource heterogeneity is represented by different sizes of existing networks; resource accumulation possesses all five characteristics of asset-stock accumulation summarized by Dierickx and Cool. The unique resource accumulation process provides an isolating mechanism for large networks to sustain their resource and competitive advantages. Using two dynamic systems models, we show that resource heterogeneity (i.e. varying initial network sizes) is a source of sustained competitive advantage for two-sided networks and has significant impact on long-term competition dynamics. The findings illustrate the importance of incorporating market context in the research of the resource-based view of competitive advantage. Copyright (c) Blackwell Publishing Ltd 2009.

Suggested Citation

  • Mingchun Sun & Edison Tse, 2009. "The Resource-Based View of Competitive Advantage in Two-Sided Markets," Journal of Management Studies, Wiley Blackwell, vol. 46(1), pages 45-64, January.
  • Handle: RePEc:bla:jomstd:v:46:y:2009:i:1:p:45-64
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    References listed on IDEAS

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    Cited by:

    1. Michael Vogelsang, 2010. "Dynamics of two-sided internet markets," International Economics and Economic Policy, Springer, vol. 7(1), pages 129-145, May.
    2. Buckley, Peter J. & Elia, Stefano & Kafouros, Mario, 2014. "Acquisitions by emerging market multinationals: Implications for firm performance," Journal of World Business, Elsevier, vol. 49(4), pages 611-632.
    3. Gordon Burtch & Jui Ramaprasad, 2016. "Assessing and Quantifying Local Network Effects in an Online Dating Market," Working Papers 16-05, NET Institute.
    4. repec:gam:jsusta:v:9:y:2017:i:5:p:734-:d:97388 is not listed on IDEAS
    5. repec:eee:jbrese:v:84:y:2018:i:c:p:114-124 is not listed on IDEAS
    6. Musso, Fabio & Francioni, Barbara, 2011. "Foreign Markets Entry Mode Decision for Italian Small and Medium-Sized Enterprises," MPRA Paper 50067, University Library of Munich, Germany, revised 31 Oct 2011.
    7. Charlotte Krychowski & Bertrand Quelin & Bulat Sanditov, 2017. "Experimenting business models with network effects : a real options perspective," Post-Print hal-01582498, HAL.
    8. Kölln, Volker, 2011. "Produktdiffusion in TIMES-Märkten: Innovation, Kompatibilität und Timing bei Netzeffektgütern," Discussion Papers on Strategy and Innovation 11-01, Philipps-University Marburg, Department of Technology and Innovation Management (TIM).
    9. Charlotte Krychowski & Bertrand Quelin & Bulat Sanditov, 2017. "Experimenting business models with network effects : a real options perspective," Grenoble Ecole de Management (Post-Print) hal-01582498, HAL.
    10. Musso, Fabio & Francioni, Barbara, 2009. "Foreign markets entry mode decision for SMEs. Key factors and role of industrial districts," MPRA Paper 32153, University Library of Munich, Germany.
    11. Jan KRÄMER & Michael WOHLFARTH, 2015. "Regulating Over-the-Top Service Providers in Two-Sided Content Markets: Insights from the Economic Literature," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(99), pages 71-90, 3rd quart.

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