Mechanism of Boundary Shaping in Digital Platform Enterprises:An Embedded Case Study
Digital platform enterprises are becoming important organizational forms,and how to shape their business boundaries during their development is a critical strategic issue.These enterprises leverage digital technology infrastructure to create building blocks that support user activities,harnessing network effects to enhance transactional and innovative efficiency.Digital platform enterprises connect supply and demand sides,and boundary strategies of"Make"and"Buy"can be delineated according to whether they implement self-operation for supplier businesses.Divergent viewpoints and practices exist among firms:some advocate providing"building blocks"for direct connections between supply and demand,opting for the"Buy"strategy—exemplified by eBay and Taobao,while others,such as Amazon and Ctrip,advocate implementing self-operation for supplier products and services to expedite platform launch,thereby embracing the"Make"strategy.The choice between"Make"and"Buy"as boundary-shaping strategies represents a novel extension of the traditional corporate boundary decision-making issue within the platform context.It raises questions about the applicability of existing boundary decision mechanisms.Corporate boundary decision-making refers to the strategy adopted by a company to decide whether to"Make"or"Buy"in a certain business,with typical cases including whether General Motors should implement"Make"for car body manufacturing.In the past,there have been two main theoretical perspectives in corporate boundary research:transaction cost theory and resource-based theory.Are these two major theoretical mechanisms still applicable in the context of digital platforms?In the field of platform research,the analysis of the boundary of digital platform enterprises is still very limited.This study aims to investigate how digital platform enterprises shape their boundaries during their development.In response to this process-oriented research issue,this paper adopts a case study method that matches it.Based on the theoretical sampling principle,six business units in the development of Alibaba and Ctrip,two digital platform enterprises,are selected for inductive analysis.E-commerce is a typical representative of Chinese digital platform enterprises,and Alibaba and Ctrip are leading enterprises in their respective fields.The two companies have undergone various business expansions in their development,exhibiting strategic differences of"Make"or"Buy"on different businesses,which can provide rich materials for cross-case comparative analysis.Our findings reveal distinct boundary-shaping mechanisms employed by platform businesses at different developmental stages.At the stage of breaking through the critical mass,enhancing user stickiness,and expanding the ecosystem,boundary shaping is dominated by the transaction cost mechanism,the interaction mechanism between transaction cost or resource capability and network effects,and the resource mechanism,respectively.Moreover,the evolution of boundary-shaping mechanisms is closely linked to platform transactions and innovation attributes,suggesting the need for digital platform enterprises to adopt a dynamic approach to boundary-shaping strategies.Especially in the context of industrial digitization,digital platform enterprises should not just stay in matching supply and demand,but need deeper involvement.This paper,from the perspective of the platform process,analyzes the mechanisms affecting the boundary shaping of digital platform enterprises,and expands the understanding of the applicability of classic boundary shaping mechanisms by introducing platform network effect characteristics.
digital platform enterprisesboundary shapingtransaction costresource-based viewnetwork effect
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