Seven of the top ten most valuable private companies worldwide are online platforms that thrive on the disruption of traditional business models. Surprisingly, however, such platforms have received little attention in the operations management (OM) literature. To fill this gap, HKUST’s Professor Ying-Ju Chen and Dr Shihong Xiao, alongside their international co-authors, set out “to examine the strategic and operations issues arising from various online platforms.” By defining and classifying key types of online platform and how they create value, the authors were able to suggest a number of exciting directions for future OM research.
Although online platforms, as “digital marketplaces,” have real competitive advantages over traditional businesses, they are also prone to failure. The success of a virtual platform “hinges on the value it creates for user groups,” note the authors. To enhance this value, they explored ways in which OM research can “mitigate the major risk factors” associated with the five main types of platform.
Beginning with resource-sharing platforms such as Airbnb and Uber, the authors wondered whether a platform gains more value from setting prices itself or giving that power to users. Surge pricing also “deserves further examination,” the authors note. They recommend examining interactions between platforms and regulators and ways to build loyalty between providers and customers.
Matching platforms such as e-Harmony and Careerbuilder empower users to establish relationships with others. OM research could help such platforms to optimize their matching and recommendation mechanisms, such as by imposing “a fee for initiating communication.” To reflect users’ complex choices and behavior, the authors add, “future research can incorporate richer searching and matching dynamics.”
Crowdsourcing platforms such as InnoCentive would benefit from investigating “how to create value for both solvers and seekers,” the authors tell us. They suggest several key questions for OM research. How should a problem be defined to gain the most value from an innovation contest? What is the impact of search friction? How can platforms guide seekers and solvers and build their loyalty?
Yelp and other review sites should enable businesses to continuously improve in response to customer feedback. OM research can help such platforms to create value for both firms and customers. It can enable firms to “attract more potential customers with better reviews,” say the authors, and offer customers a low-cost way of searching for products and services.
For Kickstarter and similar crowdfunding sites, scholars could explore how platform design impacts user interactions and value creation. Another area the authors find very exciting is “how to leverage smart contracts to reduce outcome uncertainty and increase allocation efficiency.” OM scholars could also help these sites determine how to boost and reward their users’ loyalty.
Finally, the authors suggest several questions to further inspire research. Might blockchain technology aid in building trust online? What benefits are offered by mobile platforms, such as real-time geo-location monitoring? How can validation by peers or experts help to resolve the problem of fake reviews? “As digital platforms continue to flourish in the business world,” the authors conclude, “an excellent opportunity arises for OM researchers to make an impact in this important field.”