Disentangling the Digital Platform - A qualitative study on the value creation of digital platforms

Abstract: Digital platforms disrupt industries through new ways of creating consumer value and in the past decade they have had a significant impact on incumbents' competitive position. However, there is still a lack of research regarding the underlying dynamics of digital platforms and how key variables interlink and affect each other. As such, there is some ambiguity regarding the value creation process of digital platforms and how they alter the value chain in their respective industries. To disentangle the underlying value creating factors on digital platforms, we opted to study two newly started peer-to-peer platform firms in Sweden as our empirical setting. After a thorough literature review combined with our empirical findings, we derived at a framework which depicts key variables for value creation on digital platforms and their relation to each other. This study complements prior research by highlighting which factors are responsible for digital platform value creation. Key findings included financial benefits, efficiency and convenience as important value drivers. In addition, through their ecosystem, business model and network effects, platform companies can achieve competitive advantages over their industry incumbents. Furthermore, the empirical data showed that there are underlying infrastructural factors which indirectly enables a digital platform to create value, namely industry dynamics, the sharing economy, partnerships and trust.