TP2.4: Business Models of Platform Providers

Subproject manager
Prof. Dr. Helmut Krcmar
Researcher
Andreas Hein


The goal of subproject 2.4 is to develop a configurable business model for the sustainable operation of the mobility platform of the TUM Living Lab Connected Mobility. The platform should enable collaboration with a variety of partners ranging from governmental organizations to startups. Further, the integration of additional users should be feasible.

1. What is the state of research on business models for the operation of platforms?
The platform research focuses currently on three main concepts:
(1) The economic concepts of Two-Sided Markets or Multi-Sided Platforms incorporate network externalities, multi-homing effects, platform envelopment, and pricing strategies.
(2) The technical concept of a Software Platform focuses on standardization, modularization, and value co-creation.
(3) Lastly, platform governance mechanisms orchestrating economic and technical aspects within the platform ecosystem.
Figure 1 summarizes the economic and technical aspects for a platform.

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Figure 1: Concept of a Digital Platform.
Source: Own Illustration According to (1), (2) & (3)
 
Figure 2 is the result of a literature review showing eleven different components of a platform business model. Value Proposition, Value Creation, and the Revenue Model include value-based components. These can be directed inside or outside and describe the value creation and value capture of a platform. The next five elements of a platform business model include the governance mechanisms, organizational & technology design, as well as openness, and lifecycle management. Finally, the study complements three further components. They are divided into customer relationship management & targeting and competition based considerations. All components are summarized in Figure 2.
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Figure 2: Components of a Platform Business Model
Source: (Schweiger et al. 2016)
 
2. What are the components of a configurable business model for the mobility platform of the TUM Living Lab Connected Mobility?

The main components of a mobility platform business model are summarized in Figure 2. However, also contextual information about the ecosystem and the underlying services are of importance to develop a configurable business model. The research shows an exemplary platform mobility ecosystem and sheds light on the actors involved in a mobility service ecosystem (see Figure 3).
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Figure 3: Concept of a Mobility Service Ecosystem
Source: (Riasanow et al. 2017 – to be published at ECIS 2017)
 

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Table 1: Components of a Mobility Service Ecosystems


The Mobility Services ecosystem shown in Figure 3 is the result of a quantitative survey of over 650 companies in the automotive sector. Using the e3 research methodology for the development of business models, Figure 3 presents the first concept for value creation within a mobility ecosystem. Various components or actors (see Table 1) of the business model were identified. Overall, the results provide an indication for the actors needed to design a configurable business model for mobility platforms.
A further component of the configurable business model are the underlying services. To this end, the Technical University is currently cooperating with a practice partner to develop an artifact using Design Science to describe essential mobility services in the context of platforms. The results provide insight into the functioning of mobility platforms and form the basis for further research in the area of governance mechanisms.


3. How can the sustainability of the business model be ensured?

The last research question aims to ensure flexibility of the platform business model. Thus, the research takes account for the influence of turbulent markets with the help of a scalable ecosystem. In detail, further research targets to identify contextual influence factors and incorporate them into the mobility platform business model.

Publications

1. Hein, Andreas; Scheiber, Markus; Böhm, Markus; Weking, Jörg; Rocznik, Dorothee; Krcmar, Helmut. “Toward a Design Framework for Service-Platform Ecosystems.” Twenty-Sixth European Conference on Information Systems (ECIS 2018), 2018 Portsmouth, UK
2. Hein, Andreas; Böhm, Markus; Krcmar, Helmut. “Tight and Loose Coupling in Evolving Platform Ecosystems: The Cases of Airbnb and Uber.” Twenty-First International Conference on Business Inormation Systems (BIS). Published in: Lecture Notes in Business Information Processing (2018)
3. Hein, Andreas; Böhm, Markus; Krcmar, Helmut. “Platform Configurations within IS Research: A Literature Review on the Example of IoT Platforms.” Multikonferenz Wirtschaftsinformatik, 2018 Lüneburg, Germany.

Literature

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Baldwin, C. Y., & Woodard, C. J. (2009). The architecture of platforms: A unified view. In A. Gawer (Ed.), Platforms, Markets and Innovation. Cheltenham, UK and Northampton, US: Edward Elgar.
Boudreau, K., & Hagiu, A. (2008). Platform rules: Multi-sided platforms as regulators. In A. Gawer (Ed.), Platforms, Markets and Innovation. Cheltenham, UK and Northampton, US: Edward Elgar.
Caillaud, B., & Jullien, B. (2003). Chicken & egg: Competition among intermediation service providers. RAND journal of Economics, 309-328.
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Hagiu, A. (2006). Pricing and commitment by two‐sided platforms. The RAND journal of economics, 37(3), 720-737.
Hein, A., Schreieck, M., Wiesche, M., & Krcmar, H. (2016). Multiple-Case Analysis on Governance Mechanisms of Multi-Sided Platforms. Paper presented at the Multikonferenz Wirtschaftsinformatik, Ilmenau.
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Schreieck, M., Wiesche, M., & Krcmar, H. (2016). Design and Governance of Platform Ecosystems–Key Concepts and Issues for Future Research. Paper presented at the European Conference on Information Systems, Istanbul, Turkey.
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Tiwana, A. (2013). Platform ecosystems: aligning architecture, governance, and strategy: Elsevier Inc.
Tiwana, A., Konsynski, B., & Bush, A. A. (2010). Research commentary—Platform evolution: Coevolution of platform architecture, governance, and environmental dynamics. Information Systems Research, 21(4), 675-687.