Leveraging Value Creation to Drive the Growth of B2B Platforms

Abstract

Platforms are ubiquitous, and their adoption is on the rise in the business to business (B2B) world. However, economic theory characterizing the drivers their adoption has lagged. In the few cases where B2B platforms have been explicitly examined, it is often assumed that they can be understood using principles developed from the study of business to consumer (B2C) platforms. However, the two types of platforms have important differences that often require different managerial policies. To address this gap, we apply a value creation lens, grounded in theory, that creates a better understanding of the dynamics of platform creation and growth by separating the platform’s value into three components: (1) the standalone value of the product, such as a smartphone’s ability to take pictures, (2) the value of other participants on the platform, such as the number of friends on Facebook or Instagram, and (3) the value created by complementary products from 3rd-party providers, such as apps for a smartphone. A dynamic perspective explores the trajectory of differences in value between B2B and B2C platforms along with managerial implications.

Keywords: Platforms, Business to Business, Value Creation, Launch, Scale

JEL Classification: m11, m15, O33, L23