Digital Platform Ecosystems and Competitive Advantage: A Strategic Management Perspective
Keywords:
digital platforms, ecosystems, competitive advantage, openness, network effects, platform governanceAbstract
Digital platforms compete not only through their own products but through the ecosystems of complementors they attract, and the central strategic choice is how open to make the platform. Greater openness accelerates complement growth and the network effects that follow, but it weakens control over quality and dilutes the platform owner’s capture of value. This paper develops a strategic management account of platform competitive advantage that treats openness as a lever with opposing effects, and examines it in a simulation of two competing platforms over 60 periods and 30 runs. The focal platform’s openness is varied at 0.2, 0.5 and 0.8 against a rival fixed at 0.5. Low openness leads to a declining user share that settles near 38%; matching the rival holds share at 50%; high openness yields a rising share that reaches 53%, with the advantage emerging slowly because complement growth compounds. The paper locates the sources of platform advantage in network effects, complement variety and governance quality, argues that the openness decision must be evaluated over a horizon long enough for compounding to show, and discusses the conditions under which the quality-control cost of openness outweighs its growth benefit. A research agenda for empirical work on ecosystem governance is proposed.
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