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Volume XVI Number 1
January - March 2019
ISSN 0973 - 3167
SCMS COCHIN SCHOOL OF BUSINESS, INDIA
SCMS JOURNAL
OF
INDIAN MANAGEMENT
UGC Recognized
Estd. 1976
®Re-Visiting the Relevance of PLC Theory: A Delphi Based Analysis
Uday Salunkhe, D.N.Murthy and C.N.Narayana
Estimating Volatility: GARCH Model for BSE SENSEX
Abhijit Biswas
Platform Economy: Evidence from Indian Market
Riya Shah and Samik Shome
Effect of Valuation and Growth: Stock Market Returns
Pradeep K. V. and S. Hariharan
Determinants of Capital Structure: Evidence from Listed Manufacturing Companies
in Sri Lanka
Mayuri T. and Kengatharan L.
Meta-analysis of Leadership Styles and Follower's Performance
Sakshi Sharma and Manju Nair
Portable Solar Lanterns in Guwahati
Sinmoy Goswami
Role of Product Experience in Product Purchase: Indian Users
Toney Sebastian, Pradeep G. Yammiyavar, and Stevan Jones
Measurement Scale of Tourism Destination competitiveness: Supply Side Perspectives
Saurabh Gupta and Anurag Singh
Identifying Enablers of Social Entrepreneurship: Interpretive Structural Modelling
Prigya Rawat, Vijay Kumar Jain, and Pankaj Chamola
January - March 2019, Vol. XVI, Issue No. 1
5Re-Visiting the Relevance of PLC Theory: A Delphi Based Analysis
Uday Salunkhe, D.N.Murthy and C.N.Narayana
14 Estimating Volatility: GARCH Model for BSE SENSEX
Abhijit Biswas
23 Platform Economy: Evidence from Indian Market
Riya Shah and Samik Shome
33 Effect of Valuation and Growth: Stock Market Returns
Pradeep K. V. and S. Hariharan
43 Determinants of Capital Structure: Evidence from Listed Manufacturing Companies
in Sri Lanka
Mayuri T. and Kengatharan L.
57 Meta-analysis of Leadership Styles and Follower's Performance
Sakshi Sharma and Manju Nair
77 Portable Solar Lanterns in Guwahati
Sinmoy Goswami
95 Role of Product Experience in Product Purchase: Indian Users
Toney Sebastian, Pradeep G. Yammiyavar, and Stevan Jones
105 Measurement Scale of Tourism Destination competitiveness: Supply Side Perspectives
Saurabh Gupta and Anurag Singh
117 Identifying Enablers of Social Entrepreneurship: Interpretive Structural Modelling
Prigya Rawat, Vijay Kumar Jain, and Pankaj Chamola
A Quarterly Journal
23
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Digitalisation has led to the emergence of technological advancement across the globe. The platform economy has
also arrived in business as a by-product of these technologies. This paper aims to study the influence of platform
economy with respect to the Indian market. The paper elucidates the transformation of organisations from traditional
to platform business model. This paper also introduces innovative categories of platforms which are present in the
Indian market. Such an approach is expected to create a fresh opportunity for business and scholars in strategizing
opportunities for the future.
Keywords: Digitisation, Platform, Indian market, Platform Ecosystem, Pipe business model, Multi-sided market,
Network effect.
SCMS Journal of Indian Management, January-March - 2019
Riya Shah
Research Scholar
Institute of Management
Nirma University
Ahmedabad.
Platform Economy:
Evidence from Indian Market
Samik Shome
Associate Professor
Institute of Management
Nirma University
Ahmedabad
24SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
he applications of cloud computing, big data, and
new algorithms have changed the nature of global
Tbusiness in the recent past. McKinsey study of 414
technology-focussed global companies indicated that
organizations nowadays are relying highly upon
information technology (IT) for help in driving growth.
Around 43 per cent of the executives of these companies feel
that IT-enabled business innovations can increase earnings
growth by more than 50 per cent by 2020 (Roberts and Sikes,
2012). According to the recent World Trade Report (2017),
extensiveness and penetration of the innovative
multidimensional technologies have the perspective to
transform complete systems of manufacturing, production,
and governance in any business. According to Evans and
Schmalensee (2016), there are six technologies including
powerful chips, programming languages, and operating
systems, internet, World Wide Web, broadband
communications, and cloud have expanded the scope of
connection. The concept of platform has also arrived in the
global business as a by-product of these technologies.
Evans and Gawer (2016) studied the Asian market and
identified 82 platforms (including 54 private ownership
platforms and 28 public ownership platforms) which are
supposed to be the largest number across the world.
According to them, China has 64 platform companies and
India with eight platform companies where New Delhi and
Bangalore have a cluster of platforms extending from three
to five platform companies. The total market capitalisation
of the companies was $930 billion with the 352 million
employees. There were 454 application developers in India
including 98 in New Delhi, 78 in Mumbai, 77 in Bangalore
and others in different cities of India (Kathuria et al., 2015;
Law, 2012) which makes India one of the emerging markets
of platforms and this study also try to understand the concept
of platform economy in Indian context.
In this backdrop, this paper has four objectives in specific:
(a) to examine the market transformation from the
traditional pipe business to platform model; (b) to identify
different types of platforms in current Indian market; (c) to
examine the consequences faced by the market due to
platforms; and, (d) to analyse the implications of the
platform economy for business and research.
The organization of the paper is as follows. Section 2 deals
with the transformation of the traditional pipe business
model to the platform business model and the revolution of
platforms from one-sided to the multi-sided platform with
the help of different concepts, definitions. Section 3 deals
with the different types of the platform present in the Indian
market followed by the consequences faced by the current
market due to the platform in Section 4. Section 5 analyse
the managerial and research implications. The concluding
remarks are presented in Section 6.
The Platform Economy: An Overview
One of the important technological grounds for the origin of
platform was in the mid-1990s by researchers of Netscape
Corporation. They developed the protocol for recognising
visitors to the web sites. The protocol involved insertion of a
small code known as cookie. By using these cookies, anyone
with the server can connect to the Internet to collect any data.
Further, cookies could be collected by the third party
providing services regarding payments, hosting, marketing
and other. So, cookies rapidly become an essential for
transacting and participating in online communities. As the
result of the technologies and digitalisation, platforms lead
to the emergence of new business and employment models
(Tiwana et al., 2010). Therefore, building a platform is a
major task for any business. However, platforms themselves
shape the work of others by facilitating digital locations for
the networks. Many authors have tried to explain the concept
of the platform based on their perception and studies.
According to Tiwana et al. (2010) the platform is a
“software-based system that provides core functionality
shared by the modules that interoperate with it and the
interfaces through which they interoperate”. Kenney and
Zysman (2016) defined the platform as a mediator of social
and economic interactions and are likely to describe the
digital era, with the three major building blocks; algorithm,
internet, and cloud. Similarly, Mattila and Seppala (2015)
explained that platforms are the structures that authorize
collaborators-users, peers, providers to commence a variety
of activities, often producing de facto standards, creating
whole ecosystems for value creation. Busch et al., (2016)
stated that platforms present as the main actor in the
transaction by providing the standard terms for the contract
between the parties. So, platform act as a 'remote control' for
the contractual relationship between the parties.
Platforms are algorithm-enabled “cyberplaces” where
elements like people or machinery can act or transact.
Platform economy incorporates a growing number of
digitally enabled activities in business, politics, and social
interaction (Kenney and Zysman, 2016). In other words, the
25SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
platform economy is the use of online platforms, which
decreases the transaction costs of labour outsourcing and
temporary access to goods and services (Drahokoupil and
Fabo, 2016). Platform also represents infrastructure-based
strategies for presenting friction into networks (Cohen,
2017).
Van Alstyne et al. (2016) and Evans (2003a) described a
platform as a provider of infrastructure and rules for a
marketplace that brings producers and consumers together.
Furthermore, platforms allow the consumers to become the
'prosumers' to offer not only goods but also services as Ola
consumers can also join the platform as a driver and provide
transportation services. For platforms, the information and
interaction are the main assets which ultimately create value
for a company and provide a competitive advantage over
other competitors prevailing in the market (Van Alstyne et
al., 2016). Platforms also take a central role as payment
service providers (Farrell, 2018) and reputation system
provider. The payment service provider is one taking care of
the process of transferring payments from customer to the
supplier and reputation system provider evaluate the
performance of both the parties with the help of ratings and
reviews. For example, Ola evaluates both the parties that are
driver and the rider via ratings.
The platform economy is said to get an end to 'markets for
lemons'. The users will not have to purchase the used product
which later turns out to be poorly serviced. Now, when the
platform provides rating to the service provider, the
incompetent and unskilled labour, or wanting electrician can
no longer be providing services. Additionally, 'real-life
profiles' on social media introduce innovative checks and
balances (Scholz, 2014). It can be argued that if the platform
operator only limits its role to facilitating a consumer and a
supplier, the platform operator may still have some more
duties as part of the intermediary. The duties can be meeting
of pre-contractual information duties about the goods and
services presented by the platform; duty to work as a
communicator of quality, offered services and many more
between the parties without any delay; duty to provide
appropriate business environment for supplier to operate.
The platform can become the leader by extending beyond its
own firm. The firm can aim to become the leader by building
and sustaining the ecosystem of partners in which the
platform leader become the captain (Evans and Gawer,
2016). The ecosystems encourage economies of scale
through interactions to build better businesses not the
volume. “Platform-enabled connected interactions” are at
the centre of the ecosystem. The composition of connections
enriches the value of ecosystem and built a community of
trust (Nichol, 2016).
The platforms are usually situated within broader eco
systems of firm, government, regulation and other
institutions (Evans and Schmalensee, 2016). However, all
the platforms have same basic structure and players in an
ecosystem. The players are the owners, the providers, the
producers and the consumers.
Figure 1: Traditional/Pipe business models vs. Platform driven business models
Source: Compiled by the authors
26SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
Figure 1 explains the platform ecosystem with respect to
Myntra, a company selling lifestyle products in India. For
Myntra, the owners are the one who control their intellectual
1
properties and governance which is Flipkart . So, all the
rights and control of the intellectual property is with
Flipkart. The providers serve as the platforms' interface
users which is Myntra app running on mobile devices,
desktop and any other electronic devices. The provider is
connecting producers and the customers. The producers are
the creator of the offerings which are vendors' providing
different products to customers. The consumers are the one
who uses the offerings. The platform and the producers as
well and consumers are continuously exchanges the value,
the data and the feedback.
There were few questions regarding the governance of the
platform ecosystem like how to divide value between
ecosystem participants, who have access to the platform,
how to solve the conflicts or how to manage diversified
objectives of each participant. The main aim of platform is to
create and sustain vibrant ecosystems. At the same time, the
policies must ensure the creation of value and participation
on the platform which can be increased by providing the
right mix of incentives to inspire new joining and
encouraging good behaviour of the participants.
In today's scenario, the companies based on platform hire
approx. 1.3 million employees with market capitalization of
$4.3 trillion by building platform ecosystems a critical
constituent of corporate strategy. Successful business
leaders appreciate the importance of platform-based
ecosystems which are reshaping traditional business models
as well as building new value (Nichol, 2016).
Several researchers have given different labels to this
platform economy based on their perceived attributes, viz.
sharing economy, creative economy, peer to peer economy,
on-demand economy, gig economy, the Precariat or
sometime 1099 Economy, collaborative sharing economy
among others. These names were given according to the
perceived booster of the digital platform (Kenney and
Zysman, 2016; Drahokoupil and Fabo, 2016).
Transformation of markets: From Pipe business model
to Platforms business model
Starting from the industrial-era economy, the mean for
undertakings of any barter or exchange was market. The
market became an ideal place of transaction between buyers
and sellers in which the price, quality, quantity, and
characteristics of goods and services were regulated by the
laws of demand and supply. Now, in the emerging economy,
the locus for those undertakings is the platform where
interactions are algorithmically as well as materially
intermediated (Cohen, 2017)
The traditional way of business known as the pipe business
has dominated the industry for centuries. However, with the
advent of information technology, the requirement to own
the physical structure and assets has significantly reduced.
Since the digital platforms are diverse in nature, structure,
and function, hence, the platform is also known as the digital
form of the pipe business.
In traditional pipe business model, the flow of value is linear
from a producer to consumer. Over the years manufacturing
and service sectors have followed the pipe business model
(Van Alstyne et al., 2016). However, a new concept of
platform is the plug-and-play infrastructure that enables and
harnesses this network flow of value.
1 In 2014 Myntra was acquired by Flipkart in an estimated Rs 2,000 crore deal. (Source:https://www.gadgetsnow.com/tech-news/Flipkart-acquires
Myntra/articleshow/35472797.cms accessed on May 2, 2018.
Features Pipe Business Model Platform Business Model
Focus
Growing sales
Maximum exchanges and interactions on
their platform
Direction
One way and Linear
Two -way and Continuous
Interaction
Direct interaction with the consumer Indirect interaction among providers and users
Network
Create Network effect
Face networking problems and service provider may suffer
Governance
More about creating barriers
Provide flexibilities to the parties
Value
Maximize the lifetime value of individual customer
Maximize the value of an growing ecosystem.
Resource control
Firm hold the resources -
tangible and
intangible assets
Network of producers and the consumer are
the chief resource or asset
Optimisation Internal optimisation External orientation and optimisation
Table 1: Pipe business model vs. Platform business model
27SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
Table 1 depicts the features of pipe and platform business
models regarding eight parameters viz. focus, direction,
interaction, network, governance, value, resource control,
and optimization.
Managers of traditional businesses emphasis on increasing
sales because for them the goods and services supplied are
the units of analysis. The major concerns are the revenues
and profit generated from sales. However, the focus shifts to
collaborations with intermediaries and the exchanges of
value between producers and consumers on the platform by
the new business model.
Source: Compiled by the authors
Figure 2: Myntra Platform Ecosystem
Figure 2 shows that in the pipe business model, the process
from production to distribution, marketing and finally
reaching to the customer is linear in nature and shows the
one-way process. The platform business model is two-way
directions from the platform to the whole platform
ecosystem.
In the pipe business model the network effect can be created,
but they would not face much problem as the pipe model is
the one-way model. However, in a platform, sometimes the
service provider may face the network effect as the positive
network effect can convert into negative network effect. For
the platform, the number of interactions and the related
network effects are the ultimate source of competitive
advantage.
In a pipeline business model the strategy circles around
erecting barriers. In the platform business model, the
emphasis of strategy moves to abolish barriers to production
and consumption to create value for participants. However,
the platform administrators must make two important
decisions about whom to allow on the platform and what are
they allowed to do on the platform.
In the pipe business model, the resource-based view of
competition includes tangible assets like infrastructure,
mines and many more and intangible assets like patents,
rights, and other intellectual properties. However, in the
platform business model, the assets are hard to copy as they
mostly include the community and the resources which
members of platform own and contribute. So, for platform
businesses the network of producers and consumers act as a
chief asset.
Pipeline firms organize their internal resources for value
creation by improving an entire chain of product activities.
However, value creation is been done by facilitating
interactions between external producers and consumers in
the platform. Apart from maximizing the lifetime value of
customers, the platforms seek to maximize the overall value
of a growing ecosystem by feedback-driven and iterative
process. Occasionally it requires subsidizing some type of
customer to appeal to another type.
Thus, the difference between the traditional businesses and
platform businesses become more visible because of the
higher flexibility and fragmentation of work, shifting the
way of monitoring the work, strategies for recruitment, and
the need for skills and training (De Groen et al., 2017). The
platform as a facilitator also transformed from the one-sided
platform to multi-sided platform as discussed below.
28SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
Ancient Roots: One-sided and Two-sided market
A one-sided market is a market that derives most of its value
from a single class of users. In this type of market, users can
get benefit from networking with a same group of users. For
example, instant messaging, in which everyone can receive
as well as send messages to each other and the
communication is on one to one basis.
Another type of market is a two-sided market, where the
network markets are encompassed of two discrete groups of
participants. In this type of market, both groups are required
to provide value for the network to operate, for example,
Dineout, a table reservation service provider for restaurants.
There are restaurants, and there are diners who have joined
this reservation platform. At any point of time, some of the
diners are looking for reservation ad some of the restaurants
have tables available. Dineout as a platform having the
software and database matches the restaurants and diners.
Hence, in other words, in two-sided markets, the user can get
benefits from networking with a separate as well as the
complementary group of users.
It is often observed that companies use both one-sided and
two-sided markets simultaneously to enhance their
business. Two prominent competitors in food retail in India
viz. Place of origin and Food memories are the example of
these strategies. They bring unique regional delicacies from
the most iconic and original producers from all over India at
the doorstep of customers. It is a two-sided market model as
they bring products from the smallest corners of the country
to the largest cities. However, for some products like sweets
and snacks, they bought at a wholesale price and sold for a
retail price in their brick and mortal store which is known as
a one-sided model. This distinction frequently rests on the
decisions of the intermediary rather than only on
technological attributes of the market.
One step ahead: Multi-sided market
There is no consensus on among organizations and
academicians on which characteristics a market must have
to be defined as a multi-sided market. However, in broad
terms, it is typically a market serve two or more distinct sets
of users, all of whom benefit from having each other on the
platform (Hagiu, 2009; Hagiu and Wright, 2015). It involves
more players in which each player has its interests to be
served. While a firm that is active in a multi-sided market
generally serves at least two distinct customer groups
(which constitute the different 'sides' of the market), most
definitions specify that indirect network effects are present
amongst those two or more customer groups. The existence
of those indirect network effects affects the mechanism of
price setting and competitive interaction in markets.
Hence, multi-sided markets are in nature interdependent.
For example, Justdial is a multi-sided platform providing
different services including hotel booking, cab booking,
flight booking and on-demand services like air conditioner
repairing or car cleaning, etc. It also provides online booking
of the train, bus, hotel, etc. Addition to that it provides online
shopping for books, grocery, flowers, food, medicine, etc. In
short, it consists of different sides of the market by providing
all the different types of services to the consumers at one
place.
There are three types of multi-sided platforms (a) Market-
Makers: facilitate members of different groups to transact
with each other; (b) Audience-Makers: match advertisers to
audiences; and, (c) Demand-Coordinators: create goods and
services which produce indirect network effects across two
or more groups (Evans, 2003b).
Multidimensional Network effects
A network can be defined as a means of organization in
which hubs and nodes facilitate the movements of
interaction and transactions (Cohen, 2017). The multi-sided
platform has led to study the role of network effect more
closely as it is one of the distinctive features of platforms
(Busch et al, 2016). From the very beginning markets and the
economy remain supply-side economies of scale. The
extensive fixed costs and less marginal cost help the firm
achieving higher sales volume than its competitors. The
supply side economy allows firms to decrease prices which
raise the volume and cut the price more and more which
ultimately leads to monopolies. However, the driving force
behind the internet economy or the digital economy is the
demand side economies of scale which is known as network
effect (Van Alstyne et al., 2016).
There can be two types of network effects, Direct network
effects arise when the value of connecting with the platform
for the individual increases with the number of users and
indirect network effects arise where one side of platform
users attract more users on the other side of the platform
(Busch et al, 2016). The network effects create the
efficiencies in social networking, app development, and
demand aggregation. Here in the digital economy, the form
can achieve higher volume by making larger networks which
29SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
attracts more participants, and more value can be created by
greater sale. For example; E-commerce site like Flipkart
grew in popularity as more vendors associated with those
marketplaces and sold their products to the consumers who
began to embrace shopping online. Flipkart connects those
participants by generating value for both the sides. So, when
the number of participants increases, the value increases
which is known as network effects and the network effect is
the central part of the platform strategy.
Platform Economy in Indian Market
Evans and Gawer (2016) identified four major categories of
platforms namely innovative platform, transaction platform,
integration platforms and investment platforms. Platforms
are often categorised in different segments in literature. In
addition, these categories are discussed with relevant
examples from Indian business.
Innovation platforms: An innovation platform is a
technology, product or service that serves as a foundation on
top of which other firms develop complementary
technologies, products or services. For example, Nispana
Innovative Platforms Pvt. Ltd, an international business
intelligence solutions provider offers real time and
competitive B2B platforms to business leaders around the
world through integrated practice areas like strategic
conferences, leadership forums, B2B summits, in-company
training, professional training, and B2B exhibitions. Their
partnership programs like B2B summits, conferences and
exhibitions encourage complementary invention and
leverage the indirect network effects to generate value to all
participants of that platform eco-system.
Transaction platforms: A transaction platform is a
technology, product or service that acts as an intermediary
Source: Compiled by the authors
by facilitating the exchange or transactions between
different users, buyers, or suppliers. So, transaction platform
assist individuals and institutions to find each other, such as
Flipkart and Ola, among others. Ola provides a platform to
the drivers, the individual customers as well as the group of
customers to find each other. Ola integrates city
transportation for customers and driver partners onto a
mobile technology platform ensuring convenient,
transparent and quick service fulfilment.
Integration platforms: Integration platform can be a
technology, product, or service that is a combination of
transaction platform and an innovation platform. For
example, State Bank of India (SBI) introduced India's first
integrated lifestyle and banking service platform named
YONO (You Only Need One). The platform includes
products and different offers from around 60 e-commerce
players like Amazon, Ola, Uber, Myntra, Cox and Kings,
Yatra, Swiggy, Thomas Cook and others by leveraging
analytics combined with a range of banking and financial
services.
Investment platforms: Investment platforms consist of
companies that have developed a portfolio strategy and act
as a holding company of the portfolio and active platform
investor or both. So, investment platform provide the
financial services to the users on online portal. As India's
friendliest online only investment platform, FundsIndia
gives access of different financial instruments to investors.
Those instruments include mutual funds, stocks, corporate
fixed deposits and various other investment products, all in
one appropriate online site. These types of platforms can
help the investors to get real time financial data at their
convenience and help them to invest in any financial
instrument.
Figure 3: Platforms in Indian market
30SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
However, Figure 3 describes few more categories of
platforms identified in Indian context which are discussed
further.
Platform's platform: Platform's platform means the
internet itself is the substance of the platform economy. For
example, Indus OS, an Indian mobile operating system has
transformed the mobile industry by presenting the World's
First Regional Operating System. It is an operating system
platform for smartphones on which enormous ecosystems
have been built. In addition, there are companies providing
infrastructure and tools for the rest. Indus OS provide the
platform to publish their app on that operating system.
Mediator platform: Mediator platform is the one which
plays a significant role by providing services as a mediator to
all the parties. Platforms mediate work in several ways. For
example, Info Edge, India's premier online classifieds
company in recruitment, matrimony, real estate, education
and related services. As a mediator platform, Info Edge
bridges the gap between job seeker and job providers, home
seekers and home developers, also helps to find out life
partners through matchmaking services and many more.
Transformation platform
Transformation platform includes the platforms which have
transformed the service industry by making the tools and
techniques available on online portal which were not there in
traditional business system. For example, ELEKS, Software
Engineering Company turns out to be the provider of open
source software platforms of all categories. This company
provides expert software engineering and consultancy
services to businesses on online portal. They also provide
other services like product development, product vision,
business goals, quality, and user experience and technology
innovation.
Retailing platform: Retailing platforms are those which
provide virtual market for the individual customers.
Example of this type of platform is Lenskart, a leading e-
commerce portal for eyewear in India. Lenskart provides 3D
trial of eyewear to the individuals. Therefore, easy and
hassle free demonstration of products can be done for retail
customers
The above discussed platforms have modified the prevalent
organization of economic undertakings by rearranging the
entry barriers, repackaging work, shifting to value creation
and repositioning power in the economic and network
structure. It is very much important to understand that all the
above examples can be used interchangeably for other
platforms due to the dynamic nature of the economy and
business.
Consequences – disruption of economic activities
The “Internet of Things” is offering innovative services and
improved applications based on the knowledge about the
environment and the individuals within (Bohli et al., 2009).
Combining it with Platform economy, many businesses
came into presence, forming a highly fragmented market
with new business opportunities and strategies to offer
products and services to different groups of customers.
Many studies have revealed that the digital transformation
will outspread the “Internet of Things” and beyond which is
simply a starting point and likely to release massive
creativeness, but also with few challenges to management.
First, work is being reformatted by platform economy which
has a negative impact on the labour market. The wider
application of new technologies such as data analytics,
artificial intelligence, 3D printing, cloud computing,
Internet of things (IoT) and robotics are changing the labour
markets (De Groen et al., 2017). The traditional employment
means a single business providing a long-standing
commitment to the employee with some social benefits. This
commitment and benefit are giving way by the gig or these
contract arrangements. As the business can have the better
strategy with the low margin and low price, they can provide
higher wages and other benefits to the workers which
strengthened the competitive position of the firm (Kenney
and Zysman, 2016). Thus, the shift from conventional pipe
business model to the platform business model may
powerfully modify the dissemination of income and wealth
in whole society. The platform business can generate
scattered work schedules as well as increases the levels of
part-time work deprived of the employment-related benefits
that earlier categorized in full-time work.
Secondly, there has been an outburst of articles and books
from economics in disagreement that traditional jobs will be
displaced by new digital automation and robotics.
According to the World Development Report 2016, on an
average 66 percent of all jobs could be in hazard because of
automation in developing nations in next decades. In India,
the estimated part of jobs at risk due to automation is 69
percent. So, the digital machines, artificial intelligence,
robots and others will shift work for the entire population
(Davidow and Malone, 2014).
Thirdly, there is a typical dilemma in the usage of digital
automation which means anything if it can be considered
appropriately computable, can be copied. This indicates that
an additional round of revolution and imagination is needed.
However, the digital machine can duplicate intelligence; but
it does not create the perception nor does it consider whether
human perception varies in fundamental ways from current
algorithmic tools.
Fourthly, the problem can be related to the emergence of
Monopoly market. Many platforms prove to be 'winner-
take-all models' where only one or at max two platforms
survive. For example UrbanPro, a network providing a
platform to students and professionals, trainers and others
like tutors for photography, language learning, musical
instruments, etc. There were other platforms providing
identical services like TryMyTutor, Flipclass and many
more. However, Urbanpro maintained its position as India's
largest learning provider. The portion of the value created by
the company is massive in aggregation. The platform owner
can be benefitted by getting a portion of the complete value
created by all the participants on that platform (Kenney and
Zysman, 2016). Most importantly the power is consolidated
to the platform owner who becomes a monopolist after
captivating the preliminary competition and can make
decisions for own welfare rather than the participants of that
platform.
Lastly, due to the change in the working of the current
market structure, the policies and rules need to be revised.
There is list of policy domains like taxation rules,
competition policy, intellectual property rules and service
provision requirements which needs to be taken care of in
the era of platform economy (Kenney and Zysman, 2016).
One needs to evaluate the present policies by considering
the likely burden for policy amendment created by platform
participants. Most significantly, the old rules and values
need to be changed according to this new era of platform
economy. As platforms nurture new challenges and issues
about the market power and the capability to incorporate
position in one market to another, it is impossible to carry the
same values of any era to the other.
Implication for Business and Research
As can be seen from the previous discussion, there are
several consequences and disruptions of economic activities
due to the emergence of platforms. However, organisations
are apprehending new opportunities and modifying the way
of doing business through different platforms. Implications
of the same for business and research are discussed below.
Business Implication
The different type of platforms discussed earlier is useful for
expanding the scope of business in this new and emerging
platform economy. Traditional pipe business model needs to
adapt platform business models to have a competitive
advantage by achieving economies of scale and scope.
Company having dominance in one-side or two-side markets
can expand the horizon with multi-sided platform market by
catering to more participants. Many companies have
successfully done that in past and their strategies are still
gaining importance in today's world. The above example can
help the business to understand their strategy and how they
adapt the platform business model to have competitive edge
over other. The decision regarding adaption of platform
business model is entirely rely on the business and its
owners. However, from all practical examples one can
conclude that platform economy have changed the nature of
business in market and is going to change further.
Research Implication
Evaluation research is a significant element of any change
intervention. The primary implication of the research is a
better understanding of the platform economy and its
emergence. The research will encompass the benefits to
government to promote different type of platforms which
direct the growth of economy. The research will enable the
society to take a paradigm shift from the traditional pipe
business model to platform business model by taking in to
consider the benefit of platform business model.
Conclusion
After the industrial revolution, one of the major break-
throughs in the global macro-economic environment is
platform economy. The technology is core for the success of
any platform business. However, building a successful
platform will require the building of large complex IT
systems, machine learning and advanced artificial
intelligence. While considering the Indian market, the
platform is in infant stage but it has potential to grow in
future. In today's time, majority of successful companies'
ground breaking revolutions are neither products nor
services which they are providing, but they are the platforms.
As discussed above, platform work as a mediator and a
facilitator which built the gap between consumer and
producer by changing the way of running business in recent
times. The platform ecosystem plays an important role as a
value creator for all the participants in the digital economy.
The platform business models has redesigned the work in
31SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
32SCMS Journal of Indian Management, January-March - 2019
A Quarterly Journal
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terms of providing entertainment, consumption of goods and
services, finance assistance, information transmission,
social interaction which was previously mediated by
different locally embedded systems. By taking aggregate
level scenarios, many of the platform-based businesses are
unsuccessful, but the platform business model is an
undisputable commercial success for many of them. So,
apart from above consequences and challenges, the
technological driven businesses and the born digital
businesses have successfully become proficient in platform
strategies. Now, these opportunities are opening up to each
enterprise in all industry.
