Platform development in incumbent firms: The interplay of data and actor interests in adding platforms to existing businesses
Jack Fraser, Elizabeth J. Altman, Pinar OzcanAbstract
Research Summary
Despite growing interest in platform transitions, limited research examines how firms navigate challenges of building platform businesses alongside existing products. Through a longitudinal case study of a financial services firm launching a platform, we develop a process model revealing how data bottlenecks shape platform development. These bottlenecks arise from the interplay of technological limitations and control tensions over data aggregation, sharing, and usage. We identify five sequential bottlenecks, where resolving one reconfigures constraints, giving rise to the next. We theorize how data heterogeneity, variation in strategic sensitivity, and actors' absorptive capacity create opportunities for platform sponsors to capture value without competing with complementors. We extend resource dependency theory by showing how peripheral units overcome power imbalances by demonstrating value creation potential with limited data.
Managerial Summary
When established firms launch platforms alongside existing product businesses, they face significant data‐related obstacles. Drawing on a four‐year study of a financial services firm building a platform connecting SMEs with lenders, we show how firms must navigate challenges in collecting data from internal units and customers, making incompatible data sources work together, and persuading partners to share and use data in new ways. We find that these obstacles emerge in sequence, where resolving one creates the conditions for the next. We also find that not all data is equally useful to all partners, and that these differences can open market segments the platform sponsor can serve without competing with its own partners. Managers can maintain momentum by combining short‐term data workarounds with longer‐term structural solutions.