Growth of a platform business model as an entrepreneurial ecosystem and its effects on regional development

ABSTRACT

This paper analyses the dynamics of platform business models as an entrepreneurial ecosystem and its effects on regional development. Here, we seek to answer the following research questions: (1) What effects do platform business models have on regional development? (2) What factors and structures affect the dynamics of platform business models? (3) How can we describe the dynamics of platform business models in app stores and hotel-booking industries? To answer these questions, the authors first analysed two platform entrepreneurial ecosystems in the smartphone app store industry (Google Play’s Android market and Apple’s App Store) and two ecosystems in the hotel-booking industry (Hotels.com and Booking.com). Second, we analysed the effects of platforms as entrepreneurial ecosystems on the regional development of Daegu Metropolitan City. We used in-depth interview methods with a semi-structured questionnaire, system dynamics (SD) simulation, a literature review, and a statistical analysis as research methods. The results of these analyses yielded the following findings. First, platform business models as economic ecosystems motivate a change of regional development from focused areas to multiple areas, from a hierarchical structure of firms to a network of diverse firms, and from scope and scale economy-based firms leading regional development to creative economy-based firms leading regional development. Second, we identified three category factors that were important in a platform ecosystem, and built up and simulated causal and SD models of these factors. Third, we found that the dynamics of platform ecosystems differ from platform to platform because the openness of platforms produces different effects on firms according to the industry to which they belong.

KEYWORDS:

• Platform business model
• economic ecosystem
• regional innovation system
• open business model
• regional development

Acknowledgement

This work was supported by the DGIST R&D Program 2016-IT of the Ministry of Science, ICT and Future Planning. This paper was presented at the Society of Open Innovation, Technology, Market and Complexity (SOItmC) and the Knowledge City World Summit (KCWS) 2015 conference, and updated comprehensively based on several honourable professors’ comments. An updated paper was presented at the SOItmC 2016 conference.

Disclosure statement

No potential conflict of interest was reported by the authors.