Dominant Position in Digital Markets

The article explores the state of dominant situation in digital markets from the point of view of Russian and foreign legislation.The conclusion is justified that traditional antitrust measures of the dominant situation (including those related to collective dominance) cannot be applied to the digital market, since market shares and concentration ratios based on market shares will not be significant indicators in the market environment.It is proposed to use new criteria for determining the dominant position of a subject in the digital market, for example, direct and indirect network effects, parallel use of a service from different suppliers, etc.

Linking firms' strategies with firm performance: mediating role of network value in telecom industry

PurposeThe purpose of the current study is to investigate the role network value of firm on the relationship between firm strategic initiatives on firm performance by managing the market antecedents including user's expectations, user's coordination and user's compatibility.Design/methodology/approachThe current study uses secondary date of telecom industry of Pakistan, India and China. The data obtained were later subjected to the analysis using CASUALMED procedures of statistical analysis software (SAS).FindingsThe findings from the study projected that strategic drivers played an important role in leveraging the firms' performance. The results also confirm that in order to increase the firm performance, the network value of firms' plays a very crucial role.Research limitations/implicationsDespite making novel contribution, the present study has few limitations, need researchers' attention to be explained in the future, which includes narrow population size, not being able to work on indirect network effects and the theoretical explanation of behavioral antecedents of network value.Practical implicationsThe present research have potential applications for managers of telecom industry, which in turn would help them to develop the strategies that they could build to leverage their network value and firms' performance.Originality/valueThe current study has made a considerable contribution in the literature by proposing a model that adds to the theoretical foundation of strategic management of the firm. So, closely considering these insights would be helping for the firms to leverage its network value in mobile telecommunication industry.

Borders of Network Effects and Early Internationalization as a Latecomer Strategy

Scholars have examined the persistent heterogeneity of firm performance from the entry-order effect perspective. In the international business literature, this perspective has been highlighted in research on early internationalization (i.e., the born global strategy). While prior work has focused on the heterogeneity of firm characteristics and capabilities, we present a demand-side view of early internationalization by focusing on network effects. Prior theoretical work on network effects has predicted that when network effects are prominent, survival is challenging for latecomers because of the installed bases of first movers in the global market. However, we see many cases, such as the mobile instant messenger (MIM) market, where no single winner dominates the global market and where many latecomers have survived by implementing early internationalization. We build upon Brian Arthur’s model of demand-side dynamics. The findings suggest that latecomers may overcome their disadvantages by pursuing early internationalization, especially when the direct network effects (i.e., social network effects) are stronger than the indirect network effects (i.e., installed base effects). The underlying rationale is that country borders often demarcate the reach of the direct network effect, limiting the power of installed bases.

Business diversification and multifaceted markets

In this paper, we examine multiple segments, conventionally analyzed from the perspective of business diversification, from multiple perspectives in a multifaceted market. Specifically, based on segmental financial data, we conduct an empirical analysis of whether increased sales in the transportation business increase the profit margin of the real estate business of a railroad company. The results show that there are two types of sidedness among many businesses. The effects of both positive and negative indirect network effects were found to exist. In addition, verification of the difference-in-differences based on the initiation event of the mutual traffic interconnection demonstrates the indirect network effect in the transportation business to a certain extent, and shows that the effect is not uniform in each business, with some businesses showing strong effects and others showing less visible effects.

EXPRESS: Halo or Cannibalization? How New Software Entrants Impact Sales of Incumbent Software in Platform Markets

Platform markets involve indirect network effects as two or more sides of a market interact through an intermediary platform. Many platform markets consist of both a platform device and corresponding software. In such markets, new software introductions influence incumbent software sales. New entrants may directly cannibalize incumbents. However, entrants may also create an indirect halo impact by attracting new platform adopters, who then purchase incumbent software. To measure performance holistically, this article introduces a method to quantify both indirect and direct paths and determine which effect dominates and when. The authors identify relevant moderators from the sensations–familiarity framework and conduct empirical tests with data from the video game industry (1995–2019). Results show that the direct impact often results in cannibalization which generally increases when the entrant is a superstar or part of a franchise. For the indirect halo impact, superstar entrants significantly increase platform adoption, which can help all incumbents. Combining the direct and indirect impacts, only new software that is both a superstar and part of a franchise increases platform adoption sufficiently to overcome direct cannibalization and achieve a net positive effect on incumbent software; all other types of entrants have a neutral or negative overall effect.

Multi-sided platform strategies for organizations: transforming the business model

Purpose The purpose of this study is to explore and summarize the strategies organizations can follow when adopting a multi-sided platform (MSP) business model. MSPs benefit from direct and indirect network effects, quick scaling, fast innovation and new revenue streams. Design/methodology/approach This study draws from the literature on business model innovation to identify five strategies in which organizations can transform by creating or acquiring an MSP. This taxonomy is confirmed with a classification of 20 MSPs adopted by 18 organizations, 5 short case studies and an interview with an executive involved in the launch of an organization’s MSP. Findings To implement an MSP, companies can expand their offerings, intermediate their industry with a marketplace, expand to new geographies or market segment, co-innovate their core product or service and co-innovate complementary offerings. Practical implications Organizations are presented with five distinct approaches to transform their business model and benefit from MSP interactions. The cases, quotes from executives and analyzes will serve organizations in designing a platform strategy. Originality/value This study provides executives and researchers with insights about how organizations can transform their business models with MSPs.

Causal Inferences in Repetitive Transcranial Magnetic Stimulation Research: Challenges and Perspectives

Transcranial magnetic stimulation (TMS) is used to make inferences about relationships between brain areas and their functions because, in contrast to neuroimaging tools, it modulates neuronal activity. The central aim of this article is to critically evaluate to what extent it is possible to draw causal inferences from repetitive TMS (rTMS) data. To that end, we describe the logical limitations of inferences based on rTMS experiments. The presented analysis suggests that rTMS alone does not provide the sort of premises that are sufficient to warrant strong inferences about the direct causal properties of targeted brain structures. Overcoming these limitations demands a close look at the designs of rTMS studies, especially the methodological and theoretical conditions which are necessary for the functional decomposition of the relations between brain areas and cognitive functions. The main points of this article are that TMS-based inferences are limited in that stimulation-related causal effects are not equivalent to structure-related causal effects due to TMS side effects, the electric field distribution, and the sensitivity of neuroimaging and behavioral methods in detecting structure-related effects and disentangling them from confounds. Moreover, the postulated causal effects can be based on indirect (network) effects. A few suggestions on how to manage some of these limitations are presented. We discuss the benefits of combining rTMS with neuroimaging in experimental reasoning and we address the restrictions and requirements of rTMS control conditions. The use of neuroimaging and control conditions allows stronger inferences to be gained, but the strength of the inferences that can be drawn depends on the individual experiment’s designs. Moreover, in some cases, TMS might not be an appropriate method of answering causality-related questions or the hypotheses have to account for the limitations of this technique. We hope this summary and formalization of the reasoning behind rTMS research can be of use not only for scientists and clinicians who intend to interpret rTMS results causally but also for philosophers interested in causal inferences based on brain stimulation research.

Professionalization of Online Gaming? Theoretical and Empirical Analysis for a Monopoly-Holding Platform

We analyze the private equilibrium of a two-sided market representing the online gaming industry under a principal-agent model. A monopoly-holding platform hires a manager to attract new members from both sides of the market while considering uncertainty on the adhesion of viewers and online gamers. First, we mathematically demonstrate that increasing cross-group network externalities can decrease the platform’s profit, which contradicts a canonical result from the field of two-sided markets. Moreover, knowing that the intermediary’s goal is aligned with the private interest of online gamers, machine learning models empirically show that the main theoretical outcome is observed in reality due to the presence of heterogeneous indirect network effects in online gaming activities. Second, we conclude that social welfare can be either harmed or improved for increasing cross-group network externalities, which means that the professionalization of online gaming may or may not be legitimized depending on the value taken by exogenous parameters related to the platform’s uncertainty on the number of agents that get on board, risk aversion of viewers, and royalty rate applied to online gamers. Finally, a discussion based on 2020 facts is provided and several policy recommendations are formulated to ensure the persistence of best regulatory practices.