Disentangling the Impact of Platform Sponsor Scope on Platform Growth

Abstract

The scope of the activities performed by the platform sponsor vis-à-vis the complementors is one of the key decisions that platform sponsors must continually make. Yet, the implications of alternative scope decisions are not well understood. This article delves deeper into platform sponsors’ scope decisions to understand their implications on the subsequent growth of the ecosystem around the platform. Formally modeling the platform growth trajectory for platform ecosystems with different states of directional symmetricity of indirect network effects suggests that not all platforms grow at an increasing rate. Instead, the growth trajectory differs based on the directional symmetricity of indirect network effects. Importantly, across the different platform growth trajectories, we establish that the platform sponsor can augment the growth of the ecosystem by aligning its scope with the sources of indirect network effects.