The More, the Better? Effects of Same-Side Network Externalities on Customer Loyalty in Ride-Hailing Aggregation Platforms

Abstract

This study explores the dynamics of customer loyalty in ride-hailing aggregation platforms, a burgeoning segment of the sharing economy that consolidates multiple service providers into a unified interface. Leveraging perceived value theory, we analyze the “double-edged sword” effect of same-side network externalities—how perceived customer network size impacts customer loyalty in a non-linear, inverted U-shaped pattern. Data from 543 aggregation platform users reveal that moderate levels of perceived customer network size optimize loyalty, balancing the positive effects of increased utility and trust with the negative impacts of network congestion. Moreover, perceived value mediates this curvilinear relationship, while perceived driver network size—a measure of cross-side network externalities—intensifies its curvature, highlighting the critical role of interdependencies between platform participants. Our arguments and results contribute to the literature on customer loyalty on platforms, and can inform the strategic decisions of platforms that rely on same side network externalities for value creation.