Business use of online platforms: Competition, satisfaction and willingness to pay

Abstract

Online platforms have evolved into powerful programmable architectures that enable heterogeneous groups of autonomous but interdependent users to interact. Based on a stratified sample of 1,380 companies from a newly developed enterprise survey in Austria, the analysis aims to reduce the lack of comprehensive empirical research of the general patterns and regularities of business use of online platforms across different markets and industries. We conduct a comprehensive set of (ordered) probit estimations on the determinants of platform adoption, their interaction with platform competition, their joint impact on platform users, and their overall satisfaction and willingness to pay (more) for platform services.

The analysis provides ample empirical evidence of the importance of rivalry between platforms for delivering its value proposition to all participants: For instance, the estimates show that more competing platforms imply (i) greater ease of switching, (ii) a greater likelihood of negotiable and favourable terms of use, and (iii) associate positively with a greater impact on the number of business partners, revenue per customer or product variety. In turn, (iv) better impacts for business users go hand in hand with their higher satisfaction, which directly links to (v) a higher willingness to pay (more) for platform services. Conversely, the ease of switching to an alternative platform associates with a significantly lower willingness to pay (more). Competition between platforms thus increases the bargaining power of users and allows them to claim a larger share of the platform’s value proposition.