Abstract
Past decades have seen business platforms proliferate not only as a means to collaborate, but also decrease time-to-market and promote innovation. However, extant literature tends to dichotomise platforms, perceiving them as either strategic resources or technical systems. Applied to digital platforms, we argue that options theory offers a potential means to reconcile the operand and operant perspectives of platform artefacts. We illustrate our point via a case study of a firm that has gradually developed a product that enables mobile communication into a digital platform that provides a wide range of customers with services from several different suppliers. This study contributes to our understanding of digital platforms as it describes how design choices by a provider can affect flexibility and continued development of new services.
Chapter PDF
Similar content being viewed by others
References
Baldwin, C., Woodard, J.: The Architecture of Platforms: A Unified View. In: Gawer, A. (ed.) Platforms, Markets and Innovation, pp. 19–44. Edward Elgar, Cheltenham (2009)
Eisenmann, T., Parker, G., Van Alstyne, M.W.: Strategies for Two-sided Markets. Harvard Business Review 84(10), 92–101 (2006)
Eisenmann, T., Parker, G., Van Alstyne, M.: Platform Envelopment. Strategic Management Journal 32(12), 1270–1285 (2011)
Eisenmann, T., Parker, G., Van Alstyne, M.W.: Opening Platforms: How, When, and Why? In: Gawer, A. (ed.) Platforms, Markets and Innovation, pp. 131–162. Edward Elgar, Cheltenham (2009)
Bodreau, K.J., Haigu, A.: Platform Rules: Multi-sided Platforms as Regulators. In: Gawer, A. (ed.) Platforms, Markets and Innovation, pp. 163–191. Edward Elgar, Cheltenham (2009)
Wareham, J., Fox, P., Cano Giner, J.L.: Technology Ecosystem Governance. ESADE Business School Research Paper 225-2 (2013)
Vargo, S.L., Lusch, R.F.: Evolving to a New Dominant Logic for Marketing. Journal of Marketing 68(1), 1–17 (2004)
Nambisan, S.: Information Technology and Product/Service Innovation: A Brief Assessment and Some Suggestions for Future Research. Journal of the Association for Information Systems 14(4), 215–226 (2013)
Dos Santos, B.: Justifying Investment in New Information Technologies. Journal of Management Information Systems 7(4), 71–89 (1991)
Benaroch, M., Kauffman, R.J.: Justifying Electronic Banking Network Expansion Using Real Options Analysis. MIS Quarterly 24(2), 197–225 (2000)
Benaroch, M., Jeffery, M., Kauffman, R.J., Shah, S.: Option-based Risk Management: A Field Study of Sequential Information Technology Investment Decisions. Journal of Management Information Systems 24(2), 103–140 (2007)
Ghosh, S., Li, X.: A Real Options Model for Generalized Meta-Staged Projects-Valuing the Migration to SOA. Information Systems Research 24(4), 1011–1027 (2013)
Taudes, A., Feurstein, M., Mild, A.: Options Analysis of Software Platform Decisions: A Case Study. MIS Quarterly 24(2), 227–243 (2000)
Fichman, R.G.: Real Options and IT Platform Adoption: Implications for Theory and Practice. Information Systems Research 15(2), 132–154 (2004)
Sandberg, J., Mathiassen, L., Napier, N.: Digital Options Theory for IT Capability Investment. Journal of the Association for Information Systems (forthcoming, 2014)
Suarez, F., Cusumano, M.: The Role of Services in Platform Markets. In: Gawer, A. (ed.) Platforms, Markets and Innovation, pp. 77–98. Edward Elgar, Cheltenham (2009)
Cusumano, M.A.: Platforms Versus Products: Observations from the Literature and History. History and Strategy 29, 35–67 (2012)
Tiwana, A., Konsynski, B., Bush, A.A.: Research Commentary—Platform Evolution: Coevolution of Platform Architecture, Governance, and Environmental Dynamics. Information Systems Research 21(4), 675–687 (2010)
Gawer, A.: Platform Dynamics and Strategies: From Products to Services. In: Gawer, A. (ed.) Platforms, Markets and Innovation, pp. 1–18. Edward Elgar, Cheltenham (2009)
Le Masson, P., Weil, B., Hatchuel, A.: Platforms for the Creation of Platforms: Collaborating in the Unknown. In: Gawer, A. (ed.) Platforms, Markets and Innovation, pp. 273–375. Edward Elgar, Cheltenham (2009)
Kallinikos, J., Aaltonen, A., Marton, A.: The Ambivalent Ontology of Digital Artifacts. MIS Quarterly 37(2), 357–370 (2013)
Tilson, D., Lyytinen, K., Sørensen, C.: Research Commentary—Digital Infrastructures: The Missing IS Research Agenda. Information Systems Research 21(4), 748–759 (2010)
Yoo, Y., Boland, R.J., Lyytinen, K., Majchrzak, A.: Organizing for Innovation in the Digitized World. Organization Science 23(5), 1398–1408 (2012)
Yoo, Y., Henfridsson, O., Lyytinen, K.: Research Commentary—The New Organizing Logic of Digital Innovation: An Agenda for Information Systems Research. Information Systems Research 21(4), 724–735 (2010)
Tilson, D., Sorensen, C., Lyytinen, K.: Platform Complexity: Lessons from the Music Industry. In: Proceedings of the 46th IEEE Hawaii International Conference on System Sciences, Maui, USA (2013)
Black, F., Scholes, M.: The Pricing of Options and Corporate Liabilities. The Journal of Political Economy 81(3), 637–654 (1973)
Adner, R., Levinthal, D.A.: What is Not a Real Option: Considering Boundaries for the Application of Real Options to Business Strategy. Academy of Management Review 29(1), 74–85 (2004)
Bowman, E.H., Hurry, D.: Strategy through the Option Lens: An Integrated View of Resource Investments and the Incremental-choice Process. Academy of Management Review 18(4), 760–782 (1993)
Weick, K.E., Sutcliffe, K.M., Obstfeld, D.: Organizing and the Process of Sense-making. Organization Science 16(4), 409–421 (2005)
March, J.G.: Exploration and Exploitation in Organizational Learning. Organization Science 2(1), 71–87 (1991)
Orlikowski, W.J., Gash, D.C.: Technological Frames: Making Sense of Information Technology in Organizations. ACM Transactions on Information Systems 12(2), 174–207 (1994)
Ciborra, C.U.: The Platform Organization: Recombining Strategies, Structures, and Surprises. Organization Science 7(2), 103–118 (1996)
Cohen, W.M., Levinthal, D.A.: Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly 25(1), 128–152 (1990)
McGrath, R.G.: A Real Options Logic for Initiating Technology Positioning Investments. Academy of Management Review 22(4), 974–996 (1997)
Brynjolfsson, E.: The Productivity Paradox of Information Technology. Communications of the ACM 36(12), 66–77 (1993)
Fichman, R.G., Keil, M., Tiwana, A.: Beyond Valuation: “Option Thinking” in IT Project Management. California Management Review 47(2), 74–95 (2005)
Sambamurthy, V., Bharadwaj, A., Grover, V.: Shaping Agility Through Digital Options: Reconceptualizing the Role of Information Technology in Contemporary Firms. MIS Quarterly 27(2), 237–263 (2003)
Overby, E., Bharadwaj, A., Sambamurthy, V.: Enterprise Agility and the Enabling Role of Information Technology. European Journal of Information Systems 15(2), 120–131 (2006)
Barney, J.: Firm Resources and Sustained Competitive Advantage. Journal of Management 17(1), 99–120 (1991)
Karimi, J., Somers, T.M., Bhattacherjee, A.: The Role of ERP Implementation in Enabling Digital Options: A Theoretical and Empirical Analysis. International Journal of Electronic Commerce 13(3), 7–42 (2009)
Woodard, C.J., Ramasubbu, N., Tschang, F.T., Sambamurthy, V.: Design Capital and Design Moves: The Logic of Digital Business Strategy. MIS Quarterly 37(2), 537–564 (2013)
Zittrain, J.L.: The Generative Internet. Harvard Law Review 19(7), 1974–2040 (2006)
Yin, R.K.: Case Study Research – Design and Methods, 4th edn. Sage Publications, Thousand Oaks (2009)
Creswell, J.W.: Qualitative Inquiry & Research Design - Choosing among Five Approaches, 2nd edn. Sage Publications, Thousand Oaks (2007)
Kvale, S., Brinkmann, S.: Interviews: Learning the Craft of Qualitative Research Interviewing, 2nd edn. Sage Publications, Thousand Oaks (2009)
Star, S.L., Ruhleder, K.: Steps Toward an Ecology of Infrastructure: Design and Access for Large Information Spaces. Information Systems Research 7(1), 111–134 (1996)
Teece, D.J.: Explicating Dynamic Capabilities: The Nature and Microfoundations of (Sustainable) Enterprise Performance. Strategic Management Journal 28(13), 1319–1350 (2007)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2014 IFIP International Federation for Information Processing
About this paper
Cite this paper
Saarikko, T. (2014). Here Today, Here Tomorrow: Considering Options Theory in Digital Platform Development. In: Bergvall-Kåreborn, B., Nielsen, P.A. (eds) Creating Value for All Through IT. TDIT 2014. IFIP Advances in Information and Communication Technology, vol 429. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-43459-8_15
Download citation
DOI: https://doi.org/10.1007/978-3-662-43459-8_15
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-662-43458-1
Online ISBN: 978-3-662-43459-8
eBook Packages: Computer ScienceComputer Science (R0)