Digital platform growth under contextual limitations. A case study of growing a complementary digital marketplace

Abstract

With the advent of digital technologies, platforms have become a digital business model with the power to disrupt organizations and industries. Firms are eager to exploit digital platforms’ immense potential for user growth but find themselves facing challenges and limitations that cannot be overcome with traditional business expertise. Our study focuses on exploring what roles user volume, transaction efficiency, and producer capability play in digital platform growth and how such interact and impact the aforementioned growth. Further, the study aims to gain insights into how to foster platform growth under certain limitations and proposes a framework by combining two acknowledged growth models. The combined framework aims to help firms to comprehend the mechanisms behind platform growth and to guide their efforts in growing a digital platform. The study adopts a qualitative approach employing a case study of a young central European software firm. Data was collected through semi-structured interviews and analyzed using thematic analysis. The findings suggest practice to differ substantially from theory and firms facing contextualities and limitations on their platform journey might have difficulties applying models and theories as proposed in literature. Our study sheds light on various strategic challenges when building a platform, especially when pursuing a hybrid business model with a digital marketplace. By critically discussing the observed platform journey of building a digital marketplace, the study helps firms and leaders to be aware of the challenges and risks, and aids to make informed decisions. The combined framework is expected to help firms to understand the importance of the suggested key variables and guide their efforts.