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Virtual vs physical platform: organizational capacity and slack, strategic decision and firm performance

Virtual vs physical platform: organizational capacity and slack, strategic decision and firm... This study aims to examine the relationship between organizational capacity, slack resource, platform strategic choice and firm performance. It also tackles the endogenous issues regarding the strategic choice of platform types.Design/methodology/approachThis study uses Heckman’s two-stage procedures to examine the relationship between the variables. The sample in this study comes from Compustat annual company and segment files. The sample used in the main analysis consists of 252 individual corporations globally and 3,528 firm-year observations from 2004–2017.FindingsThe empirical results suggest that: (1) firms are more likely to develop physical platforms than virtual platforms when they possess higher levels of available slack, potential slack, research and development (R&D) capacity and marketing capacity; (2) in general, firms developing physical platforms perform better than firms developing virtual platforms after the endogeneity bias are controlled; and (3) firms that choose to develop physical platforms perform better than if they had chosen to develop virtual platforms.Research limitations/implicationsThis study contributes to the platform research literature by proposing the endogenous role of platform type choice in firm performance in the context of the retail industry. Prior conceptual and theoretical platform studies have seldom focused on the retail industry through a strategic choice perspective. Furthermore, one of the contributions of this study is the derivation of empirical support for the research’s prediction using data from actual firms carried out by global physical and virtual platform companies. This study also presents many opportunities for further explorations on the relationship between firm strategic choice and firm performance in the context of platform retail industry.Practical implicationsThe findings of this study suggest that firms must realize that their performance is not necessarily affected by these platform type choice determinants in terms of potential slack, available slack, R&D capacity and marketing capacity. By contrast, they should pay more attention to developing physical platforms if it is possible. The study findings indicate that although virtual platforms have grown rapidly because of the development of technology, firm performance is at all times superior when firms choose to develop physical platforms.Originality/valuePrior platform studies have focused on the topic of network structure, platform architecture, pricing strategy, platform leadership and platform design and governance within the context of video game industry, software industry, hardware industry and telecommunications industry. Seldom of them focus on other industries through a strategic choice perspective. Furthermore, one of the contributions of this study is the derivation of empirical support for the research’s prediction using data from actual firms carried out by global physical and virtual platform companies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business & Industrial Marketing Emerald Publishing

Virtual vs physical platform: organizational capacity and slack, strategic decision and firm performance

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References (104)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0885-8624
DOI
10.1108/jbim-07-2019-0341
Publisher site
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Abstract

This study aims to examine the relationship between organizational capacity, slack resource, platform strategic choice and firm performance. It also tackles the endogenous issues regarding the strategic choice of platform types.Design/methodology/approachThis study uses Heckman’s two-stage procedures to examine the relationship between the variables. The sample in this study comes from Compustat annual company and segment files. The sample used in the main analysis consists of 252 individual corporations globally and 3,528 firm-year observations from 2004–2017.FindingsThe empirical results suggest that: (1) firms are more likely to develop physical platforms than virtual platforms when they possess higher levels of available slack, potential slack, research and development (R&D) capacity and marketing capacity; (2) in general, firms developing physical platforms perform better than firms developing virtual platforms after the endogeneity bias are controlled; and (3) firms that choose to develop physical platforms perform better than if they had chosen to develop virtual platforms.Research limitations/implicationsThis study contributes to the platform research literature by proposing the endogenous role of platform type choice in firm performance in the context of the retail industry. Prior conceptual and theoretical platform studies have seldom focused on the retail industry through a strategic choice perspective. Furthermore, one of the contributions of this study is the derivation of empirical support for the research’s prediction using data from actual firms carried out by global physical and virtual platform companies. This study also presents many opportunities for further explorations on the relationship between firm strategic choice and firm performance in the context of platform retail industry.Practical implicationsThe findings of this study suggest that firms must realize that their performance is not necessarily affected by these platform type choice determinants in terms of potential slack, available slack, R&D capacity and marketing capacity. By contrast, they should pay more attention to developing physical platforms if it is possible. The study findings indicate that although virtual platforms have grown rapidly because of the development of technology, firm performance is at all times superior when firms choose to develop physical platforms.Originality/valuePrior platform studies have focused on the topic of network structure, platform architecture, pricing strategy, platform leadership and platform design and governance within the context of video game industry, software industry, hardware industry and telecommunications industry. Seldom of them focus on other industries through a strategic choice perspective. Furthermore, one of the contributions of this study is the derivation of empirical support for the research’s prediction using data from actual firms carried out by global physical and virtual platform companies.

Journal

Journal of Business & Industrial Marketing – Emerald Publishing

Published: Dec 15, 2020

Keywords: Strategic management; Business strategy; Electronic commerce; Physical platform; Virtual platform; Organizational capacity; Slack resource; Retail industry

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