Knowledge that Transforms

Many two-sided platforms, such as eBay, iOS, Android, and Twitter, invest in developer integration tools, such as modular interfaces, interactive development environments, application programming interfaces, and help desks, in order to reduce the cost and improve the functionality of third-party content developed for the platform. Although these integration tools are crucial to platform success, they are costly to create, and therefore, managers need to understand where and when to deploy them. In particular, when the necessary integration investment is high, the advice to subsidize one side of a two-sided market while charging the other may not hold. This means that integration investment should be carefully coordinated with market pricing decisions. In general, higher levels of investment by hardware/software platforms into integration become desirable when the platform (1) has access to a large pool of content providers and consumers, (2) is able to develop integration tools that are highly effective in reducing third-party development costs, and (3) operates in high-consumer value markets. However, there are nuances. For example, business to business platforms can make investments in integration to facilitate participation by both sides of the market. We find that such investments are complements, not—as one might expect—substitutes.

We study a new source of bias in online review platforms that originates from the popularity difference between the traveling reviewer’s hometown and destination.

Online healthcare platforms allow physicians and patients to communicate in a timely manner. Yet little is known about how physicians’ online and offline activities affect each other and, consequently, the healthcare system. We collected data from both online and offline channels to study physicians’ online-offline behavior dynamics. We find that physicians’ online activities can lead to a higher service quantity in offline channels, whereas offline activities may reduce physicians’ online services because of resource constraints. We also find that the more offline patients that physicians serve, the more articles the physicians will likely share in online healthcare platforms. These findings are of great importance to practitioners and policy makers. Our work provides evidence that online healthcare platforms supplement offline services and thus lessen the concern that physicians’ participation in online healthcare platforms will negatively influence offline healthcare services. Our findings also indicate the need for the improvement of online-offline coordination and better system design.

To inform product release and distribution strategies, research has analyzed cross-market spillovers in new product adoption. However, models that examine these effects for digital and viral media are still evolving. Given resistance to advertising, firms often seek to promote their own viral content to boost brand awareness. However, a key shortcoming of virality is its ephemeral nature. To gain insight into sustaining virality, we develop a quasi-experimental approach that estimates the backward spillover onto a focal platform by introducing a piece of content onto a new platform. We posit that introducing content to the audience of a new platform can generate word of mouth, which may affect its consumption within an earlier platform. We estimate these spillovers using data on 381 viral videos on 26 platforms (e.g., YouTube, Vimeo) and observe how consumption of videos on an initial “lead” platform is affected by their subsequent introduction onto “lag” platforms. This spillover is estimated as follows: for each multiplatform video, we compare its view growth after being introduced onto a new platform to that of a synthetic control based on similar single-platform videos. Analysis of 275 such spillover scenarios reveals that introducing a video onto a lag platform roughly doubles its subsequent view growth in the lead platform. This positive cross-platform spillover is persistent, bursty, and strongest in the first 42 days. We find that spillover is boosted when the video is consumed more in the lag platform, when the consumption rate peaks earlier in the lag platform, and when the lag platform targets a foreign market. Our findings suggest that firms can sustain the popularity of their viral content by introducing it onto additional platforms (e.g., Vimeo) after posting it on a focal platform (e.g., YouTube). As a result of their posting on the latter platforms, firms can expect subsequent view growth on the focal platform to roughly double. The aforementioned benefits persists for up to five lag platforms. Platforms should also consider that a positive cross-platform spillover may help platforms reinforce each other’s usage, rather than cannibalize each other.

Mitigating Traffic Congestion: The Role of Intelligent Transportation Systems

Practice or Policy Abstract

Because of its on-demand feature and flexible pay-as-you-go mechanism, cloud service dramatically reduces the up-front information technology expenses that may deter many clients from implementing on-premises software. The associated security risks and low customization capability, however, create challenges for the adoption of cloud service. We study the competitive implications of security risks and customization capability on consumer purchase choices and vendors’ pricing and investment strategies. Although cloud services are perceived to be more vulnerable to cyberattack, our results demonstrate that in high-security-loss environments, using cloud service yields a lower average expected loss for consumers as compared with on-premises software. By endogenizing vendors’ investment decisions, our investigation highlights that the cloud vendor does not necessarily economically benefit from investing in addressing cloud security, especially in low-security-loss environments. We also find that the on-premises vendor’s security and customization investments act as strategic substitutes in low-security-loss environments and, under certain conditions, complement in high-security-loss environments. We further examine welfare-maximizing security investments and find that the socially optimal investment requires greater effort to improve cloud security in low-security-loss environments and to improve on-premises software security in high-security-loss environments.

Practice- and Policy-Oriented Abstract

The gig economy comprises a large portion of the workforce in today’s economy. The gig economy has low barriers to entry, enabling flexible work arrangements and allowing workers to engage in contingent employment, whenever, and in some cases, such as online labor markets, wherever, workers desire. And many of the workers seek and complete work via digital platforms. However, there is a lack of understanding into the participation in such platforms. The growth of the gig economy has been partly attributed to technological advancements that enable flexible work environments. In this study, we consider the role of an alternative driver, economic downturns, and associated financial stressors in the offline economy, for example, unemployment. Our analysis combines data from a leading online labor market and various archival sources such as the Bureau of Labor Statistics. We find local economic conditions significantly impact the intensive and extensive margins of labor supply in online labor markets. And such impacts are heterogeneous across different county characteristics. Given the prominence of the gig economy, we believe more research is needed to understand gig-economy participation. It is notable that policy makers recently started to look at related issues, proposing laws to protect the gig workers, such as the recent California Assembly Bill 5.

Organizational ambidexterity refers to the capability of businesses to balance the pursuit of radical innovation simultaneously with incremental innovation. It echoes the popular notion that to thrive well in a competitive economy, businesses need to balance their exploration of new markets and products with exploitation or balance operational efficiency with flexibility. Digital technologies have become central to enabling organizational ambidexterity. The analysis reveals how the three dimensions of digitization efforts—IT implementation spending, IT training, and actual IT usage—should be combined with specific internal and external factors to develop greater ambidexterity. Two of these complementary factors are either a centralized organizational structure or a strong supplier and partner network—the first a likely channel for cross-organizational knowledge transfer and the second for interfirm knowledge transfers. However, determining which combinations are useful also depends on the size of the business and competitiveness of markets. Large businesses, or those in more competitive sectors, derive a slightly greater advantage from digitization than small firms or those in less competitive sectors. These findings are useful for policy makers tasked with subsidy allocation to industry sectors and managers when allocating investment spending for digitization.