Digital platforms for development: Foundations and research agenda

Positioning in academic literature

In the platform literature (de Reuver et al., 2018), transaction platforms are often studied from the perspective of economics as their management is related to areas such as pricing and contractual factors. The economic perspective focuses on the possibility of connecting seemingly disperse groups and the benefits rely principally on the presence of network effects, whether direct or indirect. Direct network effects refer to the utility of the network (or platform) increasing to each member as more users join for the same essential use as seen in the case of digital platforms like M-Pesa and Whatsapp (Gawer, 2014). In contrast, indirect network effects in multi-sided platforms refer to the benefits derived by increasing the size of groups that are complementary to each other. Here, the decision to join a platform from the perspective of one side (e.g., demand side) is influenced by the number of users in a complementary group (e.g., supply side) and vice versa, as seen in digital platforms such as Gojek and Afristay (Hagiu & Wright, 2015). Although the generation of network effects can be the source of tremendous benefit to users and profit for platform owners, they can eventually lead to winner-take-all scenarios, where industries are dominated by a few platform players (Gawer, 2014), potentially leading to detrimental impacts on users. Economics perspectives on transaction platforms have increasingly turned their attention towards the emergence (how platform come to be) and evolution (how they develop) over time (Eisenmann et al., 2008, 2011), as well as encompassing other groups of participating actors other than simply buyers and sellers (Gawer, 2014).

Materialities and potentialities

The increasing ubiquity, reach and falling costs of digital technologies such as mobile phones and mobile data networks including 3G, have contributed to the rapid growth in transaction platform applications and access to them. However, it is the underlying material properties of digital technology and immaterial properties of digital data, from which they are composed, that has further accelerated this growth. It is these properties that afford the sources of value creation for transaction networks. The falling costs and vast capacity of memory and processing power which drives the cloud-based infrastructure within which transaction platforms are typically hosted is such that the information that they can store and the process is almost infinitely expansible (Faulkner & Runde, 2011, 2019). This allows for the storage of the ever-increasing amounts of data associated with massive installed bases of users that have exploded through network effects. The processing power of the underlying infrastructure is such that there is non-rivalry is use (Faulkner & Runde, 2011), which implies that vast amounts of users can access transaction platform services without being affected by the simultaneous use by others. Furthermore, this processing power enables the search and exchange of information at speed and scale which largely eradicates the frictions and costs associated with these operations were they to be carried out non-digitally. It is the memorability, programmability and communicability as properties of users' devices as digital technologies (Yoo, Henfridsson, & Lyytinen, 2010) that enables individuals to access these transaction platform services, when they could not have done before.