Platform ecosystem development in an institutionalized business market: the case of the asset management industry

Purpose: This study aims to investigate the impact of an institutionalized market context on platform ecosystem development. It studies how platform ecosystems are set up and evolve in the asset management industry and explores the role of the platform leader and selected core network partners in unleashing value innovation notwithstanding institutional barriers. A problematization lens is used to identify deviations between the management practices in this industry setting and the prescriptions and suggested practices in the extant literature on platform ecosystem development. Design/methodology/approach: The research follows a retrospective longitudinal single-case design focusing on the development of a new platform ecosystem to which several PaaS initiatives are linked. It is based on 13 in-depth interviews over a one-year period triangulated with documentation and member checks. This study identifies the impact of regulations and norms on the early stages of platform ecosystem development. Findings: In this institutionalized market, intensified interactions between carefully selected strategic market players focusing on platform development, lead to growing value innovation initiatives. The collaboration between core actors evolves “under the radar” with select partners and with lots of controls by incumbents. The value innovation process evolves in a non-disruptive way. Initially, the new value initiatives are rather incremental and focus on optimizing the present business models while slowly adding new peripheral services shared as successful signs of value innovation initiatives. This “submerged” direction enables platform actors to gather critical mass and stimulates co-evolution with key players. Research limitations/implications: This paper outlines one vertical and looks at various principles involved during early stages of platform development. Because the authors have chosen a deep dive into one institutionalized setting, future studies could investigate a broader scope of institutionalized settings/verticals and a broader scope of management stages and related practices to replicate the study and corroborate the findings. The idea raised from hybrid platform ecosystem development also warrants further study. Practical implications: Practitioners in institutionalized business-to-business markets find suggestions on how to overcome institutional barriers to platform ecosystem development and this study shows which levers can be used by core actors of ecosystems to strengthen established business models and simultaneously unleash value innovation initiatives. Originality/value: This study contributes to the understanding of the challenges to be faced when setting up and expanding platform ecosystems in a highly institutionalized setting and identifies “levers” to create a smooth flow and snowball effect for platform ecosystem development. It “fine-tunes” the extant literature on platform ecosystem development to institutionalized markets.