Cited by 42Digital Platforms and EconomicsDigital Economy and Work TransformationSharing Economy and Platforms

Same Old Song with a Different Melody: The Paradox of Market Reach and Financial Performance on Digital Platforms

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Hänninen, Mikko, Smedlund, Anssi·2021·Journal of Management Studies

Abstract

In the service sector, digital platforms now enable service providers to reach customers through an online marketplace and use the value‐adding complementary services offered. However, despite the widespread prevalence of digital platforms, there has been little research on the market reach and financial performance captured by service providers. We explored these service provider‐specific outcomes of digital platforms by studying a digital platform in the beauty industry. Our results show that digital platforms present a troubling paradox for service providers participating in a platform‐based online marketplace: despite increases in market reach, in terms of a higher rate of new customer acquisition, those service providers participating in the marketplace have lower sales than others. However, the ‘dark side’ of this paradox is compensated by higher sales for service providers using more of the complementary services offered by the platform. Hence, although digital platforms may open new markets and add value, service providers should be wary of their paradoxical consequences. With these findings, we contribute new theoretical and managerial insight about the service provider‐specific outcomes of digital platforms and add to the ongoing debate about firm strategies in the digital age concerning the platform economy.

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  1. Rynes, S. (2005). 'Taking stock and looking ahead'. Academy of Management Journal, 48, 9-15.
  2. Schor, J. B. (2017). 'Does the sharing economy increase inequality within the eighty percent?'. Cambridge Journal of Regions, Economy, and Society, 10, 263-79.

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Authors
Hänninen, M., & Smedlund, A.
Affiliations
  • University of Nottingham (GB)
  • Aalto University (FI)
Corresponding author
Hänninen, Mikko
Venue
Journal of Management Studies
Publisher
Wiley
Published
2021-05-03
Volume
58
Issue
7
Pages
1832-1868
ISSN
  • 0022-2380 (ISSN-L)
  • 1467-6486
OpenAlex
W3133670878
Cited by
42
References
102
Citations by year
2026: 7 · 2025: 10 · 2024: 7 · 2023: 9 · 2022: 6 · 2021: 3
FWCI
5.58
Type
journal article
Language
en
Open access
Locations
  • Journal of Management Studies (publishedVersion, cc-by)
  • Repository@Nottingham (University of Nottingham) (publishedVersion, cc-by)
  • Aaltodoc (Aalto University) (submittedVersion, cc-by)
  • Repository@Nottingham (University of Nottingham) (submittedVersion, cc-by)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
  • Social Sciences › Sociology and Political Science › Digital Economy and Work Transformation
  • Social Sciences › Business, Management and Accounting › Marketing › Sharing Economy and Platforms
Keywords
digital platforms, online marketplaces, service providers, market reach, financial performance, complementary services, beauty industry, customer acquisition, sales, platform economy, paradox

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