Platform-Based Organization and Boundary Choices: 'Opening-Up' While Still Coordinating and Orchestrating

Abstract

Rather than organize as traditional firms, many of today's companies organize as platforms that sit at the nexus of multiple exchange and production relationships. This paper considers a most basic question of organization in platform contexts: the choice of boundaries.

Herein, I investigate how classical economic theories of firm boundaries apply to platform-based organization and empirically study how executives made boundary choices in response to changing market and technical challenges in the early mobile computing industry (the predecessor to today's smartphones).

Rather than a strict or unavoidable tradeoff between “openness-versus-control,” most successful platform owners chose their boundaries in a way to simultaneously open-up to outside developers while maintaining coordination across the entire system.

Keywords: Platforms, Boundaries, Scope, Organization, Innovation and Technical Change, Entrepreneurship, Smartphones

JEL Classification: D4, E26, J4, L1, L8, 03