Creating Value from the Outside In or Inside Out
Creating Value from the Outside In or Inside Out: How Nascent Intermediaries Build Peer-to-Peer Marketplaces
by Christina Kyprianou
Peer-to-peer marketplaces have fueled the growth of the sharing economy. Despite their proliferation, little systematic evidence and theory exists on how nascent intermediaries build this particular two-sided market. I examine this process through a value creation lens, focusing on how nascent intermediaries govern producers’ and consumers’ participation. Emerging insights from a theory building multi-case study suggest nascent intermediaries’ governance choices are associated with controlling supply-side heterogeneity and cross-side interactions, albeit to a different extent (low, high, or balanced). Shifts in intermediaries’ intensity of control over time reveal two alternative value creation processes. Intermediaries creating value “from the outside in” transition from low to high control of both aspects of participation. They initially open participation to all willing producers while they support producers’ and consumers’ autonomy in determining the terms of their transactions, but subsequently enforce strict control so as to encourage producers’ and consumers’ conformity to desirable behaviors. Alternatively, intermediaries creating value “from the inside out” continuously balance low and high control of at least one aspect of marketplace participation. They initially recruit a qualified core of producers, who they later leverage to recruit more qualified ones. At the same time, they transition from low to balanced control of cross-side interactions by leveraging producers’ and consumers’ resources and contributions. These findings highlight the unique value creation challenges in peer-to-peer marketplaces as well as the evolving role of intermediaries and customers in value creation. Implications for research on business models and value cocreation are also discussed.
sharing economy, value creation, peer-to-peer marketplaces, multi-sided platforms, qualitative research methods (general), strategy process, business models