-
Enabling Versus Controlling
August 7, 2015 Editor 0
by Andrei Hagiu and Julian Wright
Executive Summary —
Widespread adoption of Internet and mobile technologies has made it possible to build marketplaces and platforms for a rapidly increasing variety of services, from house cleaning to programming, consulting and legal advice. Highlighting the tradeoffs, this paper studies a firm’s choice between two modes of organization—a traditional mode versus a platform mode—where the key difference between the two modes is that professionals hold more control rights over service provision in the platform mode than in the traditional mode.
Author Abstract
In an increasing number of industries, firms choose how much control to give professionals over the provision of their services to clients. We study the tradeoffs that arise in choosing between a traditional mode (where the firm takes control of service provision) and a platform mode (where professionals retain control over service provision). The choice of mode is determined by the need to balance two-sided moral hazard problems arising from investments that only professionals can make and investments that only the firm can make, while at the same time minimizing distortions in decisions that either party could make (e.g., promotion and marketing of professionals’ services, price setting, choice of service offering, etc.).
Paper Information
- Full Working Paper Text
- Working Paper Publication Date: July 2015
- HBS Working Paper Number: 16-002
- Faculty Unit: Strategy
Related Posts
Categories: Innovation
Livestock and Fish program evaluation reviews successes in Vietnam and seeks new research opportunities Sensing is Exploring Uncharted Territory
Subscribe to our stories
Recent Posts
- Entrepreneurial Alertness, Innovation Modes, And Business Models in Small- And Medium-Sized Enterprises December 30, 2021
- The Strategic Role of Design in Driving Digital Innovation June 10, 2021
- Correction to: Hybrid mosquitoes? Evidence from rural Tanzania on how local communities conceptualize and respond to modified mosquitoes as a tool for malaria control June 10, 2021
- BRIEF FOCUS: Optimal spacing for groundnuts in smallholder farming systems June 9, 2021
- COVID-19 pandemic: impacts on the achievements of Sustainable Development Goals in Africa June 9, 2021
Categories
Archives
Popular Post-All time
- A review on biomass-based... 1k views
- Apply Now: $500,000 for Y... 834 views
- Can blockchain disrupt ge... 816 views
- Test Your Value Propositi... 779 views
- Prize-winning projects pr... 740 views