Towards a Framework of Digital Platform Disruption: A Comparative Study of Centralized & Decentralized Digital Payment Providers
Kazan, Erol; Tan, Chee-Wee; Lim, Eric T K
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Digital platforms are disruptive information technology (IT) artifacts that erode conventional business logic associated with traditional market structures. This paper presents a framework for examining the disruptive potential of digital platforms whereby we postulate that the strategic interplay of governance regimes and platform layers is deterministic of whether disruptive derivatives are permitted to flourish. This framework has been employed in a comparative case study between centralized (i.e., PayPal) and decentralized (i.e., Coinkite) digital payment platforms to illustrate its applicability and yield propositions on the nature and impact of digital platform disruptions. Preliminary findings indicate that centralized digital platforms attempt to create unique configurals to obtain monopolistic power by tightly coupling platform layers, which are difficult to replicate. Conversely, decentralized digital platforms purposely decouple platform layers, to foster open innovation and accelerate market disruption. This paper therefore represents a first concrete step aimed at unravelling the disruptive potential of digital platforms.