Two-directional convergence of platform and pipeline business models

Abstract

Purpose

This article examines the new phenomenon of the convergence of platform and pipeline business models. It examines the potential synergies and challenges for platforms to add pipeline components and vice versa for pipeline businesses.

Design/methodology/approach

This paper uses a conceptual approach that synthesizes and integrates the literature from service, hospitality, and strategy, and supplements them with two illustrative mini-case studies.

Findings

While the extant literature typically focuses on the dichotomy between incumbent pipeline businesses that create value by controlling a linear series of activities and network effects-driven platforms, we differentiate between two types of platform business models (i.e. platforms with asset control and platforms with peer-provided assets). Further, we identify three common pathways of convergence; that is, pipelines moving towards (1) platforms with asset control and (2) those with peer-provided assets, and (3) platforms with peer-provided assets adopting defining business characteristics of pipelines. Furthermore, we contrast key characteristics of the three business models and examine potential synergies and challenges for business model convergence. Our findings suggest that convergence from pipelines to platforms with asset control seems to be a natural extension that offers many potential synergies and relatively minor challenges. In contrast, convergence from pipelines to platforms with peer-provided assets is likely to encounter more serious challenges and few synergies. Finally, the synergies and challenges of convergence from platforms with peer-provided assets to pipelines seem to be in between the other two in terms of synergies and challenges.

Practical implications

This article helps managers think through key considerations regarding potential synergies to develop and challenges to mitigate for embarking on convergence strategies between pipeline and platform business models.

Originality/value

This article is the first in the service, business model and strategy literature to identify, define, and conceptualize business model convergence between platforms with asset control, those with peer-provided assets and pipeline businesses. It is also the first to examine potential synergies and challenges these different paths of business model convergence may entail.

Citation

Mody, M., Wirtz, J., Fung So, K.K., Chun, H.H. and Liu, S.Q. (2020), "Two-directional convergence of platform and pipeline business models", Journal of Service Management, Vol. 31 No. 4, pp. 693-721. https://doi.org/10.1108/JOSM-11-2019-0351