Policy Rationales in the Shift to Digital Platform Economy: Strategies and Policies to Support Innovation, Entrepreneurship and Business in the Shift to Digital Platform Economy



The project will focus on developing a solid understanding on how digital technologies and platform economy changes rationales for policy intervention, by removing, changing, and/or creating novel market failure mechanisms, spillover effects, and policy rationales. Digital platform economy has twofold implications for public policy. First, it reduces some of the market failure mechanisms and spillover mechanisms past policy has been founded on, but at the same time creates new failures and policy rationales for public policy intervention. For instance, platforms have a potential to diminish market failures, such as reputational feedback mechanisms of the sharing economy addressing information asymmetries (Thierer et al. 2015). Digital also allows opening of interfaces for complementors that can participate at arms-length (at any place), controlling  and directing complementors  generating increased use, innovation capacity, etc, reducing profits, trade-offs (August, Shin, & Tunca, 2018).  Secondly, it generates a new set of challenges and opportunities in the economy that public policy has to take into account. For instance, digital platforms require to consider novel strategic elements, such as specific structure of relationships in platform ecosystems (Jacobides, Cennamo, & Gawer, 2018), the interfaces of digital infrastructures and platforms and the boundary resources as key strategic assets in innovation and value generation (Karhu, Gustafsson & Lyytinen, 2018), and  the economic dynamics of open-source software.

We will in this research project examine policy rationales in the shift to digital platform economy focusing on the nature of digital technologies and digital platform economy, and challenges and opportunities for firms, how digital technologies and digital platform economy may take away or reduce market and system failures underlying policy rationales for intervention in business, innovation and entrepreneurship, and how digital technologies and digital platform economy may develop novel forms of market and system failures as well as novel policy rationales for intervention in business, innovation and entrepreneurship.

The key research questions of the project are

  1. How do digital technologies and the platform economy change the rationales for policy intervention in business, innovation, and entrepreneurship support?
  2. What are the rationales for policy interventions in business, innovation, and entrepreneurship support in this shift in different industry sectors and markets?

Sectors we aim to focus on to expose differences in policy rationales, challenges in the shift to digital platform economy include among others the sectors of health care, mobility, education, and manufacturing. As the phenomena and mechanisms of digital platform economy are emergent and not well understood, we will develop insights and understandings in this research project not only through the integrative synthesis on past and current research on policy rationales and digital platform economy, but importantly engage in highly interactive ways to co-produce understanding, insight and policy guidance with digital platform economy firm executives, entrepreneurs, and public service producers as well as policy makers from relevant government and ministerial organizations.

Project Resources

Policy rationales in platform economy



Aalto, E. J., Cheung, Z., & Gustafsson, R. (2018, July). Asymmetric Regulation, Managerial Discretion, and Corporate Political Strategies. In Academy of Management Proceedings (Vol. 2018, No. 1, p. 16566). Briarcliff Manor, NY 10510: Academy of Management

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