In recent twenty years, Internet platform companies are rapidly rising on global scale. Key characteristics are identified in its growth, first, creating value by building an ecosystem based on core technology or product, such as Goolge search ecosystem, Alibaba Taobao ecosystem and Tencent WeChat ecosystem; second, expanding the ecosystem by intensely investing start-ups through CVC activities. These two characteristics may imply a internal relations between the CVC activities and the value creation of the business ecosystem. Explore the influence of CVC objectives on the value creation of the internet platform business ecosystem is the purpose of this research project.
The research is conducted by adopting the exploratory, embedded single case study methodology. Tencent, as the leading Chinese internet platform is selected as the research target. In this research, information is collected from three sources: (1) literatures, including the business agreements and academic literatures in connection with Tencent; (2) archival records, including the archival records and data in connection with Tencent and its 387 CVC projects from 2004 to 2016; (3) direct observation, including observation of the development trend and CVC activities of Tencent with industrial experience.
The research topic is subject to business strategy management and innovation management.
Three key findings have been achieved in the course of analyzing Tencent’s case, (1) Tencent’s growth path follows “Product - Platform - Ecosystem” model; (2) seven strategic objectives of Tencent’s CVC activities are identified. (3) the CVC strategic objectives make direct impact on value creation of Tencent’s business ecosystem. The way of imposing impact is to influence the value creation drivers, namely, novelty, efficiency, complementarity, lock-in on the level of product, platform and ecosystem.
There are three theoretical contributions in this research. (1) integrating the three theoretical views of platform, and business ecosystem theory to enrich the theoretical connotation of the internet platform ecosystem. (2) building the value creation model by applying the four different value creating drivers on various levels of the platform ecosystem framework. (3) enriching the CVC strategic objective theoretical connotation by linking the CVC strategic objectives with the value creation framework.
Limitation on the research scope and source of data are two main limitations of this research work.
Three directions are recommend for the future research (1) expanding the research scope to other platform ecosystems like Alibaba, Baidu, Google, Facebook, etc, aiming to improve the applicability and generalization of the theoretical results; (2) conducting the ecosystem value creation study on quantitative base; (3) in addition to value creation, the value capture behavior by the ecosystem members is worthwhile to study.
The research reveals that internet platform ecosystem creates value on three levels: core products, complementary platform and business ecosystem. Strong core products are the foundation for the success of platform and ecosystem. CVC is a strategic means for managers to expanding company’s ecosystem. CVC strategic objectives take positive contribution to value creation of ecosystem by impact the four value creating drivers on each value creation level.Originality/value
This research presents two main innovations, (1) building the value creation framework of internet platform ecosystem based on different theoretical thoughts. (2) delivering the in-depth case of Tencent, by which demonstrate the CVC strategic objective impact on value creation of the platform ecosystem.
Internet platform, business ecosystem, value creation, CVC, Case study