Platform Governance for Established Companies

What is it about?

This article explores how established companies can transition to digital platform strategies; a shift that comes with unique challenges compared to platform-native startups. While startups often build their platforms from scratch, established companies must navigate legacy systems, diverse product lines, and long-standing partnerships. These challenges make digital transformation more difficult but also present opportunities, given their existing customer bases and partner networks. To better understand this process, we conducted an in-depth study of four established companies from different industries, each working to implement a digital platform strategy. Our findings led us to propose a multi-layered model that offers a more nuanced approach to platform governance. This model recognizes the need to govern different actors—such as internal business units, core partners, and third-party developers—in distinct ways. For internal teams, we suggest hierarchical governance to maintain control and align efforts across the organization. With core partners, closer, more contractual governance helps ensure that these long-term relationships continue to deliver value while adapting to the platform model. Third-party developers, on the other hand, benefit from a more open governance approach that encourages innovation while maintaining quality control. Our study provides practical insights for managers in established companies who are navigating the challenges of digital transformation. The multi-layered governance model offers a framework to manage the competing needs of different ecosystem players, enabling established firms to leverage their existing assets while fostering innovation and maintaining control over critical areas of their platform. By addressing the specific challenges of established companies, this research fills a gap in the existing literature on platform governance.

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Why is it important?

Our article contributes to the existing body of knowledge about digital platforms by offering a multi-layered governance model tailored for established companies adopting digital platform strategies. It extends the traditional core-periphery model by addressing the complex needs of internal business units, core partners, and third-party developers, thus filling a gap in the platform governance literature which primarily focuses on platform-native companies. The article offers actionable guidance to managers in established companies by emphasizing the need for tailored governance strategies at different levels of the platform ecosystem. It advises managers to implement hierarchical governance for internal business units, maintain close contractual relationships with core partners, and adopt open governance for third-party developers. This approach enables companies to leverage their existing assets, streamline integration for developers, and foster innovation while maintaining control over critical services​.