Abstract
In the Internet economy, digital platforms have become vital information and business infrastructure and reshaped the competition environment. Online-to-offline (O2O) platforms that link consumers’ online searches with offline consumption through purchases from local physical stores have become popular in the digital era. This paper studies the impact of a service firm’s decisions on product concentration on its performance in a platform-based local market. Informed by the infomediary role of digital platforms and the agglomeration theory, we theorize the roles of customer usage of digital platforms and spatial agglomeration in shaping the relationship between product concentration and firm performance. We look at data from China’s movie theater industry, in which the majority of movie theaters have joined O2O platforms, and we find that theaters’ movie concentrations have a significant positive impact on their revenues. The positive relationship is the weakest when customer usage of O2O platforms is medium and is comparatively stronger when the demand-side usage of O2O platforms is low or high. When spatial agglomeration is higher, the positive relationship is weaker. Theoretical and practical implications of the study are discussed.
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Acknowledgements
The authors appreciate all the helpful and insightful comments by anonymous reviewers. The first author gratefully acknowledges financial support from the Natural Sciences and Engineering Research Council of Canada (RGPIN-2022-03957). The second author gratefully acknowledges financial support from the National Social Science Foundation of China (Grant No. 21BGL033) and Principal Scholar/Excellent Team of Instructors of Qing Lan Project for University Scholars of Jiangsu Province, and Innovation Team Project “Internet Platform Strategy and Governance (KYCTD202201)” sponsored by Nanjing University of Finance and Economics.
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Chen, J., Wan, X. & Yang, J. Superstar effects in a platform-based local market: The role of customer usage of online-to-offline platforms and spatial agglomeration. Electron Markets 33, 43 (2023). https://doi.org/10.1007/s12525-023-00661-4
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DOI: https://doi.org/10.1007/s12525-023-00661-4
Keywords
- Product concentration
- Online-to-offline platforms
- Customer usage
- Movie theater industry
- Spatial agglomeration