Measuring platform return on participation

Abstract

While industry platforms can transform industries and drive the digital economy, little guidance exists to help managers decide which industry platform to join. Derived from industry research, we propose a six-step return-on-participation (ROP) method that enables managers to clearly and logically review how their firms are affected by a platform, what the benefits are, how current and future variable and fixed costs vary, as well as the often-hidden joining costs. We suggest this technique could also be used by managers to compare competing platforms and by platform owners to evaluate the attractiveness of their offerings.