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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2022 Annual Theme: Stakeholder Capitalism
Market-Based Solutions to Vital Economic Issues
Mar 20, 2018

Beyond the Chicken and Egg: Strategy Formation in Two-Sided Marketplace Ventures


Extant literature highlights the importance of specific choices such as pricing and particular strategies like “get big fast” for strategy in two-sided markets. Yet it leaves open how executives form a viable strategy in entrepreneurial settings, particularly when buyers, sellers, and product may be uncertain. With an inductive case study of 8 two-sided marketplace ventures in multiple industries, we develop a theoretical framework that describes how entrepreneurs address this challenge: by focusing on successive strategic domains, beginning with supply. We also identify the specific sequence of domains (supply, demand, geography) and provide insight into the contingencies, accelerators, and dilemmas of each. Overall, we contribute a dynamic and holistic view of strategy formation in two-sided marketplace firms.

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