Understanding Network Externalities

Guest Paavo Ritala

Bio

• Professor of Strategy and Innovation at LUT University
• Co-editor of R&D Management, a main journal in the innovation management domain
• Researches platforms and ecosystems

Summary This episode features Paavo Ritala, who shares his journey into platform research, starting from his early work on networks and collaborations. He discusses how the concept of ecosystems emerged in his research in the early 2010s, followed by the observation of platform-based business models. Ritala explains that his understanding of platforms evolved from observing multi-sided markets in economics, the emergence of app stores, and studying companies like Amazon. He emphasizes that platforms can be viewed as a modular technological architecture, an organization, and within the context of an ecosystem. The conversation focuses on Ritala's recent paper on network externalities, which explores how the value of a platform extends beyond the number of users.

Publications & Papers Mentioned

• Karhu, K., Heiskala, M., Ritala, P., & Thomas, L. D. W. (2024). Positive, negative, and amplified network externalities in platform markets. Academy of Management Perspectives, 38(3), 349-367.
• Thomas, L. D. W., & Ritala, P. (2022). Ecosystem legitimacy emergence: A collective action view. Journal of Management, 48(3), 515-541.

Links Paavo's LinkedIn: https://www.linkedin.com/in/paavo-ritala-6475a31/