Since the 1990s, rapid developments in information and communication technologies, alongside improved logistics and lower tariff and nontariff barriers, have largely reduced market transaction costs.<sup>5</sup> Firms have begun to operate within wider boundaries. They outsource production activities to suppliers across the globe, forging a global value chain.<sup>6</sup> Many developing countries seized the opportunity to achieve industrialization through the export-led model of producing components for companies in developed countries. For example, firms in coastal provinces of China began to serve as contracting manufacturers for Western firms and transformed China into the world’s factory.<sup>7</sup> India focused instead on exporting services, using its excellent technical universities and language schools as springboards into global competitiveness. Infosys and similar industry leaders such as Tata Consultancy Services, HCL, and Wipro are among the group of Indian information technology services companies offering business process outsourcing services to clients across the globe.

With the further technological advances in big data and artificial intelligence, as well as the rising Internet penetration since the new millennium, the boundaries of firms and markets have become blurry. Digital platform firms, which leverage a “platform” to create value by facilitating exchanges between two or more interdependent groups, are the new disrupters in the market. However, questions arise on whether those digital platforms are firms or markets. Unlike the conventional pipeline business model in which the production process is linear, with inputs at one end and output delivered at the other end after going through a series of value addition steps,<sup>8</sup> the platform model orchestrates production that resembles the invisible hand of a market. Producers and consumers congregate on a platform that facilitates better matching of supply and demand with competitive price-quality options. For example, the Apple and Android app stores connect numerous app developers and smartphone users. Tokopedia, an online retail platform in Indonesia, hosts more than 4 million online active merchants, serving 35 million customers in 2018.<sup>9</sup> Digital platform firms exhibit features that are distinct from those of traditional firms. For these firms, intangible assets are the key factors of production.<sup>10</sup> China’s Ant Financial, an independent financial company under the Alibaba Group, has become one of the world’s most valuable fintech firms thanks to its powerful digital loan assessment algorithm. Jumia has gained success by growing from a local e-commerce firm in Lagos to the Africa’s Amazon. Key ingredient on its success recipe is a well-designed online platform that embeds complex algorithm to reduce transaction frictions between suppliers and customers. Many of these productivity-increasing products are simply digital algorithms that are infinitely replicable and instantly distributable around the world, thereby making scale without mass possible.<sup>11</sup> Careem, a ridehailing platform headquartered in Dubai, made inroads in 120 cities in 14 countries in the Middle East region within five years. It now has 1 million drivers and 25 million users.<sup>12</sup> The success of these platform-based businesses is closely associated with the positive network effect—that is, the value of a platform increases as the number of participants on either side, whether a consumer or a producer or supplier, grows.<sup>13</sup> For example, Tutorama, an Egyptian online platform, connects students with quality local private tutors. On the one hand, the more local private tutors it adds to its system, the more attractive it becomes to student clients. On the other, a larger client base incentivizes more local tutors to register in the system. As the number of participants on either side grows, the growth generates value for both groups, creating two-sided network effects.

A tremendous amount of data accumulates on digital platforms with expansion of the positive network effect. Data on consumer behavior and preferences become the secret weapon to further propel business growth.<sup>14</sup> The data can either be utilized to improve a platform’s efficiency as an exchange facilitator or to develop other related businesses. Flipkart, an Indian e-commerce platform, provides customers with more targeted advertisements based on their transaction patterns. Ant Financial incorporates data gained through Alibaba’s Taobao.com Marketplace in its loan assessment model to offer microloans to merchants on the 4