Purpose Motivated by the observed real-world practices that either manufacturers or platforms are actively introducing smart products (SPs), this paper investigates a practically important question in platform-based supply chains: whether SPs should be introduced by manufacturers or by platforms? Design/methodology/approach We develop a Stackelberg game framework to investigate three potential strategies for introducing SPs (i.e. no SPs, SPs are introduced by the manufacturer and SPs are introduced by the platform) within a platform-based supply chain consisting of one manufacturer and one platform. The equilibrium decisions and profit outcomes under the three supply chain models are analytically derived and systematically compared. Findings Either the manufacturer or the platform may possess a cost advantage in introducing SPs. Regardless of the introducer, the platform always benefits from the introduction of SPs. In contrast, when SPs are introduced by the platform, the manufacturer may be worse off. As a result, a strategic conflict may arise, since both the manufacturer and the platform achieve higher profits when they introduce SPs themselves. Interestingly, we identify conditions under which the platform optimally acts as a free rider by allowing the manufacturer to introduce SPs, thereby eliminating the conflict. Originality/value Departing from the products innovation literature and traditional store-brand encroachment literature that focuses on manufacturers' traditional products (TPs) innovation or retailers/platforms' TPs encroachment, this study develops an analytical framework to compare alternative introduction strategies for SPs in platform supply chains. The analysis identifies the conditions under which manufacturers or platforms optimally introduce SPs, clarifies how consumer valuation would affect pricing decisions, demand allocation and welfare outcomes and provides managerial implications for firms operating in digitally enabled markets.
Tang et al. (Wed,) studied this question.