Hypercontinuous Innovation and Demand-Side Learning: Why Digital Platforms Enjoy Longer and More Expansive Market Leadership Positions

Strategy and innovation scholars are increasingly concerned about the market power of successful digital platforms—and so are the authorities tasked with regulating the so-called Big Tech companies. This raises the question of what has allowed these digital platforms to enjoy such sustained and expanded positions of market leadership? Building from and extending upon the increasing returns to adoption literature, this article develops a framework of digital dominance. The framework explains how firms’ adoption and use of digital technologies such as big data analytics and cloud streaming has enabled two shifts in the underlying drivers of increasing returns to adoption. First, digitization facilitates a transition away from forcing sharp generational breaks to hypercontinuous innovation, enabling uninterrupted network externalities and impeding substitution. Second, firms’ learning orientation has shifted from the supply to the demand side, which has amplified customer-switching costs and enhances platforms’ ability to adapt to market change. These shifts also do not act in isolation; there are powerful feedback mechanisms that help to further entrench and expand the dominance of these firms and their platforms. The framework contributes to the strategic management literature and offers implications for policymakers.