The Varying Role of Regulation on the Interdependence between Platform Owners and Complementors

This study explores the evolution of interdependence between platform owner and complementors under varying regulations. Using a longitudinal qualitative study on a Chinese online drug retailing platform and its online pharmacies during the period of 2005 to 2021 when they encountered both harsh and favorable government policies, our findings reveals that government regulations toward platform behavior may yield more complex consequences than regulators expected as the regulatory pressure would be transmitted to connected actors, reshaping the form of interdependence. Built upon our findings, we present a process model to elaborate three phases of shaping interdependence under varying regulations: experiment, intensification, and polarization. Our model contributes to the understanding of how platform owner reconciles the need for the continuity of value creation with radical changes in institutional environment. It also shows how complementors are involved into the reconstruction of relationships with platform under regulations—both proactively and passively.