Events

Dr. Wesley W. Koo
Assistant Professor of Strategy
INSEAD
 

How to understand and address social issues is a topic of growing interest in the field of management and organizations. An important organizational form in the modern era is that of multi-sided platforms, which provide the interface for interactions among different types of participants. In this study, we investigate the ability of platforms to address social issues through private governance. We conducted a field experiment in collaboration with a Singapore-based online platform that connects domestic helpers with employers/families. This setting is characterized by various forms of socially harmful behavior from employers (e.g., not giving helper enough food, yelling at helpers). In the treatment conditions, we communicated to helpers and employers that the platform plans to implement a new rating system that allows helpers to rate employers. There are two sets of findings. First, employers did not react positively to the rating system, and employers’ dislike of the rating system is especially pronounced among high-income employers. Second, surprisingly, helpers did not like the rating system either, even though it was designed to help and empower them. In particular, the most vulnerable helpers (those who likely had experienced socially harmful behavior in the past) were especially likely to disapprove of the rating system. This study shows that significant frictions exist to impede a platform’s governance of social issues. Whereas the theory of indirect network effects predicts that governance that benefits one side of the platform would make the platform more attractive for both sides, this study shows that either side has their idiosyncratic reasons to reject platform governance.