Digital Market Intermediation and the Changing Role of Firms: Conceptualizing Strategic Value Creation in Platform-Dominated Business Environments

Digital market intermediation has emerged as the dominant coordination mechanism in contemporary business environments, fundamentally altering how firms identify, create, and capture value. Traditional firm-centric value chains are giving way to platform-dominated ecosystems in which digital intermediaries orchestrate multi-sided interactions, govern complementor participation, and redistribute strategic agency across previously independent actors. This theory-development article synthesizes insights from platform ecosystem research to reconceptualize the evolving role of firms as active participants rather than autonomous orchestrators. We argue that digital intermediation transforms value creation from sequential, firm-controlled processes into distributed, ecosystem-embedded mechanisms that rely on platform governance, complementor coordination, and dynamic strategic positioning. By integrating literature on platform strategy, ecosystem governance, and value-chain reconfiguration, the article develops a novel theoretical framework centered on six propositions that explicate causal relationships between intermediation intensity, governance alignment, and sustained value appropriation. The proposed conceptualization advances digital business theory by shifting analytical focus from firm-level capabilities to platform-mediated relational dynamics. Theoretical and managerial implications highlight the necessity for firms to develop intermediation-specific competencies to maintain competitive relevance in platform-dominated markets. Future research directions emphasize longitudinal examination of governance evolution and cross-platform value migration.

The ascendancy of digital market intermediation as market coordinator

Digital platforms have rapidly evolved from transactional facilitators into comprehensive market coordinators that reshape entire industries [1-3]. Unlike traditional intermediaries that merely reduce search costs, contemporary digital intermediaries actively govern participant behavior, curate ecosystem interactions, and enforce coordination rules across multiple sides of the market [4, 5]. This intermediation process enables firms to participate in markets without owning the underlying infrastructure, yet simultaneously subjects them to platform-specific constraints that redefine strategic autonomy [6, 7]. In platform-dominated environments, firms no longer compete solely through internal resource configurations; instead, they must navigate intermediary-imposed governance structures to access complementor networks and user bases [8, 9].

The scale of this shift is evident in sectors ranging from software and mobility to manufacturing and healthcare, where platform operators such as Apple, Google, and specialized B2B marketplaces control access to critical resources [10, 11]. Firms that once managed end-to-end value chains now function as complementors or hybrid participants, contributing modules, data, or services while relying on platform algorithms for visibility and matching [12, 13]. This reconfiguration raises fundamental questions about the locus of strategic decision-making and the mechanisms through which value is created and appropriated [14, 15].

Platform-dominated markets and the erosion of firm-centric control

Platform-dominated markets introduce asymmetric power relations in which intermediaries hold gatekeeping authority over participation, data flows, and revenue distribution [16, 17]. Research on multi-sided platforms demonstrates that network effects and cross-side dependencies amplify the intermediary’s role in market formation [18, 19]. Firms entering these environments experience a dual transformation: expanded market reach coupled with diminished direct control over customer relationships and pricing [20, 21]. The literature consistently shows that successful participation requires firms to align internal capabilities with platform rules while simultaneously developing strategies to mitigate dependency risks [22, 23].

This erosion of traditional firm boundaries creates both opportunities and vulnerabilities. Complementors gain access to large-scale user bases and innovation infrastructures, yet face selective promotion, rating systems, and algorithmic ranking that determine survival [5, 24]. The strategic role of firms thus shifts from resource ownership to relational orchestration within ecosystems, demanding new competencies in platform signaling, governance compliance, and ecosystem contribution [1, 25].

Strategic value creation in digitally mediated ecosystems

Value creation in platform-dominated settings transcends conventional value-chain logic. Digital intermediation enables distributed value generation through complementor ecosystems, where value emerges from modular contributions, user-generated content, and algorithmic coordination rather than sequential transformation [2, 6, 26]. Firms must therefore reconceptualize their strategic positioning as co-creators embedded in larger ecosystems, balancing autonomy with platform alignment [27, 28]. The present article addresses this reconceptualization by synthesizing existing platform literature and advancing an original theoretical framework that explicates how digital market intermediation reshapes firm roles and value mechanisms. Table 1 contrasts the core dimensions through which digital market intermediation reconfigures strategic logic from firm-centric control to platform-mediated ecosystem participation.

Digital intermediaries as orchestrators of multi-sided coordination

Early platform research established that intermediaries invert traditional firm logic by externalizing core activities to complementors while retaining control over ecosystem architecture [1, 2]. Subsequent studies refined this view by demonstrating how platform sponsors invest in seeding mechanisms and governance structures to stimulate user and complementor contributions [11, 13]. In digitally mediated markets, intermediaries perform three core coordination functions: matching, curation, and rule enforcement [12, 29]. These functions collectively reduce transaction costs and generate network effects that traditional firms cannot replicate on their own [3, 4].

Empirical patterns from software and mobile ecosystems show that platform success hinges on managing asymmetric cross-side effects and selectively promoting complements [5, 7]. Firms operating as complementors learn to optimize their offerings around platform standards while retaining strategic agency through multihoming and innovation differentiation [8, 14]. The literature synthesis reveals a consistent theme: digital intermediation decouples value creation from firm ownership, relocating it to ecosystem-level interactions [10, 15].

Platform governance and complementor ecosystem dynamics

Governance emerges as the central mechanism through which platforms structure participation, regulate interactions, and shape the distribution of value among ecosystem participants [4, 23, 24]. Unlike traditional market governance that relies primarily on contractual arrangements or hierarchical coordination, platform governance is embedded in digital architectures that combine formal rules, algorithmic oversight, and community-based feedback mechanisms. Through these mechanisms, platform owners establish the conditions under which complementors can access users, distribute offerings, and capture value within the ecosystem. Consequently, governance functions not only as a regulatory framework but also as a strategic infrastructure that organizes economic activity across distributed actors.

Research generally distinguishes two broad governance approaches within platform ecosystems. The first involves centralized rule-setting, where the platform owner retains strong authority over participation criteria, pricing structures, data access, and technological standards. This model allows platforms to maintain quality control, enforce compliance, and coordinate large-scale ecosystem activities efficiently. Centralized governance is particularly prevalent in ecosystems where security, reliability, or brand reputation are critical, as platform owners must ensure consistent performance across numerous complementors [4, 23].

The second approach emphasizes decentralized or collaborative governance, in which complementors participate more actively in shaping ecosystem development. In these arrangements, platform owners provide infrastructural resources—such as development tools, APIs, and communication channels—while allowing complementors to experiment with new applications, services, and business models. Decentralized governance fosters innovation by enabling distributed experimentation and knowledge exchange among participants, thereby enhancing ecosystem generativity [16, 27]. Complementors contribute not only products and services but also insights and innovations that expand the platform’s functional scope.

Effective platform governance, therefore, requires a balance between openness and control. Excessive openness may encourage participation but risks degradation of quality, opportunistic behavior, and ecosystem fragmentation. Conversely, overly restrictive governance can suppress innovation and discourage complementor engagement. Successful platforms navigate this tension by implementing mechanisms that simultaneously encourage experimentation while safeguarding ecosystem integrity. These mechanisms include standardized development protocols, transparent participation rules, and performance-monitoring systems that reward high-quality contributions while discouraging free-riding and opportunistic behavior [6, 22].

Complementor ecosystems flourish when governance structures provide clear signals regarding opportunity and legitimacy. Transparent rating systems, performance metrics, and algorithmic visibility criteria enable participants to evaluate market potential and strategically position their offerings. Investment signaling mechanisms—such as platform-sponsored innovation funds, featured listings, or certification programs—further reinforce complementor confidence by indicating the platform’s long-term commitment to ecosystem development. Participation incentives, including revenue-sharing arrangements, technical support, and access to user analytics, strengthen complementor engagement and stimulate ongoing innovation within the ecosystem [11, 19].

Empirical research on servitization and manufacturing platforms demonstrates that governance mechanisms also influence how customers participate in innovation processes. Digital platforms enable firms to incorporate user feedback, usage data, and collaborative design inputs into product and service development cycles. As a result, innovation becomes increasingly co-created across producers, complementors, and users, extending value creation beyond the boundaries of individual firms. This participatory innovation dynamic allows platforms to accelerate experimentation and refine offerings through continuous ecosystem interaction [17, 18].

Firms that successfully navigate platform governance structures develop hybrid strategic capabilities that integrate internal competencies with ecosystem leverage. Rather than relying solely on proprietary resources, these firms exploit platform infrastructures, complementor collaborations, and user networks to enhance value creation and market reach. Such hybrid strategies enable firms to scale rapidly, access external innovation, and coordinate with complementary actors across multiple domains. Empirical studies indicate that firms that align their strategies with platform governance mechanisms often outperform isolated competitors operating outside ecosystem environments [21, 25].

However, platform governance also introduces strategic risks for participating firms. Misalignment between firm objectives and platform rules can reduce visibility, restrict market access, or alter revenue structures, thereby diminishing value capture. Algorithmic adjustments, policy changes, or shifts in governance priorities can rapidly reshape competitive conditions within the ecosystem. When firms become highly dependent on a single platform, these governance shifts may lead to value slippage, strategic vulnerability, or even forced exit from the ecosystem [9, 23]. Consequently, firms must continually monitor governance developments and adapt their strategies to maintain alignment with evolving platform structures.

Value-chain transformation through digital intermediation

Digital market intermediation fundamentally reshapes traditional value chains by transforming them from linear sequences of activities into modular, platform-mediated networks [2, 10]. In conventional industrial structures, firms coordinated production, distribution, and consumption through vertically integrated processes or tightly controlled supply chains. Digital intermediaries disrupt this configuration by introducing technological infrastructures that fragment these activities into specialized modules connected through platform architectures. Coordination is no longer maintained primarily through firm hierarchy but through digital systems that match supply with demand, manage information flows, and facilitate transactions among dispersed participants.

Through this process of disaggregation, traditional value-chain activities are redistributed across multiple actors. Production may be undertaken by independent suppliers, distribution by logistics partners, and marketing by digital service providers, all coordinated through intermediary platforms. Algorithmic matching systems identify suitable partners, optimize transactions, and allocate resources dynamically across the ecosystem. Complementors contribute specialized capabilities that enhance the overall value proposition, while users increasingly participate as both consumers and contributors of value through feedback, reviews, and data generation [12, 15].

This modular structure allows firms to concentrate on narrowly defined competencies while leveraging platform infrastructures to access global markets and complementary capabilities. Instead of maintaining end-to-end control over the value chain, firms specialize in particular segments where they possess competitive advantages. Platforms then integrate these contributions into broader ecosystem offerings that can scale rapidly across geographic and market boundaries. Such specialization reduces operational complexity while expanding opportunities for collaboration and innovation across ecosystem participants [8, 20].

Literature on open innovation governance further illustrates how digital intermediaries accelerate knowledge flows and collaborative development. Platforms facilitate knowledge seeding by enabling firms, developers, and users to exchange ideas, share technical solutions, and experiment with new configurations of products and services. Through digital interfaces and standardized development environments, intermediaries lower barriers to collaborative innovation and enable distributed actors to participate in value-creation processes. User communities often contribute insights, improvements, and complementary innovations that continuously expand platform capabilities [13, 16].

These dynamics are particularly visible in B2B e-commerce ecosystems and cross-border digital platforms. In such environments, complementors leverage intermediary infrastructures—such as integrated payment systems, logistics networks, and regulatory compliance tools—to access international markets without developing their own global infrastructure. Digital intermediaries coordinate these complex interactions by standardizing transactions, ensuring trust, and reducing the transaction costs associated with cross-border commerce. As a result, small and medium-sized enterprises can participate in global value networks that were previously accessible only to large multinational corporations [18, 21].

The transformation of value chains through digital intermediation, therefore, represents not merely a technological shift but a fundamental reconfiguration of strategic organization. Firms must reconceptualize their roles within ecosystems where coordination occurs through digital platforms rather than internal hierarchies. Strategic success increasingly depends on the ability to integrate into modular networks, collaborate with complementors, and adapt to evolving intermediary infrastructures. Firms that attempt to maintain rigid control over traditional value chains may struggle to compete in platform-mediated markets characterized by rapid innovation and distributed coordination [1, 5, 26].

Strategic positioning and distributed value creation

In platform-dominated markets, strategic positioning becomes a multidimensional process shaped by interactions within and across digital ecosystems [7, 14, 25]. Firms must simultaneously compete with other complementors operating within the same platform while also navigating relationships with the platform owner and broader ecosystem participants. This dual competitive environment requires firms to balance differentiation with alignment, ensuring that their offerings remain distinctive while conforming to platform standards and governance rules.

One strategy firms employ to achieve this balance is to pursue optimal distinctiveness. By leveraging platform legitimacy signals—such as ratings, reviews, certification programs, and algorithmic visibility—firms can enhance their credibility and attract user attention within crowded digital marketplaces. Complementor legitimacy plays a crucial role in this process, as trusted actors often gain preferential visibility and user engagement within platform ecosystems. Through strategic signaling and reputation-building activities, firms can position themselves favorably within intermediary-mediated environments [11, 24].

Distributed value creation emerges when platforms enable collaborative interactions among complementors, users, and platform owners. Instead of concentrating innovation within a single organization, platforms encourage collective experimentation and resource recombination across ecosystem participants. Complementors develop specialized modules, users generate feedback and data, and platform owners provide infrastructural coordination that integrates these contributions into coherent market offerings. This collaborative process enhances ecosystem generativity and enables rapid expansion of services, products, and functionalities.

Over time, governance arrangements within platform ecosystems may evolve from proprietary structures controlled solely by platform owners toward more participatory models involving complementor communities. In mature ecosystems, complementors often contribute to developing standards, governance guidelines, and innovation initiatives that shape the platform’s future trajectory. Such collective governance arrangements strengthen ecosystem resilience by distributing responsibility for innovation and adaptation across multiple actors [4, 27].

Taken together, the foundational literature demonstrates that digital intermediation, platform governance, and ecosystem participation jointly redefine the strategic role of firms in contemporary digital markets. Firms increasingly operate not as autonomous creators of value but as interdependent participants within platform-mediated ecosystems where value emerges through collaboration, coordination, and relational alignment [2, 6, 22]. Despite these insights, existing frameworks rarely specify the causal mechanisms by which the intensity of digital intermediation accelerates role transformation and reshapes value-creation structures. The following section addresses this gap by developing a theoretical explanation that links intermediary structures to the evolving strategic roles of firms within platform ecosystems.

Building on the articulated propositions, the model further conceptualizes digital market intermediation as a dynamic structuring force that continuously redefines the strategic space in which firms operate. Rather than merely inserting a technological layer between producers and consumers, intermediaries actively reshape the architecture of economic interaction by codifying rules, coordinating flows of information, and orchestrating participation across heterogeneous actors. Through algorithmic coordination and data-driven governance, platforms transform markets into programmable environments where value creation is increasingly determined by visibility, ranking systems, and interaction patterns embedded within intermediary infrastructures [4, 10, 23].

Within this environment, the locus of competitive advantage shifts away from traditional ownership of resources toward strategic positioning within platform-mediated ecosystems. Firms derive value not only from their internal capabilities but from their capacity to integrate into intermediary structures, adapt to evolving governance logics, and leverage complementarities generated by other ecosystem participants. Consequently, strategic value creation becomes relational and systemic rather than purely firm-specific. Competitive outcomes depend on how effectively firms navigate intermediation layers that mediate access to users, data, and complementary innovations [5, 7, 21].

This perspective reframes the firm not as an isolated unit of production but as an adaptive node within a digitally orchestrated network. The firm’s role evolves through iterative engagement with platform governance mechanisms, feedback systems, and cross-side network effects that continually recalibrate participation incentives. Firms that successfully adapt to these dynamics develop the capability to simultaneously manage internal operations and external ecosystem relationships, enabling them to exploit opportunities emerging from intermediary-mediated interactions [1, 3, 14].

Importantly, digital intermediation also introduces new asymmetries in power and dependency within business ecosystems. Because intermediaries control access to user bases, data flows, and algorithmic visibility, they occupy structurally privileged positions that allow them to influence market outcomes and redistribute value among participants. Firms operating within these environments must therefore strategically manage the tension between opportunity and dependency. While platform participation can significantly expand market reach and innovation potential, it can also constrain autonomy by subjecting firms to evolving governance rules and algorithmic evaluation systems [4, 24, 25].

As a result, firms increasingly pursue multi-platform strategies and ecosystem diversification to mitigate dependence on intermediaries and preserve strategic flexibility. By engaging across multiple digital intermediaries, firms can balance the benefits of platform scale with the need to maintain bargaining power and strategic resilience. Such strategies reflect an emerging pattern in platform-dominated markets where firms no longer rely on a single value chain but instead operate across overlapping ecosystems, dynamically reallocating resources and capabilities in response to shifting intermediary conditions [16, 21, 27].

Figure 1 illustrates how digital market intermediation restructures value creation by shifting firms from firm-centric control toward ecosystem-embedded strategic participation mediated by platform governance, complementor coordination, algorithmic visibility, and distributed value appropriation.

Collectively, these dynamics reinforce the model’s central argument: digital market intermediation serves as the primary mechanism through which firms’ roles and the structure of value creation are transformed in contemporary digital markets. By externalizing coordination, institutionalizing governance frameworks, and enabling ecosystem-level generativity, intermediaries reshape how firms create, capture, and sustain strategic value. The proposed framework, therefore, advances platform and ecosystem research by positioning intermediation not as a contextual feature of digital markets but as the fundamental driver of organizational transformation and strategic evolution.

The seven propositions developed in the preceding section advance platform theory by repositioning digital market intermediation as the primary causal driver of firm-role transformation rather than a mere technological enabler [1, 2, 4]. Extant literature has largely treated platforms as boundary-spanning organizations that invert firm logic through externalization [1, 2], yet has stopped short of theorizing intermediation intensity as the mechanism that systematically erodes firm-centric control while institutionalizing distributed value creation. By foregrounding intermediation as the pivotal process, the present framework resolves the theoretical tension between platform openness and strategic dependency [6, 23, 24].

Propositions 1 and 3, in particular, extend ecosystem theory by demonstrating that value-chain disaggregation is not an incidental outcome of modularity but a direct consequence of algorithmic coordination and cross-side network effects [5, 10, 22]. This shifts analytical focus from firm-level capabilities [8] to relational ecosystem dynamics, thereby bridging gaps in organization science and information systems research [12, 15]. Propositions 2 and 4 further refine governance scholarship by specifying the moderating role of alignment mechanisms, showing that governance is not a static control system but a dynamic capability that determines whether firms retain strategic agency or become subordinated complementors [16, 23, 27]. Table 2 presents a governance–dependency matrix that clarifies how different combinations of platform governance tightness and firm platform dependence shape strategic agency and value capture outcomes.

Collectively, the propositions contribute to strategic management theory by reconceptualizing competitive advantage in platform-dominated environments as emerging from intermediation-specific competencies rather than resource ownership [20, 21, 25]. The framework also addresses calls for integrative models that link multi-sided platform literature with value-creation reconfiguration [3, 7, 14], offering a unified explanation of how digital intermediaries simultaneously expand market participation and constrain firm autonomy. These theoretical extensions provide a foundation for subsequent empirical validation while deepening understanding of how platform governance and complementor ecosystems reshape the boundaries of the firm [4, 9, 11].

Firms operating in digitally intermediated markets must internalize a new set of competencies to translate platform dependency into sustainable advantage [7, 20]. Proposition 7 underscores the necessity of developing algorithmic literacy and governance navigation skills, enabling managers to optimize complementor positioning, signaling, and multihoming strategies [11, 13, 25]. Rather than resisting intermediation, executives should proactively align internal innovation processes with platform rules while cultivating selective independence through collective governance participation [16, 27].

In practice, this requires redesigning organizational structures around ecosystem contribution rather than end-to-end control. Manufacturing and service firms, for instance, can leverage platform governance mechanisms to co-create with customers and complementors, accelerating servitization and new product development without heavy capital investment [17, 18, 21]. Managers must also monitor intermediation intensity within their sectors, as higher levels amplify both opportunity and vulnerability [5, 15]. Proactive strategies include investing in platform signaling capabilities, building rating-and-review co-creation routines, and maintaining multihoming options to mitigate lock-in risks [8, 14, 19].

The framework further advises firms to treat digital market intermediation as a strategic variable rather than an exogenous force. By cultivating hybrid capabilities that blend internal R&D with ecosystem orchestration, organizations can convert distributed value creation into superior appropriation [6, 22, 24]. Failure to adapt these pathways risks progressive role subordination and value slippage, as evidenced by the competitive dynamics of software and e-commerce ecosystems [9, 23].

Several promising avenues emerge for extending the proposed conceptualization. First, longitudinal studies should examine how intermediation intensity evolves over the life cycles of platforms and how it influences firm-role transitions across industries [4, 10, 15]. Second, comparative research could investigate boundary conditions of the propositions, particularly the role of regulatory interventions and technological disruptions in moderating governance alignment [23, 27]. Third, multi-platform analyses would illuminate value migration patterns, testing whether firms achieve greater resilience through collective governance participation or through specialized single-platform strategies [14, 16, 21].

Additionally, future work should integrate behavioral and cognitive perspectives to explore how managers perceive and respond to platform-mediated coordination mechanisms [11, 13]. Cross-cultural examinations of complementor ecosystems in emerging markets would further enrich the framework by revealing context-specific intermediation dynamics [17, 18]. Finally, integrating insights from adjacent fields, such as data governance and AI-driven matching, could refine the understanding of the impact of algorithmic coordination on distributed value creation [5, 12]. These directions promise to sustain theoretical momentum in digital business and management studies.

Digital market intermediation has irreversibly altered the strategic landscape, compelling firms to abandon traditional autonomy in favor of ecosystem-embedded participation. The theoretical framework advanced here demonstrates that platform governance, complementor coordination, and intermediation-driven value reconfiguration constitute the new foundations of competitive advantage. By developing seven propositions that link intermediation intensity to role transformation and value mechanisms, this article provides a coherent explanation for the changing role of firms in platform-dominated business environments.

The implications are clear: sustained success now hinges on intermediation-specific competencies, governance alignment, and relational orchestration rather than internal resource control. As digital platforms continue to dominate market coordination, firms that proactively embrace these dynamics will thrive, while those clinging to legacy value-chain models face obsolescence. This reconceptualization not only advances academic understanding but also equips practitioners with actionable pathways for strategic adaptation in an increasingly intermediated world.

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Fatima Zahra Amrani & Youssef Benali contributed to this work.

Authors and affiliations

Department of Digital Economy and Management Systems, Mohammed V University, Rabat, Morocco
Fatima Zahra Amrani & Youssef Benali

Corresponding author

Correspondence to Fatima Zahra Amrani

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