Governance Structure in Platform Business: Amey Parulkar [21501698]

This essay by Amey Uday Parulkar [21501698] explores the critical role of governance in platform-based businesses, highlighting the differences between traditional and platform-based models and the challenges these new businesses pose to labor markets and society. It discusses the various types of platform governance, categorizing them into content, community, technical, and legal governance, and elaborates on six key functions of governance: organizational objectives, ethics, culture, compliance, management accountability, and framework design. The essay also introduces the petal diagram framework, emphasizing the importance of governing relationships, change, people, finances, and viability/sustainability. It delves into the platform economy, its consequences, and the growing need for robust platform governance to ensure user protection, accountability, and a balance between innovation and regulation, advocating for collaboration between businesses, governments, and users to create effective policies.

Role of governance in a platform-based business
Governance structure – Platform Business
Amey Uday Parulkar [21501698]
Platform Governance
Governance is essentially derived from words like government or governing in control. With regards to any
business organization, governance plays a role in decision-making that is ethical in nature and allows action
that is managerial in an organization which relies on transparency, accountability, and defined roles. [1]
Platform businesses are largely driven by innovations in the technical spectrum with an increased online
connectivity, these businesses are game changers and re-writing the pages of our book on living and work
patterns. To give you some perspective, the new way of hailing a cab service is via “Uber” application online
at your doorstep, while booking a decent room with all amenities equivalent of a traditional high standard
hotels and within budget has been made possible via “Airbnb”- again a platform-based application, while
traditional way of shopping has been completely disrupted by another platform-based application “Amazon”
charging the whole canvas of how we shop today.
Organizations above are only few examples from many such platform-based businesses utilizing the power of
web and mobile-based platforms transforming the way services are delivered. With the advent of these
innovative techniques, they have created market conditions that has disrupted there respective industries and
making them eventually follow their suite or else disappear!
The main differentiator between platform business and traditional business is a strong foundation of policies
that governs the interests of users and employees which are in place for decades when it comes to traditional
enterprises. This is quite opaque when it comes to platform-based businesses and poses new questions and
challenges for labor market, organizations, and society at large.
Hence, it is pertinent that platform governance must be at the core of any platform-based business in terms of
user protection, their privacy, and rights. [2]

Platform Governance Types
As we have established that governance is a key aspect in the formation of any successful platform-business.
However, governance is not just a single structure that can be implemented by the book. It is a layered
architecture that must be designed by asking some very important questions at each layer to address the
shortcomings of the platform when it comes to governance. These layers of governance can be broadly
categorized into 4 types as explained below:
Governance and its types described above can be further elaborated into six different functions using the
petal diagram framework. By integrating, coordinating, and balancing these six functions, a good governance
can be achieved. [9]
 What are the objectives of an organization?
The objective of any organization is found via its mission and vision statements that are executed
using their strategic plan. They defined the purpose and describe on the way to achieve the same.
The strategy to achieve the goal is the key between management and governing body with
responsibility that is shared to device an effective plan for the management to execute. [10]
 What are the ethics of an organization?
Ethics define the behavioral aspects of any organization. Most weightage is given to factors such as
social responsibility, sustainability and engaging the stakeholders over profits. Ethics are essentially
moral values that define the standards that govern the conduct of individuals the organization. Any
organizations ethical standards are measured by the behavior of any individual from a top-down
hierarchy. [11]
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Structural
Financial
Performance
Regulatory
What digital platform?
Local and Central Control
Reporting hierarchy
Management Autonomy
Budget allocation
Fund Control and processing
Investment details
Employee Evaluation
Reward structure
Performance assessment
Legislation Impact
Accounting Rules

 Organizational Culture
Any organizations culture is defined the way people communicate and interact with each other.
People in decision-making positions can influence this operating culture that is decided by the
governing bodies that wants to implement it. An effective culture can be implemented by the will of
the people who wants to be “governed” and support a governance system at the core. This is
sometimes referred to as Governmentality1. Other factors that may affect organization culture
depends on how supportive an organization is in terms of risk taking or innovation. How open and
transparent or mature and professional an organization can be with high tolerance. [12]
 Organizational Compliance
A compliance framework consisting of regulatory, statutory, and legal obligations that is defined by
the governing body must be ensured by the management and employees in terms of achieving
organizations goals. [13]
 Management Accountability
Management must ensure accountability to uphold the ethics and culture they have developed and
influenced within the organization. They must also ensure to look after the resources under them and
take responsibility for accomplishing the strategic plan and fulfilling organization goals. [14]
 Governance Framework (Design and Implementation)
A governing body is essentially responsible for organizations performance and must be responsible
for it. But it is humongous task to undertake all responsibilities themselves. To ensure smooth
governance of the organization, many responsibilities are assigned to people within the management.
Governance framework essentially defines the factors that enable the principles and structures acting
as an interface through which any organizations governance will delegate levels of authority and
responsibility to managers and others for ensuring accountability. [4]
To implement the above six functions, the governing body requires an effective framework consisting of the
primary elements that are required to achieve the objective of an organization. This is outlined in the petal
diagram framework below:
The management of project management: A conceptual framework for project governance - Scientific Figure on ResearchGate. Available from: https://www.researchgate.net/figure/Petal-diagram-of-
governance_fig4_266620368 [accessed 30 Jul, 2021]
See R. Müller, S.Pemsel, J.Shao. Organisational enablers for project governance and governmentality in project-based organisations. International
Journal of Project Management (Pre press). http://dx.doi.org/10.1016/j.ijproman.2014.07.008
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The petal diagram of governance is essentially a solo process with different planes. The “petals” in the
diagram mainly represents five main aspects of governance namely: governing relationships, governing
change, governing the organizations people, financial governance and finally viability and sustainability.
The pistil throws light on the core values of an organization that is well-governed using the six functions of
governance discussed above.
Each petal concentrates on an area of governance that requires certain set of skill or knowledge. Each of
these areas uses the above six functions to augment the skills and capabilities for implementing governance.
For instance, stock exchanges and governments would certainly expect an appreciation in financial domain
such as balance sheets. This is possible only via certain level of standard provided by the financial
governance.
Although, a petal diagram is a solo process with different facets as discussed above, the individual petals do
not operate separately. This means that any governance failure in any “petal” will certainly impact not just
other areas but also the organization. For example, failure in governance in terms of mishandling of
organization staff due to management can have legal implications. This could certainly affect the
organizations reputation and send their market status in a downward spiral.
So, as we know that in order to govern any part of the overall structure in an organization requires skills and
knowledge, but it is equally important to be aware that every petal of governance is inter-linked and failure in
any one of the areas would certainly affect not just other areas but also overall organization. The model is
designed to do the same in portraying both the factors and implement strategies that can parallelly provide
both skills and knowledge that is required by each petal in terms of governance but also remain inter-linked
with each other in an integrated part of the overall governance structure. [4]
What is Platform Governance?
We have discussed at length about what is governance in general with a little glimpse of what would it look
like platform-wise. In today’s world, an individual is impacted by various forms of digital solutions on a
daily basis which has transformed their life. For instance, grab made life easier to hail a cab while solutions
such as Deliveroo and food panda have revolutionized the food delivery industry and all available at a click
of your fingertip! This is nothing but a platform-based business where businesses take advantage of web and
mobile based platforms to come up with innovative solutions disrupting an already existing traditional
industry in the same domain.
No wonder that these platform-based organizations have had a resounding success, but this has come too fast
too fatal in terms of governance. It has been observed that lack of strong policies in place to govern has left
the users (both customers and employees) out in the open in comparison to their traditional counterparts. For
instance, the drivers of Deliveroo are employees or contractors? What the labor laws that are applied on
them? This spike in economy has certainly opened new challenges and questions for society at large and
organizations as well.
Hence, governance is going to be a big focus in the present and future for these platform-based organizations
to find a common ground in terms of protecting user and their privacy as rights.[8]
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What is Platform Economy?
The ingress of platform-based businesses has stirred the economic success phenomenally in last few years.
Lot of businesses have started adopting this business model to survive this disruptive wave by applying the
best practices as well as digital strategies. Any digital solution that provides a platform using the internet for
individuals to connect and interact is defined as platform economy.
The business model essentially comprises of the platform, the seller (or worker) and the buyer (or customer).
It is the platform that helps people to connect demand (customer) with that of supply (the seller or worker)
The consequences of the platform economy
Every outcome in this world has its pros and cons! And Platform economy is no different. A simple google
search can expose several negative points. Although, platforms most of time times deliver of what is
expected of them (e.g., Booking online shopping and getting it delivered at home) for both the consumer and
the platform, however, due to lack of governance or strict policies and community guidelines in place may
results in a lot of loopholes. This may eventually result in many negative outcomes such as users being
scammed, or delivery man being treated unfairly. As platform businesses are relatively new concept, they do
not follow the regulations set forth by traditional businesses as they do not deem fit for the laws that govern
these policies. [2]
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Importance of Platform Governance
What is platform governance? As explained, a collective decision of policies, processes, rules and design that
are implemented to augment on how any content is scrutinised and presented followed by observing the
user/community behaviour to ensure cooperation while preventing abuse among users. Now, as the
circumstances that surround any platform-business are quite unique in nature and hence lack in steady
policies to govern these types of business.
Platform businesses have paved their way into market with a disruptive strategy thereby also creating a gap
between them and the way traditional businesses run. Due to this, the definition of platform governance is not
status and continues to be dynamic in nature. For instance, what is the role of government in making sure that
these platforms are abiding certain form of governance? What is the role of employees? What role does
users/community play in the platforms business making?
So, in order to keep the viability of any business alive, platform-based, traditional business and governments
need to work in collaboration to write policies that govern these platforms in providing a great user
experience. This will certainly be a win-win for both consumer as well as the businesses. [2]
Although platform governance is evolving gradually, there are 3 main aspects that it needs to address as soon
as possible.
For any type of platform-based business, it is extremely important to set
the onus of responsibility in terms of accountability. This could be in in terms of consumer’s data security to
private information. The question is who is accountable? Is it the platform itself or application owner or seller
for that matter? In case of a cyber-attack on the application, who takes the bullet?
One great example of accountability is “Airbnb”. Although there are many scams happening but the one at
Airbnb takes the cake where hosts scam the consumers by using Airbnb platform to advertise fake listings.
The usual modus operandi is when user pays an amount to book a stay at a location, but right before check-
in, the hosts would inform the consumer of an emergency such as flood in that area or facilities not working
properly and offer the consumer with another of their property. This turns out to be a property not worth the
amount that the consumer spent online. Now since the payment has already been made and there are no
policies at Airbnb governing an outcome in such situations, the consumer has no choice but to accept the
offer without an option of refund as it is possible only before check-in. So essentially no one is held
accountable due to lack of governance in terms of accountability. Now, in some cases, Airbnb had taken
accountability and refunded the scammed consumers, but it begs a bigger question as to when we will give
preference to user safety and protection. This takes us to the second important aspect: “Compliance
Regulation” [7]
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Accountability!

Currently, there are no policies implemented to govern the levels of
regulations that platform-based businesses must comply to in terms of safety standard or taxes or fair
competition etc. This is mainly due to a drastic difference in terms of the business model that they are based
on in comparison to their traditional counterparts. Hence, existing laws of regulations may not apply and
need to be re-visited to incorporate these new business models especially when it comes to manpower rights
and labor laws.
For instance, what labor rights can be applied to platform models hiring drivers to provide cab service?
Should they be considered as employees or contractors? It is a gray area to enforce policies that are defined
for traditional businesses on platform-based operations. This becomes even more difficult when the platform
considers itself as a facilitator between consumer and seller and hence does not consider themselves as an
employer. This can deeply impact the socio-economic status and well-being of these workers associated with
these businesses. [6]
Information can be broadly presented in two forms: Genuine and Made up
(fake). It is an extremely important factor to be considered when platform governance is concerned in terms
of how information is presented on various online platforms such as Twitter or Facebook. Online platforms
such as these have provided the traditional institutions a run for their money in terms of the algorithms, they
use to bring the favorite content to user but at the same time lacking the likes of moderation and control that
traditional platform offer using editors/researchers etc. Algorithms that use the keyword placement to provide
a favored article or information puts more emphasis on the quantitative (monetary) value rather than the
qualitative value of the content. Marketers in this booming economy are doing everything they can to gain
this attention.
Having said that, many online platforms such as “Facebook” try to enforce stricter policies to bring quality
content that is reliable and accurate for the user to consume. This is extremely important in today’s day and
age when a large amount of readership has gone online and get influenced by the content and end making
critical decisions based on inaccurate or false information. A great example would ne the 2016 US
presidential elections which proves that false information was floated online that influenced decision making
of individuals and changed the course of history for the next four years. [5]
Conclusion
As the time progresses, these technologies will become even more engraved within us and society. Although
these platforms have found the key to success in terms of the providing innovative services, but to keep the
longevity alive, building trust with all the consumers and workers of a mobile/web platform is the need of the
hour or else you risk losing your users that you have built over a period and worked hard to maintain it.
Platform governance would certainly be a key player in bridging this gap and provide the required stability,
accountability and reliability along with a stronger code of ethics and stricter policy enforcing to make sure
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Compliance Regulation
Information Reliability

that both parties of the platform are heard and provided with swift action. This eventually would build the
required trust by the users with the concerned platform and keep the longevity alive!
References
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