From Networked Firms to Digital Scalability

We live in an increasingly networked world, where physical links interact with digital connections, and value co-creation paradigms enhance disrupting business models. The interactions among the traditional stakeholders (shareholders, managers, employees, banks, suppliers, customers, etc.) are reshaped by the presence of digital platforms that act as a bridging agent and represent a “virtual” stakeholder. This is the case, for instance, in B2B2C eCommerce applications or in real-time information exchanges where big data fuel artificial intelligence patterns. In this evolutionary ecosystem, traditional firms coexist with innovative startups: while the former undergo a complex digital transition, the latter face Darwinian selection. Cross-pollination represents a form of win-win interaction between conventional and digitally-born firms. This dialectic interplay may be interpreted with Plato’s allegory of the cave, wondering if the shadows perceived by the prisoners represent the real or the digital world. A trendy complementary theory is represented by complex – multilayer – networks where mutual layers interact. Digital platforms can be reinterpreted accordingly, as they represent a bridging node that connects several layers, adding value to the whole ecosystem. This chapter shows that networks, together with their uneasy mathematical properties, contribute to a path-breaking reinterpretation of the theory of the Coasian firm. This essay fills a gap in the existing literature, adding an innovative interpretation to classic corporate governance concerns.