Risks in On-Demand Service Platform Operations: The Innovative Framework With SET Strategies

With the rapid development of internet and mobile technologies, we have witnessed a boom in on-demand service platform operations. Acting as an intermediary between consumers and service providers, the platform needs to consider the attributes of both the supply side and demand side, and match them efficiently. However, multiple controversies and challenges exist in on-demand service platform operations, making it urgent to identify associated risks and mitigate them. In this paper, we first combine a systematic literature review, real-world practices, and industrial discussions to examine the key risks and propose potential risk management strategies involved in on-demand service platform operations. We divide our discussions into three areas: Demand and pricing, supply and incentives, and matching mechanisms. Based on the derived insights, we establish an innovative and interdisciplinary framework based on related theories to depict the relationships among key risks, system members' key decisions, risk management “SET” strategies, and systems performances. The proposed framework could help on-demand service platforms alleviate risks, optimize decisions, achieve operational innovation, and improve operations performances. Finally, we establish a future research agenda. Managerial Relevance Statement: By combining the literature, real-world practices, and industrial discussions, this paper establishes a framework which proposes insights to improve on-demand service platform operations. This innovative framework depicts the relationships among key risks, system members' decisions, risk management “SET” strategies, and systems performances. The focus of the proposed “SET” strategies is on risk management, which would provide valuable guidance to engineering managers of on-demand service platforms.