Which is more effective for platform performance: Punishments or incentives?

The success of third-party business-to-business (B2B) e-commerce platforms relies heavily on simultaneous governance of both sellers and buyers. This study examined and compared the effects of punishments and incentives on seller's opportunism toward platforms, buyers' trust in platforms, and platform performance using data from B2B platforms in China. The results show that punishments (both severity and speed) and incentives have differential effects on curbing sellers' opportunism and building buyers' trust. These findings not only make novel theoretical contributions to the B2B platform and governance literature by exploring platforms' triadic governance issue but also provide valuable practical suggestions for platform managers.