1

Social Enterprise Steps into Multi-Sided Platforms: A Case Study of

Barrier-Free Transport Service in Taiwan
1


Introduction
Duofu Care & Service, established in May 2009, is Taiwans first private rehabus
service operator that is also considered to be one of Taiwans representative social
enterprises. Duofu Care & Service (hereafter referred to as Duofu) is dedicated to
providing a highly flexible, high-quality, barrier-free transport service for people with
disabilities, regardless of their nationality. The goal was to resolve the transport
inconvenience that people with disabilities in Taiwan typically encounter and are, thus,
often forced to remain at home. Since its establishment, Duofu has developed a
multitude of extension services such as accessible travel, commissioned management
for rehabus vehicles, and medication delivery services. Among the services provided,
the accessible travel service is the primary source of income for Duofu. Nevertheless,
the method by which Duofu achieved success is worthy of related service
providers to follow. For example, how did Duofu develop itself? How did Duofu
overcome its financial problems when it did not accept any government subsidies
while still having to compete with other private rehabus service operators who
received a considerable amount of government subsidies? How did Duofu attract
users to use their services? When its accessible travel service was developed, how did
Duofu persuade vendors and tourist attraction operators to participate in a travel
service that has yet to be verified for its profitability? How should Duofu gain a
balance between economic and social values in an attempt to achieve multidirectional
growth goals?
A multisided platform hereafter referred to as MSPcan be used to explain
the business logic that Duofu adopts: Duofu creates value primarily by enabling direct
interactions between people with disabilities, accessible travel service providers, and
other related service providers. Platform here refers to economic platform
2
which

1
Working paper prepared by Sonic (Hsiang-Hsun) Wu and Jennifer Chen. Do not cite without authors
permission. You can contact Sonic Wu by email: sonicwu@saturn.yzu.edu.tw
2
Other type of platform such as product platform which is a set of product parts that are connected
physically as a steady sub-assembly and are able to fit for different final models and also develop
2

has two (or more) distinct groups that provide each other with network benefits
(Eisenmann & Hagiu, 2008). A platform operator intends to facilitate direct
interactions by offering infrastructure and rules between two (or more) distinct groups
of affiliated users is called multisided platform (Hagiu & Wright, 2011). Any users
value the ability to interacting, transacting, and cooperating with a various users on
the networks other side(s). However, at the beginning, Duofu had no MSP idea for
use to resolve the aforementioned problems. When it started, Duofu focused on
providing an excellent accessible transport service, actively cooperated with public
service providers who offer accessible transport services, and vied for cooperative
opportunities with disability groups, all in an effort to establish a positive word of
mouth. When the business has attracted a group of regular customers, Duofu began
developing new services, such as its traveling service. Duofu gradually realized its
unique role as been a platform to attract other groups of users. Thereafter, upon the
request of third-party agencies, Duofu added commissioned rehabus management,
medication delivery, and food delivery services. Financially, although Duofu is still
making a loss, the MSP used by Duofu is expected to bring benefits relating to
economies of scale and economies of scope.
Duofu provides social enterprises with a sustainable management method of
evolving from using a single service to employing MSP. Doufu shows us social
enterprises are inherently a two-sided platform, in which one side is a group formed
for fulfilling social public needs, and the other side comprises participants who invest
in such a group because of the groups business value (Baden-Fuller & Mangematin,
2013). In recent years, the development of e-commerce platforms such as the
business-to-business trading platform Alibaba and novel mobile applications such as
the Uber taxi service has confirmed that platform is a business model that yields
substantial economic value. However, in non-profit organization and social enterprise
studies, platform perspective was less studied and discussed. If stakeholders of social
enterprises can re-comprehend the interactive effects between business value and
social value from a platform perspective, social enterprises will thus be able to
develop services and products featuring increased sustainability.
The major difference between the platform model of social enterprises and that

differentiated products is not included in our discussion.
3

of for-profit organizations is that social enterprises are required to mitigate the
conflicts that occur between social public ends and economic goals. Similar to a
typical platform model, the platform model of social enterprises also requires a large
amount of capitals to establish its infrastructure. However, obtaining investments
from investors is relatively more challenging for social enterprises than it is for
profit-making organizations, because the goal that social enterprises actively pursue
(i.e., public benefits) signifies no possibility of profit returns. In addition, another
problem that arises when platform model is used is the chicken-and-egg problem,
whereby a group of users would stand by, observing whether other users would join;
if no other party provides a group that enables interaction, transaction, and
cooperation, users would decide not to employ the platform model (Hagiu & Wright,
2011). For-profit organizations can resolve the chicken-and-egg problem by
subsidizing the investment costs that early users expend on using a product or service.
For example, a family game console is typically sold at a low cost to increase the
number of game players. Cross subsidization is not a business model unknown to
social enterprises; for example, Scojo Foundation (currently known as VisionSpring)
distributed reading glasses free of charge to Indian citizens living in rural areas, while
selling them to middle class people in urban areas. However, social enterprises
implementing cross subsidization may encounter the following problems: (1) whether
they should use the capitals acquired from nonprofit businesses to subsidize the
development of profit-making businesses that just started (Kerlin, 2012)?; (2) should
profit-making businesses extensively subsidize nonprofit businesses? And when
should they cease subsidizing them?; and (3) how should social enterprises respond
when external investors of profit-making businesses attempt to reduce the focus that
social enterprises place on nonprofit businesses? Another approach that for-profit
organizations typically employ to resolve their chicken-and-egg problem is providing
exclusivity to attract user participation, such as tying exclusive game software to a
game console whenever a new generation of game console is launched. Exclusivity
entails requiring a large amount of investment in advance or seeking the full support
of a third party (Casey & Tyli, 2012); if no such large-scale enterprise or capital is
available, a small social enterprise generally cannot adopt the exclusivity approach.
The infrastructure pertinent to a MSP is extremely expensive, and the process of
building trust among various groups of users is time consuming. Cases of failure in
4

using a platform model are higher in number than those of successful cases (Casey &
Tyli, 2012). If social enterprises adopt a platform model at the beginning of the
entrepreneurial venture, their failure rate can be expected to be higher than that of
for-profit organizations. In this case study of Duofu, we observed that Duofu had not
been successful in using a platform model at first; instead, it had sought to seeking a
potential two-sided platform from which it then develops a MSP. In the remaining
sections of this paper, we first introduce Duofus background and its initial method of
cross subsidization and subsequently describe the developmental process whereby
Duofu advances from using a one-sided platform, to a two-sided and then MSP.
Finally, based on this case study, we propose three platform model concepts that are
conducive to social enterprises seeking sustainable development.
Establishment of Duofu: Resolving the shortage of barrier-free transport
services
In May 2009, Jeff Hsu resigned from his job as a documentary director and
established Duofu Care & Service. What prompted Jeff to start this care service is his
grandmother who was injured from a fall and travelling to seek medical attention was
extremely inconvenient for her because she lacked a medical record for handicap (i.e.,
a disability card proving an individuals state of disability) that would allow her to
travel on rehabus shuttles. In addition, public (government)-managed private transport
services for people with disabilities have a considerable number of restrictions such as
users need to make reservations in advance, transport to other counties or cities is not
within the service scope, and the service is limited to only individuals who need
transport to seek medical attention. These limitations not only wasted users and their
family members time and physically and mentally influenced these people, but also
confined people with disabilities to a specific living circle.
3
Therefore, Jeff thought,
instead of complaining and waiting for improvements, he could develop a transport
service himself that would fulfill the needs of people with disabilities. Thus, Duofu
became Taiwans first private service company offering accessible transportation,
incorporating professional services into an accessible transportation service, which
was initially dominated by traditional car rental service providers. Consequently,
pregnant women, children, elderly people, and people with disabilities are able to

3
Sun, C.W., Vehicle Service: Duofu Creates a Barrier-Free Environment, China News Agency, Taipei,
February 13, 2013.
5

travel whenever and wherever they desire.
Duofus primary competitor is rehabus services that are subsidized by the
government. Private sectors are unwilling to invest in rehabus businesses because (1)
the cost of purchasing a six-seat shuttle and relevant modification fees total at least
NT$3 million, suggesting a high investment cost; (2) passengers are typically not
physically well, causing prolonged and complex service processes, which indicate that
the revenue achievable is substantially lower than that of a taxi business when
operating within the same time frame; and (3) modified buses cannot be sold on the
secondhand market. The government of the Republic of China has therefore
formulated subsidy policies that would encourage private organizations to invest in
rehabus business. With the help of the central government, local governments have
developed rehabus services based on a public (government)-managed private business
concept, encouraging business owners who are willing to provide rehabus service to
participate in the tendering process. Successful tenderers can obtain subsidies;
however, according to regulations, only individuals who hold a disability card are
eligible to use the service. Generally, public-managed rehabus service is inexpensive,
charging users at a third of the standard taxi rate, and low-income households are
even eligible for a certain number of free rides per week. In addition to their own
vehicles, tenderers are also provided with rehabus vehicles owned by the local
government. Currently, operators who have cooperated with the local government to
provide rehabus service include the Eden Social Welfare Foundation, e-Go, and
e-Bus.
Despite the provision of government subsidies, public-managed private
businesses remain incapable of resolving the severe social concern regarding rehabus
shortages. At the end of the first season of 2014, 1,125,000 people in Taiwan possess
the disability card, accounting for 4.8% of the total population; based on disability
categories, 375,000 people (33.3%) are individuals with limb disorders, accounting
for the highest proportion in Taiwan. However, such a high number of people require
accessible transportation yet insufficient number of vehicles is available. According to
data presented by the Ministry of Health and Welfare, by the end of March 2014,
merely 1,382 vehicles are available in Taiwan for providing accessible transportation
services. Based on various counties and cities, on average, 1,000 people with mental
and physical disabilities require 1.23 rehabus shuttles; specifically, Taipei City has the
6

highest number of shuttles at 2.3, and Yunlin County has the least at 0.32,
demonstrating the uneven distribution and shortage of rehabus resources. According
to Jeffs estimation based on 60,000 people with disabilities who need to periodically
visit medical institutions for examinations, annual medical transport service yields
approximately NT$4 billion revenue.
4
Thereafter, incorporating the requirement of
the entire nation indicates a revenue of NT$2530 billion.

Figure 1. Number of rehabus vehicles dstributed per 1000 people with physical and mental disabilities
(Data source: Organized by this study, and the Directorate of Statistics, Ministry of Health and Welfare)

The low service quality of public-managed private rehabus services is another
aspect that has been criticized severely. Successful tenderers of various counties and
cities have only provided service to people with disabilities whose household registry
is registered under that specific area, and focused on attaining as much profit as
possible from the difference between subsidies and operating costs. To achieve this
5
,
these service providers have tried to minimize costs for vehicle maintenance, safety
equipment, and personnel training, consequently engendering an unsafe environment
and extremely poor service quality for passengers. In addition, to enhance vehicle use
rate, service providers have mandated that users must make bookings 35 days in
advance and refused to permit impromptu bookings. Moreover, users who missed
bookings will receive penalty points as a form of punishment. For example, in Taipei
City, those who accumulate 3 penalty points are prohibited from using the service for

4
Calculated by assuming that each person requires 8 trips per month at NT$700 per trip
5
County and city governments have specified that rehabus service providers must provide the standard
number of services per month in order to receive the set amount of subsidies; failure to do so shall
result in a proportionate deduction from the subsidy. Report has shown that providers had attempted to
maintain this standard by dispatching a bus to the residential area of a user who had already cancelled
the service and even made their own arrangements via phone to satisfy the specified standard.
0.73
2.30
1.90
1.13
0.91
1.11
0.46
2.00
0.62 0.66
0.32
0.46 0.49
1.06
0.85
0.69
0.79
0.84
0.55
1.57
1.19
4.55
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00

Number of rehabus vehicles dstributed per 1000 people with physical and mental disabilities
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7

a month. Furthermore, vehicles are typically prioritized for people with higher level of
disability severity, making it impossible for people with lower disability severity to
use the service. If users opt to use self-paid rehabus services, they could be charged at
a rate of as high as NT$ 900 per trip.
6
Therefore, not only have Taiwanese people
with disabilities expressed extreme dissatisfaction toward rehabus services, but
foreign travelers have also considered Taiwan to be a disability-unfriendly nation.
In the first year (2009) of its establishment, Duofu, headquartered in Wenshan
District of Taipei City, started serving people with disabilities in Taipei City and New
Taipei City by using two vans. In contrast to public-managed private rehabus services,
Duofu allows users to use the service any time and cancel their bookings without
being penalized. In addition, Duofu provides transport to cross-counties and cities for
any purpose, and fees charged by Duofu are considerably lower than those of
self-paid rehabus services, starting at a rate of NT$500. Therefore, at the early stage
of its entrepreneurial venture, Duofu rapidly attracted a wide range of customers who
are perfectly satisfied with its service, including people with disabilities, pregnant
women, children, and elderly people. Within a short period, Duofu purchased another
van by the end of 2009 and managed to break even in its first year. At the beginning
of 2010, Duofu further purchased three more vans, increasing its total number of vans
to six.

Making a Platform: Where Did the Customers Come From?
In the first two years of its establishment, Duofu has visited various large and
small disability associations with the hope of becoming the best accessible
transportation partner to these associations. However, the lack of trust these
associations had for Duofu has rendered Duofus effort in promoting itself fruitless.
Nevertheless, Duofus series of advantages (inexpensive service, high service quality,
no limitations to purpose of use, and no booking required) have been verbally
transmitted by its customers and propagated across the Internet, which helped Duofu
to successfully establish its first group of highly loyal customers. The transport
service design adopted by Duofu is described as follows:

6
The price per trip in Taipei City, displayed according to the price list announced by e-Go in
December 2008.
8

Service standardization: Duofu has standardized its service procedures,
from the first point of contact with customers to the satisfaction survey
conducted on users who have used its service. In addition, Duofu offers
services according to users level of disability severity. During the
standardization process, Jeff requested drivers to first determine the
inconveniences that passengers experience in order to effectively handle
various situations. For example, when a passenger vomits in the car
because of physical discomforts, the driver should immediately check the
passengers status and comfort him/her accordingly while contemplating
how the interior can be restored prior to picking up the next passenger.
Drivers whom Duofu hire are typically 40 years old on average, 10 years
younger than those typically employed by other service providers,
because Jeff believed that younger drivers are more likely to accept a
customer-centered service model and abide by service regulations.
Home service: Jeff found that elderly people and patients who live in
apartments equipped with no elevators are unable to travel outdoors,
which severely influenced their social lives and physical health.
Therefore, Duofu introduced a stair-climbing machine for wheelchairs,
enabling transport services to be extended into user homes.
Safety consideration as the top priority: To ensure a safe, comfortable
travel and enable passengers to feel respected, Duofu only employ
vehicles aged below 5 years old and adopt vehicle safety equipment
manufactured by well-known manufacturers. In addition, Duofu will
make sure its modified vehicles pass inspections before using them on the
road. To ascertain customer safety, Duofu mandated that each wheelchair
must be equipped with 5 seat belts, and all passengers are insured with
the maximum insurance amount regulated by law.
Fixed pricing: Duofu adopts a point-to-point pricing; for example,
NT$600 is charged per trip from Wenshan District in Taipei City to
Yonghe District. The prices customers see are what they have to pay; thus,
customers are exempted from having to apprehend whether other
additional fees will be added.
9

No in-advanced bookings required: Duofu offers a 24-hour full day
service, permitting its customers to make reservations any time of the day,
as well as make impromptu bookings and changes. Jeff believes that
customers who are late for their reservations, who wish to use the service
earlier than expected, or who had to cancel the service, all had their
reasons to delay or change their schedule. Therefore, no fees are charged
for any changes and scheduling made; when such a case occurs, Duofu
will make sure to comfort customers, informing them not to worry that
making schedule changes will incur a penalty and that they should not
discontinue to use Duofus service because they feel bad for making
changes. To accommodate flexible scheduling, for every 10 vehicles, 12
to 13 drivers work in shifts to facilitate unexpected incidents.
Nevertheless, Jeff asserted that hiring more drivers than necessary is an
essential waste for enabling customers to enjoy the freedom of
traveling.
No service restrictions: Duofu offers a fixed-point, periodic transport
service to people who need to visit medical institutions for medical
consultations. In addition, customers are welcome to use Duofu for
visiting friends or for traveling purposes.
To enable more people to benefit from Duofus pick-up service, Duofu has vied
to become Taipei Metros appointed wheelchair accessible service partner. Following
2 years of promotion, Duofu has built a strong partnership with various organizations
such as Taiwan Foundation for Rare Disorders, Sunable: Access for All in Taiwan,
Spinal Cord Injury Associations, and Taiwan Motor Neuron Disease Association.
Concurrently, Duofu has also actively participated in large-scale accessible transport
projects, such as the Association of Mouth and Foot Painting Artists of the World in
2012, and the Accessible Transport Service for Taichia Matsu Procession in 2013.
Duofu was extensively involved with the services offered in these projects,
cooperating with host organizers to improve barrier-free facilities, such as adjusting
entrance width to accommodate wheelchair entry and bed heights and preparing
assistive devices for bathing use.
I ntroducing Travel Service
10

Duofus accessible travel service was introduced six months after its
establishment. Jeff recalled that (2013):
Duofus customers with physical disabilities often reflected that: Because of
limited transportations and other constraints, we cannot move as how others do!
Sometimes, when we have finally settled ourselves in a cab, were not sure whether
the place were going is wheelchair friendly. Instead of getting their and only to find
out that the place has no access for wheelchairs or has no bathrooms for disabled
people, wed rather stay at home and watch TV or play on the computer.
Compared with services offered for hospitalhome traveling, accessible travel is
relatively more complex in design. Therefore, Duofu began exploring tourist
attraction areas in an attempt to resolve problems concerning inadequate barrier-free
facilities. Upon dedicating himself to devising the accessible travel service, Jeff
identified the following key points
7
:
1. Service group expansion: Accessible travel offers caregivers and care
receivers (family members) a solution to travel together. Previously,
accessible transport services have focused on care receivers, neglecting the
prolonged stress imposed upon caregivers. Jeff asserted that (2013)
accessible travel is not only a service package provided to an individual,
but is also a complete set of measures offered to an entire family or group.
During holiday seasons or long-weekends, families and companies have all
sought Duofu for assistant, stating that someone in the group needs a
wheelchair and that as long as you can satisfy our accessibility needs,
well entrust you with planning our entire trip! Service group expansion
signifies that Duofu can advocate the concept of accessible service to
consumers who are physically and mentally healthy, rather than to only
people with disabilities.
2. Increased revenue sources and profit margins: As service groups extend
from including care receivers to incorporating caregivers, this implies an
increased inflow of additional income sources. Duofus accessible travel is
charged per head count with no relation to disability status. Furthermore,
travel service differs significantly from transport service in that travel

7
Summarized points based on the interview with Jeff in 2013, July.
11

service adequately utilizes the production capacity of a vehicle. The
transport service that Duofu offers is based on a pick-on-call concept, in
which additional vehicles and drivers are needed to provide services at any
time. By comparison, Duofus travel service involves a chartered service
that is provided when the number of people in a group has reached the
minimum threshold and charged on a per-day basis. Therefore, the operating
costs of a travel service are relatively lower than those incurred for transport
services.
To provide an accessible travel service, Duofu begins by constructing a
barrier-free environment. Currently, the barrier-free environment in Taiwan is
imperfect. Although several tourist attractions areas offer relevant services or ramps
for handicaps, excessive obstacles remain throughout the entire trip, such as stairs,
masts, or road protrusions or dips. In addition, accessible services pertinent to
bathrooms, meals, accommodation, and emergency medical treatment remain
inadequate, consequently disrupting accessible travel itineraries and activities. Before
Duofus commitment to providing an accessible travel service, other social public
groups
8
(e.g., Eden Social Welfare Foundation and Taiwan Access for All Association)
have actually invested efforts in offering accessible travel. However, because of their
status as a nonprofit organization, these groups cannot commercially promote their
accessible travel service and thus are resorted to lobbying. Nevertheless, Duofu has
cooperated with Sunable, focusing on comprehensively linking aspects of an
accessible service. For instance, in Wulai (Taipei), Duofu and Sunable spent almost a
year, persuading owners of retail stores, bed and breakfast, restaurants, and recreation
areas that they can gain increased revenues and enhanced reputation from tourists
with disabilities by improving their accessible environment. Consequently, Duofu has
rapidly developed a travel route in Northern Taiwan, spanning from Danshui, Wulai,
Daxi, and along the North coast Road. In 2014, Doufu cooperated with Lion Travel,
actively promoting its accessible travel service. Currently, this travel service
encompasses areas north of Hsinchu (including Hsinchu). Duofu provided transport
service at a rate approximating its cost price, successfully establishing its customer
base; it then offered an added value travel service to its customers, and finally used
the profits earned from the travel service to subsidize the higher cost of its transport

8
Few private business owners, such as Love Travel, have invested in accessible travel services.
12

service.
Case in Depth: From Cross Subsidization to a Platform
As we have mentioned earlier, Doufu didnt realize its platform role until
successfully launched accessible travel service. More and more travel service
providers became affiliated members of Doufuto offer qualified and certified
services to people with disabilities. In this evolving process, we find
cross-subsidization plays a key role to keep Doufu blooming and become a platform.
Contrary to past studies on MSP taking cross-subsidization as an instrument of
profit-generating (Rochet and Tirole, 2003), Doufu case showed that
cross-subsidization is a probe to find chance to become a MSP.
Cross subsidization is a business practice commonly used by MSP who offers a
service that provides a cross-subsidization to other services in the same platform if the
fees charged for that service is greater than the standalone cost of offering the service
(Rochet and Tirole, 2003). For example, Adobe offers Acrobat Reader for free,
enabling people to read PDF books and documents. At the same time, Adobe also sells
Adobe Acrobat at a high price targeting users who need to edit and export PDF files.
In other words, Adobe categorized users into subgroups according to price flexibility
and user needs, and subsequently used the influence that each subgroup exerts on each
other; specifically, as the number of free users increases, the chance that these free
users will convert into paid users increases.
It should be noted that cross subsidization is not a sufficient condition for a
platform. For example, Dropbox charges users who need a comprehensive file
management function and large storage spaces, while providing free services to users
who only require the basic function of storing and accessing files online. Dropboxs
freemium is based on the concept of cross subsidization, where monetary amount
received from few paid users is used to subsidize free users who occupy the majority.
However, Dropbox is not a platform because free users and premium users almost do
not interact through their service.
On MSP, cross subsidization occurs between groups of users in distinct
networks. For instance, in a credit card industry, credit card holders often enjoy
multiple special offers and lower card fees, whereas merchants are charged at a higher
13

merchant discount rate (Rochet and Tirole, 2002); in video game industries, Sony and
Microsoft charge players at a price lower than production costs for them to purchase
game consoles, and the subsidization capitals are derived from the high licensing fees
to which game developers are charged. In the newspaper industry, newspaper agencies
charge higher advertisement costs to advertising agencies in order to subsidize lower
prices for readers. In shopping malls, shoppers benefit from free parking fees while
vendors must pay a high amount of rental. Users of platform must decide which user
groups are charged at a lower price in order to ensure participation from at least one
of the groups during the initial stage of platform development (Eisenmann, Parker, &
Van Alstyne, 2006; Rochet & Tirole, 2003). Based on the aforementioned examples of
cross-subsidizers, if a wide variety of choices is offered to the subsidized side,
operators who employ a platform model cannot charge higher prices to the
subsidizing side (Eisenmann, 2007; Rochet & Tirole, 2003). For example, assuming
players can simultaneously purchase multiple game consoles of various brands at a
low cost, Sony and Microsoft thus cannot easily charge a high licensing fee to game
developers. Therefore, platform operators must raise the incentive of retaining the
subsidized side in the platform or increase the cost required for the subsidized side to
leave the platform.
The transport and travel services that Duofu offers are a cross subsidization in a
same-side network; subsequently, Duofus travel service and tourism and
travel-related service providers form a cross subsidization in a cross-side network.
Because suppliers of accessible travel services are scant, customers are unable to find
replacements of Duofus accessible travel service and, thus, are willing to pay higher
prices. Customers who purchase Duofus accessible travel service are typically users
of Duofus accessible transport service. Because of the trust that they have in Duofu,
these customers are unlikely to use the service of other accessible travel providers.
For tourism and travel-related service providers, when Duofu and its partnering social
public groups proposed the need to improve accessible services and facilities, these
service providers accepted their proposal immediately. By contrast, in the early stages
of its establishment, Duofu had failed to construct an effective two-sided network for
its accessible transport service because of the lack of trust that health-related service
providers have in Duofu. Moreover, if existing health-related service providers need
accessible transport service providers, they would prioritize public-managed private
14

rehabus services over private service providers. Figure 2 illustrates a schematic
diagram of the cross subsidization and two-sided platform established by Duofu.

Figure 2. Duofus cross subsidization and two-sided platform

As Duofus succeeds in its accessible travel business, a predicament
subsequently arises: should Duofu relinquish its accessible transport service to focus
on managing its accessible travel service? In other words, should Duofu become a
profit-making enterprise? To customers, accessible travel service is irreplaceable; in
addition, accessible travel is the stable outcome of the cross-sided network that Duofu
has jointly established with its tourist and travel-related service providers. Without
having to subsidize its accessible transport service (which is making a loss), Duofu
can rapidly accumulate profits. Jeff had once received many investors request to
remove the medical transport service and well invest in your business immediately;
however, Jeff firmly believed that the initial concept of Duofu, creating a
comprehensive accessible service, cannot be altered, repeatedly stating to investors
that Duofu is not a profit-oriented company. Jeff also stressed that from the start,
Duofus accessible transport service is a customer-driven service that seeks to identify
the actual needs of people with disabilities. This process is the reason that Duofu has
accumulated large amounts of irreproducible service experiences and customer trusts
that cannot be established within a short period. In addition, these experiences and
trusts are the cornerstone indispensable to the growth of Duofus accessible travel
service.
The strategy that Duofu employed to develop its two-sided platform involved
providing novel perspectives by studying two-sided platforms. Previous studies have
Health-related services
Doufu
Accessible Transport Accessible Travel
Loss leader/subsidized segment Profit-making/subsidizing segment
Cross-subsidy
Hospitals
Adult Day Care Services
Disability organizations
Time-consuming to
establish trust
leads to weak
cross-network
effect
Tourism and travel-
related services
Well-adapted hotel
rooms
Accessible restaurants,
bars, and other facilities
Adapted toilets in
restaurants and public
places
Accessible streets and
sidewalks
Travel Agents
Strong cross-
network effect
15

rarely described the developmental process of a two-sided platform (Eisenmann &
Hagiu, 2008), and few studies have thoroughly investigated the relationship between a
cross subsidization in a same-sided platform and cross subsidization in a cross-sided
platform (Rochet & Tirole, 2003). Based on the development of Duofu, the platform
model Duofu adopts was not planned in advance; instead, it gradually develops from
using a cross subsidization model in a one-sided network, into a business that operates
using a two-sided platform. Furthermore, Duofus developmental process highlights
the difficulty for social enterprises, in comparison to profit-making organizations, to
maintain a balance between economic goals and social ends.

Become a Real Multisided Platform
To enhance Duofus accessible transport service, Jeff has attempted to encourage
the participation of other service providers. For example, Jeff had assumed as an
accessible taxi instructor for Crown Taxi in Neihu District of Taipei; he advocated that
accessible service providers should increase their resources and generate social
influences, rather than focusing merely on expanding their customer bases. Accessible
transport is Duofus most crucial service that offers significant social public benefits.
To strengthen the operating effectiveness of his accessible transport service, Jeff
proposed a commissioned management program for rehabus vehicles in 2013; he
realized that many enterprises often donate rehabuses, in the name of corporate social
responsibility, to private social welfare groups without considering whether these
groups are capable of managing the donated vehicles. Typically, these groups are
unable to afford the substantial costs required for maintaining these vehicles (e.g., fuel
costs, parking fees, maintenance fees, and labor fees) and are not professionally
capable of managing vehicle dispatch processes. In addition, most enterprises have
donated vehicles to groups based in metropolitan areas, neglecting those who most
need rehabuses in remote counties and cities (e.g., Hualien and Taitung). Therefore,
Jeff and several other social welfare groups began formulating a commissioned
management program, in which Duofu is responsible for managing vehicles.
This program involves the donator (enterprises) donating rehabus vehicles to
well-known social welfare groups (recipients) such as Taiwan Foundation for Rare
16

Disorders and Taiwan Motor Neuron Disease Association, who then commissions
Duofu to manage these donated vehicles. These commissioners have the top priority
of using these vehicles, and Duofu may use these vehicles when they are not in use.
According to agreements, Duofu then gives the social welfare groups a proportion of
profits earned from using the commissioned vehicles. In this mechanism, the social
groups not only gained monetary benefits, but also saved on the costs of managing
vehicles and corresponding labors fees. To further motivate social welfare groups to
cooperate with Duofu, Duofu also gives the income earned from selling the vehicles
to the social welfare groups. Therefore, on the one hand, Duofu can increase the scale
of its operation without having to expend more on purchasing transfer vehicles; on the
other hand, donator enterprises can employ Duofus detailed records to continuously
follow-up on the number of serviced people and mileages generated from using the
donated vehicles and thereby assess the benefits obtained from their investments in
social public welfares. Figure 3 illustrates a schematic diagram of the commissioned
management mechanism.
From initially using only a two-sided platform involving tourists with disabilities
and tourism and travel-related service providers, to establishing a multisided
relationship comprising accessible transport customers, social welfare groups, and
donators, Duofu intends to transform into a service company deploying MSP.
Generally, the subsidized side is not always supported by the subsidizing side; rather,
the subsidized side endeavors to seek a platform that enables it to support itself while
providing social public benefits.

Figure 3. Process by which Duofu uses a commissioning management service to enhance the
cross-sided network of its accessible transport service

Doufu
Accessible Transport Accessible Travel
Loss leader/subsidized segment Profit-making/subsidizing segment
Cross-subsidy
Disability organizations
Tourism and travel-
related services
Accessible Vehicles
Donators
17

As a MSP, Doufu is a very attractive partner for many service providers who
desire to offer medication and meal delivery services to elderly people. In the early
stages of its development, Duofu introduced a stair-climbing machine for wheelchairs
that allows customers who reside in apartments that are not equipped with elevators to
travel outdoors, thus creating opportunities for developing other multisided
relationships. The stair-climbing service enabled Duofu to provide an integrated
roadside and home-based service to elderly people. With this unique advantage,
Doufu usually been viewed as the most important strategic partner of homecare
service. For example, in 2013 Duofu collaborated with iHealth, allowing female
iHealth pharmacists to travel on Duofus buses to deliver medications to patient
homes.

Discussion and Conclusion
Duofus developmental process serves as a vital inspirational source to social
enterprises developing platform-mediated model. In this section, we conclude the case
study of Duofu, presenting three platform-mediated business strategies worthy of
subsequent investigations: (1) Identifying two-sided platform business opportunities
based on a one-sided cross subsidization service; (2) realizing economic and social
goals by expanding a two-sided platform into a multisided platform; and (3)
expanding the overall profit pool by leveraging a platform-mediated business model.
(1) Identifying two-sided platform-mediated business opportunities from a
one-sided cross subsidization service
Jeff first established Duofu Care & Service because he realized how
inconvenient it was for people with disabilities to use rehabus services. As the number
of customers increases and stabilizes, Jeff introduced the accessible travel service as
recommended by his physically challenged friends. Because Duofu cannot simply
profit from providing transport services, Jeff used a cross subsidy approach involving
both services, using the earnings achieved from travel services to subsidize the
financial deficiency of the transport service. Subsequently, Duofu attracted more users
of travel services with the help of its transport service users. To expedite its tourism
development, Duofu cooperated with tourism and travel-related service providers to
18

improve the basic facilities required for an accessible travel service, thereby
promoting a two-sided platform business model. In such a platform, physically
handicapped tourists and their families are motivated to use Duofus travel service
because of Duofus exceptional service quality and diverse traveling routes; tourism
and travel-related service providers are motivated to cooperate with Duofu because of
the predictable number of consumers. Tourism and travel-related service providers are
the subsidizing side who offers free accessible services and facilities, whereas Duofu
is the platform operator who selects participants and ensures a high service quality.
Social enterprises in nature are a cross subsidization in the same-sided platform.
Based on this case study, if a cross subsidization in the same-sided platform can be
converted into a cross subsidization in a two-sided platform, the social value and
economic value that social enterprises demonstrate can be enhanced.
(2) Realizing economic and social goals by expanding a two-sided platform into a
multisided platform
Duofu originally had only a single subsidized sideaccessible transport;
however, the introduction of commissioned management mechanism and medication
and meal delivery services engendered additional sides, forming a multisided platform.
Consequently, the extent to which its accessible transport service is subsidized
gradually decreased. Because the services provided in Duofus multisided platform
established from its accessible transport service neared perfection as the number of
cooperating operators increased, relevant customer switching costs also increased.
Hence, operators who use a platform model can implement their long-term
social-value goals because of the stable relationship they have with the customers.
(3) Expanding the overall profit pool by leveraging a platform-mediated business
model
Because current self-pay accessible transport services and tourism markets
remain underdeveloped, Duofus MSP has attracted multiple service participants,
which accelerated market growth. In addition, by engaging in co-competition with a
portion of its potential competitors, Duofu enabled accessible service markets to
expand further.
Social enterprises endeavor to identify entrepreneurial opportunities from among
19

the many social concerns, in an effort to provide social public benefits and achieve
economic goals. However, how social enterprises should avoid inhibiting
organizational growth caused by conflicts engendered between social ends and
economic goals is worthy of further exploration. Previously, Dees (1998) indicated
that for managers to maintain a harmonious relationship between two types of
employees who hold distinct perspectives in an organization, they must ensure that,
while supporting commercialization, the business means adopted for
commercialization is based on the organizations core value, enabling employees to
trust one another. Managers must predict the conflicts that are likely to occur and
determine the source of the conflict and subsequently educate employees in the
organization to mitigate the negative effects generated from such conflict.
Consequently, both sides of employees can devise the most applicable method of
action through communications and coordination. Salary issues may also be one of
the sources leading to conflicts among employees. Compared with employees who
have served an organization for many years and whose education level is equivalent
to that of a newly hired employee, new employees recruited from relevant industries
may request for higher salary. Thus, how salary allocation can be reasonably
implemented must be processed using a transparent method. In this case study, the
founder of Duofu, Jeff, served as the arbitrator when a conflict between social public
benefits and economic goals occurs; nevertheless, as Duofus MSP becomes
increasingly perplex, it would require a more comprehensive managerial mechanism
to process conflict issues.

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