Platform Governance and Digital Sustainability: A Systemic Functional Dependency Perspective

The governance of digital platforms is a key factor in the sustainable business development. Nevertheless, the specific governance mechanisms through which platforms reconfigure virtual (e-commerce) and physical (logistics) systems, and whether these outcomes are equitable or sustainable, remain insufficiently examined. This research proposes a novel theoretical framework, Systemic Functional Dependency, to elucidate how platform governance shapes the co-evolution of digital and physical activities in the platform economy. In our analysis of China’s platform economy from 2013 to 2022, we identify a governance-induced bifurcation: Core regions build sustainable, synergistic business models (local e-com coef. =0.204, p< 0.05). In contrast, peripheral regions face structural decoupling; where digital-led growth (22.63% CAGR) vastly outpaces the expansion of physical business capacity (6.46% CAGR). This imbalance, caused by a functional transition (32.21% CAGR in network-serving logistics vs. 2.44% in local-serving logistics), led to a structural breakpoint in 2017-2018. The findings advance digital business theory by linking platform governance to asymmetric outcomes. We conclude this creates a functional lock-in for peripheral regions, presenting a substantial sustainability challenge and underscoring the immediate necessity for innovative governance frameworks.