Rural and regional development in the age of digital platforms: platformization of the Japanese Furusato Nozei Hometown Tax Donation System

Abstract

We explore the Japanese regional development system, Furusato Nozei, which has been transformed radically after the entrance of private sector digital platforms. Drawing on the literature on platformization and social mission platforms, we perform thematic analysis of interview data collected from the representatives of private sector digital platforms operating in the system. Our findings show that the market dynamics that drive platformization of the Furusato Nozei system increased cross-sectoral interactions and resource distribution between urban taxpayers, rural municipalities, and local small and medium-sized enterprises. However, economic incentives also obscure the system’s original goal of rural and regional development. The results illustrate governance challenges related to public value creation in a platformized system. The conclusions show the importance of governing a delicate balance between creating economic incentives and maintaining shared social goals, while an ideological anchor such as the idea of hometown fosters the stability of the platformized system.