Strategic Management Journal

In platform ecosystems, the creation of new products is often based on standardized development tools. Complementors often have a choice between either using these tools or creating the functionality themselves. In this paper, we study how the use of standardized development tools is related to the type of products created. By using data on the use of middleware (e.g., game engines) in the console video game market, we show that the use of development tools is associated with products that are less novel but with higher sales on average. We exploit a policy change that affected the ability of U.S.‐based developers to hire foreign workers as an instrument for the use of development tools and find further support for these patterns.

When developing new products, firms often have to decide whether they base their technology on preexisting components and standardized tools or develop that technology themselves. In general, it has not been clear how using standardized third‐party tools that may be available to all firms in an industry affects the nature of the products that are created. Using data on middleware components, such as game engines, in the console video game industry, this paper shows the use of such standardized tools is associated with the creation of products that are less novel but generate higher sales on average. This is an important strategic consideration for firms, but also for platforms that make decisions regarding whether such tools should be allowed on their platform.

This paper studies the impact of platform‐owner entry threat on complementors in platform‐based markets. We examine how app developers on the Android mobile platform adjust innovation efforts (rate and direction) and value‐capture strategies in response to the threat of Google's entry into their markets. We find that after Google's entry threat increases, affected developers reduce innovation and raise the prices for the affected apps. However, their incentives to innovate are not completely suppressed; rather, they shift innovation to unaffected and new apps. Given that many apps already offer similar features, Google's entry threat may thus reduce wasteful development efforts. We discuss the implications of these results for platform owners, complementors, and policy makers.

We examine one prevalent source of conflict: platform owners' entry into complementary product spaces. We show that app developers on Google's Android system are strategic and nimble actors. They respond to the threat of Google's entry by adjusting both value‐creation and value‐capture strategies. We also show that platform owners could use direct entry to shape innovation directions and encourage variety of complements. Overall, on the one hand, Google's entry may have pushed complementors into other areas (which might be less lucrative) and strengthened its position in the mobile market. On the other hand, the entry may have reduced wasteful production efforts in the development of redundant applications. The overall welfare implication is thus ambiguous.

With the growth of digital platforms, understanding the role of property rights on those platforms has become increasingly important. Digital piracy, the unauthorized copying and distribution of digital products, is therefore an important strategic issue, both because of lost revenues and because it is thought to decrease innovation. Yet, while the latter effect is often argued, empirical evidence is limited. We study whether piracy affects innovation and whether it leads firms to shift to different types of innovations. By studying a large piracy event in a mobile app marketplace, we find that piracy leads to a decrease in the release of incremental innovations, such as bug fixes, but does not decrease more substantial revisions. Additionally, it is associated with subsequent new product development.

For many platform companies, a critical issue is understanding how piracy and imitation should be regulated, motivated in part by a common narrative that piracy will eliminate innovation on these platforms. The present article suggests that these effects are slightly more nuanced. We find that piracy does lead to a decline in incremental innovations, such as bug fixes or appearance tweaks, but no discernible decline in more major innovations, such as feature updates or entirely new versions. This implies that piracy can shape the type of innovation, potentially leading to products that are less polished and refined but not affecting the overall level of innovation.

Many platforms rely on volunteer contributions for value creation. Thus, unpaid contributors are valuable to the platform, but control over their activities is limited. We study whether and how volunteer communities can provide a competitive advantage and ask how contributor behavior depends on a platform's competitive position. We propose two channels: First, a stronger competitive position facilitates contributor coordination, leading to a larger active community. Second, a platform's competitive position is related to contributor motivation, which drives how much individuals contribute. Studying two competing game wiki platforms, we find that a platform's stronger competitive position is associated with higher activity, primarily driven by the number of contributors, which in turn triggers increased contributions by existing contributors. Further, high‐productivity contributors are especially active on a stronger platform.

Online “crowdsourcing” communities create value for many digital platforms, but managing them in a way that ensures productive contributions is challenging. To better understand the conditions under which online communities create value productively we analyze how contribution patterns differ between more and less successful platforms. We study 13 game wiki communities on two competing platforms and find that success is tied to higher activity, which is in turn the result of more manpower in the value creation process, but also higher productivity by individual contributors. In addition, a dedicated core of highly productive community members is an important driver of platform success. These findings have implications for the motivation of community members, and the entry and growth strategies of crowdsourced platforms.