More Web Proxy on the site http://driver.im/

article

Sustaining Superior Performance in Business Ecosystems: Evidence from Application Software Developers in the iOS and Android Smartphone Ecosystems

Authors:

Shiva AgarwalAuthors Info & Claims

Organization Science, Volume 28, Issue 3

Pages 531 - 551

https://doi.org/10.1287/orsc.2017.1122

Published: 01 June 2017 Publication History

Abstract

We study the phenomenon of business ecosystems in which platform firms orchestrate the functioning of ecosystems by providing platforms and setting the rules for participation by complementor firms. We develop a theoretical framework to explain how the structural and evolutionary features of the ecosystem may shape the extent to which participating complementor firms can sustain their superior performance. The structural feature, which we refer to as ecosystem complexity, is a function of the number of unique components or subsystems that interact with the complementor's product. We incorporate the evolutionary features by considering the role of generational transitions initiated by platform firms over time as well as the role of complementors' ecosystem-specific experience. Evidence from Apple's iOS and Google's Android smartphone ecosystems supports our arguments that higher ecosystem complexity helps app developers sustain their superior performance, and that this effect is stronger for more experienced firms. In contrast, platform transitions initiated by Apple and Google make it more difficult for app developers to sustain their performance superiority, and that this effect is exacerbated by the extent of ecosystem complexity. The study offers a novel account of how the performance of complementor firms in platform-based business ecosystems may be shaped by their ecosystem-level interdependencies.

References

[1]

Adner R, Kapoor R (2010) Value creation in innovation ecosystems: How the structure of technological interdependence affects firm performance in new technology generations. Strategic Management J. 31(3):306-333.

[2]

Adner R, Kapoor R (2014) Innovation ecosystems and the pace of substitution: Re-examining technology S-curves. Strategic Management J. 37(4):625-648

[3]

Adner R, Oxley J, Silverman B, eds. (2013) Introduction: Collaboration and competition in business ecosystems. Collaboration and Competition in Business Ecosystems. Advances in Strategic Management, Vol. 30 (Emerald Group Publishing Ltd., Bingley, UK), ix-xvii.

[4]

Agarwal S, Kapoor R (2017) Two faces of value creation in business ecosystems: Leveraging complementarities and managing interdependencies. Working paper, Wharton School of the University of Pennsylvania, Philadelphia.

[5]

Allison PD (1984) Event History Analysis: Regression for Longitudinal Event Data (Sage, Beverly Hills, CA).

[6]

Allison PD (2000) Survival Analysis Using the SAS System: A Practical Guide (SAS Institute, Cary, NC).

[7]

Anderson P, Tushman ML (2001) Organizational environments and industry exit: The effects of uncertainty, munificence and complexity. Indust. Corporate Change 10(3):675-711.

[8]

Ansari S, Garud R (2009) Inter-generational transitions in sociotechnical systems: The case of mobile communications. Res. Policy 38(2):382-392.

[9]

Balasubramanian N, Lieberman MB (2010) Industry learning environments and the heterogeneity of firm performance. Strategic Management J. 31(4):390-412.

[10]

Baldwin CY (2012) Organization design for business ecosystems. J. Organ. Design 1(1):20-23

[11]

Blossfeld HP, Rohwer G (2002) Techniques of Event History Modeling. New Approaches to Causal Analysis, 2nd ed. (Lawrence Erlbaum Associates, Hillsdale, NJ).

[12]

Boudreau K (2010) Open platform strategies and innovation: Granting access vs. devolving control. Management Sci. 56(10): 1849-1872.

Digital Library

[13]

Brynjolfsson E, Hu YJ, Smith MD (2003) Consumer surplus in the digital economy: Estimating the value of increased product variety at online booksellers. Management Sci. 49(11):1580-1596.

Digital Library

[14]

Carroll GR, Hannan MT (2000) The Demography of Corporations and Industries (Princeton University Press, Princeton, NJ).

[15]

Ceccagnoli M, Forman C, Huang P, Wu DJ (2012) Co-creation of value in a platform ecosystem: The case of enterprise software. MIS Quart. 36(1):263-290.

Digital Library

[16]

Chevalier J, Goolsbee A (2003) Measuring prices and price competition online: Amazon.com and BarnesandNoble.com. Quant. Marketing Econom. 1(2):203-222.

[17]

Christensen CM (1997) The Innovator's Dillemma (Harvard Business School Press, Cambridge, MA).

[18]

Cox DR (1975) Partial likelihood. Biometrika 62(2):269-276.

[19]

Csaszar FA, Siggelkow S (2010) How much to copy? Determinants of effective imitation breadth. Organ. Sci. 21(3):661-676.

Digital Library

[20]

Cusumano MA, Mylonadis Y, Rosenbloom RS (1992) Strategic maneuvering and mass-market dynamics: The triumph of VHS over Beta. Bus. History Rev. 66(1):51-94.

[21]

D'Aveni RA, Giovanni BD, Smith KG (2010) The age of temporary advantage. Strategic Management J. 31(13):1371-1385.

[22]

Davis JP, Eisenhardt KM, Bingham CB (2009) Optimal structure, market dynamism, and the strategy of simple rules. Admin. Sci. Quart. 54(3):413-452.

[23]

Dess GG, Beard DW (1984) Dimensions of organizational task environments. Admin. Sci. Quart. 29(1):52-73.

[24]

Dierickx I, Cool K (1989) Asset stock accumulation and sustainability of competitive advantage. Management Sci. 35(12):1504-1511.

Digital Library

[25]

Eisenhardt KM (1989) Making fast strategic decisions in high-velocity environments. Acad. Management J. 32(3):543-576.

[26]

Eisenmann T, Parker G, Van Alstyne M (2011) Platform envelopment. Strategic Management J. 32(12):1270-1285.

[27]

Fleming L, Sorenson O (2001) Technology as a complex adaptive system: Evidence from patent data. Res. Policy 30(7):1019-1039.

[28]

Ganco M (2013) Cutting the Gordian knot: The effect of knowledge complexity on employee mobility and entrepreneurship. Strategic Management J. 34(6):666-686.

[29]

Garg R, Telang R (2013) Inferring app demand from publicly available data. MIS Quart. 37(4):1253-1264.

Digital Library

[30]

Gavetti G, Levinthal DA (2004) The strategy field from the perspective of management science: Divergent strands and possible integration. Management Sci. 50(10):1309-1318.

Digital Library

[31]

Gawer A, Cusumano MA (2002) Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation (Harvard Business School Press, Boston).

[32]

Gawer A, Henderson R (2007) Platform owner entry and innovation in complementary markets: Evidence from Intel. J. Econom. Management Strategy 16(1):1-34.

[33]

Ghazawneh A, Henfridsson O (2013) Balancing platformcontrol and external contribution in third-party development: The boundary resources model. Inform. System J. 23(2):173-192.

Digital Library

[34]

Grambsch PM, Therneau TM (1994) Proportional hazards tests in diagnostics based on weighted residuals. Biometrika 81(3): 515-526.

[35]

Harrison JR, March JG (1984) Decision making and postdecision surprises. Admin. Sci. Quart. 29(1):26-42.

[36]

Henderson RM, Clark KB (1990) Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Admin. Sci. Quart. 35(1):9-30.

[37]

Hermelo FD, Vassolo R (2010) Institutional development and hyper-competition in emerging economies. Strategic Management J. 31(13):1457-1473.

[38]

Iansiti M, Levien R (2004) The Keystone Advantage: What the New Dynamics of Business Ecosystem Mean for Strategy, Innovation, and Sustainability (Harvard Business School Press, Boston).

[39]

Kapoor R (2013) Collaborating with complementors: What do firms do? Adner R, Oxley J, Silverman B, eds. Collaborating and Competition in Business Ecosystems. Advances in Strategic Management, Vol. 30 (Emerald Group Publishing Ltd., Bingley, UK), 3-25.

[40]

Kapoor R, Lee JM (2013) Coordinating and competing in ecosystems: How organizational forms shape new technology investments. Strategic Management J. 34(3):274-296.

[41]

Katila R, Ahuja G (2002) Something old, something new: A longitudinal study of search behavior and new product introduction. Acad. Management J. 45(6):1183-1194.

[42]

Lenox MJ, Rockart SF, Lewin AY (2006) Interdependency, competition, and the distribution of firm and industry profits. Management Sci. 52(5):757-772.

Digital Library

[43]

Lenox MJ, Rockart SF, Lewin AY (2010) Does interdependency affect firm and industry profitability? An empirical test. Strategic Management J. 31(2):121-139.

[44]

Levinthal DA (1997) Adaptation on rugged landscapes. Management Sci. 43(7):934-950.

Digital Library

[45]

Lippman SA, Rumelt RP (1982) Uncertain imitability: An analysis of interfirm differences in efficiency under competition. Bell J. Econom. 13(2):418-438.

[46]

Lloyd S (2001) Measures of complexity: A nonexhaustive list. IEEE Control Systems Magazine 21(4):7-8.

[47]

McGrath RG (2013) The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business (Harvard Business Review Press, Boston).

[48]

McIntyre DP, Subramaniam M (2009) Strategy in network industries: A review and research agenda. J. Management 35(6):1494-1517.

[49]

Nelson RR, Winter SG (1982) An Evolutionary Theory of Economic Change (Belknap Press, Cambridge, MA).

[50]

Pacheco-de-Almeida G (2010) Erosion time compression, and self-displacement of leaders in hypercompetitive environments. Strategic Management J. 31(13):1498-1526.

[51]

Page SE (2010) Diversity and Complexity (Princeton University Press, Princeton, NJ).

[52]

Panzarino M (2012) Developer say iPhone 5's large screen poses some challenges, especially without a device to test apps. Accessed September 13, 2012, http://thenextweb.com/apple/2012/09/13/developers-say-iphone-5s-larger-screen-poses-challenges-especially-without-device-test-apps/.

[53]

Porter ME (1985) Competitive Strategy: Creating and Sustaining Superior Performance (Free Press, New York).

[54]

Rivkin J (2000) Imitation of complex strategies. Management Sci. 46(6):824-844.

Digital Library

[55]

Rosenberg N (1982) Inside the Black Box: Technology and Economics (Cambridge University Press, Cambridge, UK).

[56]

Rumelt RP, Schendel D, Teece DJ (1991) Strategic management and economics. Strategic Management J. 12(S2):5-29.

[57]

Singh K (1997) The impact of technological complexity and inter-firm cooperation on business survival. Acad. Management J. 40(2): 339-367.

[58]

Teece DJ (2007) Explicating dynamic capabilities: The nature of microfoundations of (sustainable) enterprise performance. Strategic Management J. 28(13):1319-1350.

[59]

Tushman ML, Anderson A (1986) Technological discontinuities and organizational environments. Admin. Sci. Quart. 31(3):439-465.

[60]

Venkatraman N, Lee CH (2004) Preferential linkage and network evolution: A conceptual model and empirical test in the U.S. video game sector. Acad. Management J. 47(6):876-892.

[61]

Wiggins RR, Ruefli TW (2002) Sustained competitive advantage: Temporal dynamics and the incidence and persistence of superior economic performance. Organ. Sci. 13(1):81-105.

Digital Library

[62]

Wiggins RR, Ruefli TW (2005) Schumpeter's ghost: Is hypercompetition making the best of times shorter? Strategic Management J. 26(10):887-911.

[63]

Wilcox M (2014) State of the developer nation: The app economy consolidates before the next gold rush. (July 21), https://www.visionmobile.com/blog/2014/07/the-app-economy-consolidates-before-the-next-gold-rush.

[64]

Zhu F, Iansiti M (2012) Entry into platform-based markets. Strategic Management J. 33(1):88-106.

[65]

Zott C (2003) Dynamic capabilities and the emergence of intraindustry differential firm performance: Insights from a simulation study. Strategic Management J. 24(2):97-125.

Cited By

Agarwal AAssenova V(2024)Mobile Money as a Stepping Stone to Financial InclusionOrganization Science10.1287/orsc.2022.1656235:3(769-787)Online publication date: 1-May-2024
https://dl.acm.org/doi/10.1287/orsc.2022.16562
Chung HZhou YEthiraj S(2024)Platform Governance in the Presence of Within-Complementor InterdependenciesManagement Science10.1287/mnsc.2023.470670:2(799-814)Online publication date: 1-Feb-2024
https://dl.acm.org/doi/10.1287/mnsc.2023.4706
Rudmark DLindgren RSchultze U(2024)Open data platformsThe Journal of Strategic Information Systems10.1016/j.jsis.2024.10185033:3Online publication date: 1-Sep-2024
https://dl.acm.org/doi/10.1016/j.jsis.2024.101850
Show More Cited By

Recommendations

Understanding Business Ecosystem Dynamics: A Data-Driven Approach

Business ecosystems consist of a heterogeneous and continuously evolving set of entities that are interconnected through a complex, global network of relationships. However, there is no well-established methodology to study the dynamics of this network. ...
Platform ecosystems: how developers invert the firm

For a period starting in 2015, Apple, Google, and Microsoft became the most valuable companies in the world. Each was marked by an external developer ecosystem. Anecdotally, at least, developers matter. Using a formal model of code spillovers, we show ...
Incumbent business ecosystems in the face of new entry: An event study of Google's autonomous car announcement
Abstract
This study investigates the value implications for an incumbent business ecosystem when an innovation is newly introduced. We theorize the different entrance modes and pathways through which the innovation can join the value co-...

Comments

Please enable JavaScript to view thecomments powered by Disqus.

Information & Contributors

Information

Published In

cover image Organization Science

Organization Science Volume 28, Issue 3

June 2017

217 pages

ISSN:1526-5455

Issue’s Table of Contents

Publisher

INFORMS

Linthicum, MD, United States

Publication History

Published: 01 June 2017

Accepted: 05 January 2017

Received: 23 October 2015

Author Tags

Qualifiers

Article

Contributors

Other Metrics

View Article Metrics

Bibliometrics & Citations

Bibliometrics

Article Metrics

15
Total Citations
View Citations
0
Total Downloads

Downloads (Last 12 months)0
Downloads (Last 6 weeks)0

Reflects downloads up to 09 Jan 2025

Other Metrics

View Author Metrics

Citations

Cited By

Agarwal AAssenova V(2024)Mobile Money as a Stepping Stone to Financial InclusionOrganization Science10.1287/orsc.2022.1656235:3(769-787)Online publication date: 1-May-2024
https://dl.acm.org/doi/10.1287/orsc.2022.16562
Chung HZhou YEthiraj S(2024)Platform Governance in the Presence of Within-Complementor InterdependenciesManagement Science10.1287/mnsc.2023.470670:2(799-814)Online publication date: 1-Feb-2024
https://dl.acm.org/doi/10.1287/mnsc.2023.4706
Rudmark DLindgren RSchultze U(2024)Open data platformsThe Journal of Strategic Information Systems10.1016/j.jsis.2024.10185033:3Online publication date: 1-Sep-2024
https://dl.acm.org/doi/10.1016/j.jsis.2024.101850
Agarwal SKapoor R(2023)Value Creation Tradeoff in Business EcosystemsOrganization Science10.1287/orsc.2022.161534:3(1216-1242)Online publication date: 1-May-2023
https://dl.acm.org/doi/10.1287/orsc.2022.1615
van Angeren JKarunakaran A(2023)Anchored Inferential LearningOrganization Science10.1287/orsc.2022.160734:3(1027-1050)Online publication date: 1-May-2023
https://dl.acm.org/doi/10.1287/orsc.2022.1607
Du S(2023)Symbiosis Evolution of E-commerce Platform Ecosystem with Cooperative and Competitive EffectModelling and Simulation in Engineering10.1155/2023/24726182023Online publication date: 1-Jan-2023
https://dl.acm.org/doi/10.1155/2023/2472618
Zhu XDu K(2023)Incumbent business ecosystems in the face of new entryInformation and Management10.1016/j.im.2023.10376060:3Online publication date: 1-Apr-2023
https://dl.acm.org/doi/10.1016/j.im.2023.103760
El-Nouty CFilatova D(2023)The Learning Model for Data-Driven Decision Making of Collaborating EnterprisesHuman and Artificial Rationalities10.1007/978-3-031-55245-8_22(345-356)Online publication date: 19-Sep-2023
https://dl.acm.org/doi/10.1007/978-3-031-55245-8_22
Sun RGregor SFielt E(2022)Generativity and the paradox of stability and flexibility in a platform architectureInformation and Management10.1016/j.im.2021.10354858:8Online publication date: 9-Apr-2022
https://dl.acm.org/doi/10.1016/j.im.2021.103548
Engert MEvers JHein AKrcmar H(2022)The Engagement of Complementors and the Role of Platform Boundary Resources in e-Commerce Platform EcosystemsInformation Systems Frontiers10.1007/s10796-021-10236-324:6(2007-2025)Online publication date: 3-Jan-2022
https://dl.acm.org/doi/10.1007/s10796-021-10236-3
Show More Cited By

View Options

View options

Media

Figures

Other

Tables

View Issue’s Table of Contents