Managing Platform Value through Complementor Business Model Governance

Online

Abstract

This study offers a novel account of how platforms can orchestrate complementor business models through governance choices. In a platform setting, the platform owner can often govern how third-party firms participate by shaping the rules and architecture. Business models jointly consider value creation activities and value capture methods, and thus, are a critical strategic choice that affect the value proposition of a platform and its complements. Thus, a key tension in platform governance design is to encourage complementor value creation for the platform ecosystem, while finding ways to capture a share of that value. Through a large-scale quantitative study of 15,604 mobile applications between January 2021-July 2021 supplemented with a program of qualitative interviews, I investigate how changes to Apple App Store policies around complementor business models affected platform participants. I leverage the announcement of a platform change that negatively impacted in-app advertising to show that firms that had relied on advertising were more likely to exit from the platform and shifted their innovation efforts. I also provide preliminary evidence that while this change negatively affected the amount of value capture that the platform owner received from affected third-parties, it also led to increased first-party value capture. These findings enrich our understanding of how platform owners balance between value creation and value capture in an ecosystem.

This event is open to faculty, doctoral students, academic researchers, and graduate students.

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