When Do ISVs Join a Platform Ecosystem? Evidence from the Enterprise Software Industry

In the enterprise software industry leading firms usually adopt an open platform strategy and nurture their innovation ecosystem to achieve the shared success of the community. In this study we examine the antecedents of small independent software vendors’ (ISVs’) decision to join a platform ecosystem. Using data of 1208 ISVs’ history of partnering activities with a major enterprise software marker from 1996 to 2004, we find that appropriability strategies based on intellectual property rights and the possession of downstream complementary capabilities by ISVs are positively related to the partnership formation, and ISVs use the two mechanisms as substitutes to prevent expropriation by the platform owner. In addition, we show that greater level of competition in the downstream market between ISVs and the platform owner negatively affects the likelihood of partnering. The results highlight the role of innovation appropriation, downstream complementary capabilities and collaborative competition in the formation of enterprise software platform ecosystems

Participation in a Platform Ecosystem: Appropriability, Competition,andAccess to the Installed Base

In this study we examine the antecedents of small independent software vendor (ISV) decisions to join a platform ecosystem. Using data on the history of partnering activities from 1201 ISVs from 1996 to 2004, we find that appropriability strategies based on intellectual property rights and the possession of downstream complementary capabilities by ISVs are positively related to partnership formation, and ISVs use these two mechanisms as substitutes to prevent expropriation by the platform owner. In addition, we show that greater competition in downstream product markets between the ISV and the platform owner is associated with a lower likelihood of partnership formation, while the platform's penetration into the ISV's target industries is positively associated with the propensity to partner. The results highlight the role of innovation appropriation, downstream complementary capabilities, and collaborative competition in the formation of a platform ecosystem

Essays on innovation ecosystems in the enterprise software industry

Innovation ecosystem strategy is often adopted by platform technology owners to seek complementary innovation from resources located outside the firm to exploit indirect network effect. In this dissertation I aim to address the issues that are related to the formation and business value of platform innovation ecosystems in the enterprise software industry. The first study explores the role of three factors - increased payoff from access to platform owner's installed base, risk of misappropriation due to knowledge transfer, and the extent of competition - in shaping the decisions of third-party complementors to join a platform ecosystem. The second study evaluates the effect of participation in a platform ecosystem on small independent software vendors' business performances, and how their appropriability strategies, such as ownership of intellectual property rights or downstream complementary capabilities, affect the returns from such partnerships. Built upon resource based view and theory of dynamic capabilities, the third study reveals that users' co-innovation in enterprise information systems, measured by their participation in online professional community networks, constitute a source of intangible organizational asset that helps to enhance firm level IT productivity.Ph.D.Committee Chair: Wu, D.J.; Committee Member: Ceccagnoli, Marco; Committee Member: Forman, Chris; Committee Member: Keskinocak, Pinar; Committee Member: Mitra, Sabyasachi; Committee Member: Slaughter, Sandr

Understanding Platform Loyalty in the Cloud: A Configurational View on ISV´s Costs and Benefits

Platform-as-a-service (PaaS) providers are increasingly engaged in nurturing vibrant ecosystems of independent software vendors (ISVs) by offering standardized services. However, cloud ecosystems have also been known for its fluctuation and high rates of desertion. A currently under-researched explanation for this low traction and high rates of fluctuation may lie in the fact that ISVs face considerable costs when joining and acting on a specific platform. If these costs are too high, they can rapidly outweigh the additional value generated by the ecosystem. This study therefore explains the role of different configurations of cost-inducing factors and resource benefits in influencing an ISV´s platform loyalty. By using a configurational approach based on fuzzy-set qualitative comparative analysis (FsQCA), we display complex interactional effects of cost and benefits as causal conditions on ISVs’ intention to stay in the ecosystem and thus provide valuable insights for both practice as well as theory on platform ecosystems

Participation in a Platform Ecosystem: Appropriability, Competition,andAccess to the Installed Base

In this study we examine the antecedents of small independent software vendor (ISV) decisions to join a platform ecosystem. Using data on the history of partnering activities from 1201 ISVs from 1996 to 2004, we find that appropriability strategies based on intellectual property rights and the possession of downstream complementary capabilities by ISVs are positively related to partnership formation, and ISVs use these two mechanisms as substitutes to prevent expropriation by the platform owner. In addition, we show that greater competition in downstream product markets between the ISV and the platform owner is associated with a lower likelihood of partnership formation, while the platform's penetration into the ISV's target industries is positively associated with the propensity to partner. The results highlight the role of innovation appropriation, downstream complementary capabilities, and collaborative competition in the formation of a platform ecosystem

Love and Hate Relationships in a Platform Ecosystem: A case of Finnish Electronic Identity Management

There has been a substantial interest among scholars in digital platforms and their governance. This paper proposes a different perspective on the phenomenon, by providing observations on non-focal firms’ dependencies to external platforms. Using the case study results of Finnish firms’ utilization of a monopolistic BankID authentication platform, we describe the platform ecosystem and its transformation on organizational and technology aspects. We show how legislation can transform the roles and relations between ecosystem participants and lead to the long-time dominant legacy platform weakening. Our study extends existing research on platforms and contributes new knowledge about the enforced adoption of the platform by heterogeneous organizations. These findings have important managerial implications, as they inform how non-focal firms can understand the use of existing and coming digital platforms

LEVERAGE ONCE, EARN REPEATEDLY – CAPABILITIES FOR CREATING AND APPROPRIATING VALUE IN CLOUD PLATFORM ECOSYSTEMS

Information technology (IT) advancements enabled new delivery models (i.e. Cloud Computing), thereby facilitating the emergence of new business models in the IT industry, such as Cloud platform ecosystems. With their growing acceptance and diffusion in practice, we need a deeper understanding of their IT capabilities in order to implement their business model, thereby creating and appropriating value. We draw on empirical data from four case studies of Cloud platform ecosystems utilizing a framework on IT-enabled business models for data analysis. We found four key motivations for inter-firm collaboration that each generated business model requirements specified in the context of Cloud platform ecosystems. These drive the development of unique B2B IT capabilities enabling value crea-tion and appropriation mechanisms. We propose three dyadic (relation-specific) IT customization and two network IT standardization (network-oriented) capabilities based on our cross case analysis. Fur-thermore, we describe prevalent value creation and appropriation mechanisms and suggest two addi-tional mechanisms grounded in the data: downstream capabilities and platform resourcing. We pro-vide a possible reasoning on the underlying logic of IT capabilities, value creation and appropriation of Cloud platform ecosystems

Why do complementors participate? An analysis of partnership networks in the enterprise software industry

In the enterprise software industry, large providers (hubs) are fostering partner networks with smaller companies (spokes) that complement their platforms. This study takes the perspective of these spokes and seeks to understand their motivation to partner. It is the first to simultaneously examine two theoretical perspectives that help explain partnership formation. The input-oriented perspective holds that organizations enter inter-firm arrangements in order to access external resources and capabilities. The output-oriented perspective posits that the complementarity of the partners’ products influences the benefits obtained from a partnership. In order to examine the relevancy and possible interaction of these two perspectives, a multiple-case study is conducted. Qualitative data from 17 spoke organizations is gathered and thoroughly analyzed. The study confirms that the hub's reputation and its capability to provide integrated systems are generally important reasons for partnering. However, the extent to which the hub’s innovativeness and its commercial capital motivate spokes to partner varies substantially. The key finding of this study is that these variations can be explained by differences in the level of product complementarity. This leads to the conclusion that there is a widely neglected interaction effect between the input- and outputoriented perspectives in explaining the formation of hub-and-spoke partnerships

Letters from the War of Ecosystems – An Analysis of Independent Software Vendors in Mobile Application Marketplaces

The recent emergence of a new generation of mobile application marketplaces has changed the business in the mobile ecosystems. The marketplaces have gathered over a million applications by hundreds of thousands of application developers and publishers. Thus, software ecosystems—consisting of developers, consumers and the orchestrator—have emerged as a part of the mobile ecosystem. This dissertation addresses the new challenges faced by mobile application developers in the new ecosystems through empirical methods. By using the theories of two-sided markets and business ecosystems as the basis, the thesis assesses monetization and value creation in the market as well as the impact of electronic Word-of-Mouth (eWOM) and developer multihoming— i. e. contributing for more than one platform—in the ecosystems. The data for the study was collected with web crawling from the three biggest marketplaces: Apple App Store, Google Play and Windows Phone Store. The dissertation consists of six individual articles. The results of the studies show a gap in monetization among the studied applications, while a majority of applications are produced by small or micro-enterprises. The study finds only weak support for the impact of eWOM on the sales of an application in the studied ecosystem. Finally, the study reveals a clear difference in the multi-homing rates between the top application developers and the rest. This has, as discussed in the thesis, an impact on the future market analyses—it seems that the smart device market can sustain several parallel application marketplaces.Muutama vuosi sitten julkistetut uuden sukupolven mobiilisovellusten kauppapaikat ovat muuttaneet mobiiliekosysteemien liiketoimintadynamiikkaa. Nämä uudet markkinapaikat ovat jo onnistuneet houkuttelemaan yli miljoona sovellusta sadoilta tuhansilta ohjelmistokehittäjiltä. Nämä kehittäjät yhdessä markkinapaikan organisoijan sekä loppukäyttäjien kanssa ovat muodostaneet ohjelmistoekosysteemin osaksi laajempaa mobiiliekosysteemiä. Tässä väitöskirjassa tarkastellaan mobiilisovellusten kehittäjien uudenlaisilla kauppapaikoilla kohtaamia haasteita empiiristen tutkimusmenetelmien kautta. Väitöskirjassa arvioidaan sovellusten monetisaatiota ja arvonluontia sekä verkon asiakasarviointien (engl. electronicWord-of-Mouth, eWOM) ja kehittäjien moniliittymisen (engl. multi-homing) — kehittäjä on sitoutunut useammalle kuin yhdelle ekosysteemille — vaikutuksia ekosysteemissä. Työn teoreettinen tausta rakentuu kaksipuolisten markkinapaikkojen ja liiketoimintaekosysteemien päälle. Tutkimuksen aineisto on kerätty kolmelta suurimmalta mobiilisovellusmarkkinapaikalta: Apple App Storesta, Google Playstä ja Windows Phone Storesta. Tämä artikkeliväitöskirja koostuu kuudesta itsenäisestä tutkimuskäsikirjoituksesta. Artikkelien tulokset osoittavat puutteita monetisaatiossa tutkittujen sovellusten joukossa. Merkittävä osa tarkastelluista sovelluksista on pienten yritysten tai yksittäisten kehittäjien julkaisemia. Tutkimuksessa löydettiin vain heikkoa tukea eWOM:in positiiviselle vaikutukselle sovellusten myyntimäärissä. Työssä myös osoitetaan merkittävä ero menestyneimpien sovelluskehittäjien sekä muiden kehittäjien moniliittymiskäyttäytymisen välillä. Tällä havainnolla on merkitystä tuleville markkina-analyyseille ja sen vaikutuksia on käsitelty työssä. Tulokset esimerkiksi viittaavat siihen, että markkinat pystyisivät ylläpitämään useita kilpailevia kauppapaikkoja.Siirretty Doriast

From Suppliers to Complementors: Motivational Factors for Joining Industrial Internet of Things Platform Ecosystems

Spurred by the internet of things, industry firms are increasingly establishing platforms that animate an ecosystem of external actors to provide complementary offerings. But why do independent firms decide to join these ecosystems and to become complementors? The goal of this study is to disentangle their motivational factors in the context of the industrial internet of things. A theoretical framework is developed a priori based on the knowledge-based view of the firm and complementary logics. The framework is empirically explored using a case study design. Our results indicate that financial, technology, and knowledge gains positively influence the decision of complementors to join the ecosystem. Yet, our interviews reveal relative differences in motivations based on complementors’ uncertainty. Our findings contribute to the research on joining nascent digital platform ecosystems from a complementor perspective and the growing stream of research on industrial internet of things platforms