Why do complementors participate? : an empirical analysis of the emergence of partnership networks in the enterprise application software industry

The enterprise application software industry is currently undergoing profound changes. The well-established, large providers (hubs) are fostering partner networks with small complementors (spokes). This paper takes the perspective of these spokes and seeks to understand their motivations for partnering. Drawing on research on dynamic capabilities and complementarity, an explanatory model of the spokes’ motivation to partner is developed. It is argued that partnering is especially attractive for smaller organizations when it enables them to access the hub’s complementary commercial, technological, and social capital. The model is empirically examined through a post hoc analysis of 17 small enterprises. The study reveals that the hub’s reputation as part of its social capital as well as its commercial capital indeed act as reasons to participate in partnership networks. In contrast, the hub’s technological capabilities may be seen as a double-edged sword. While the hub’s capability to provide integrated systems was found to be a prime reason for partnering, its innovative capability may actually detain spokes from partnering. The negative influence of the hub’s innovativeness, however, was found to be contingent upon the type of solutions offered by hub and spoke. The same holds true for the positive effect of the hub’s commercial capital

The emergence and management of an inter-organizationally networked IS development industry : An exploratory case study

The IS development industry is currently undergoing a fundamental change towards a more inter-organizational structure. These networks of smaller companies are expected to nest around existing, large development firms. In this context, this study addresses fundamental research objectives regarding both the motivation for this development and how the new structure can be managed; this from both perspectives, that of the large hubs and that of the smaller spokes. Relying on various economic and management theories, different factors are elaborated that are expected to play an important role for answering these questions. Testing this theoretical framework in ten case studies (two hubs and eight spokes), a comprehensive model of inter-organizational cooperation in IS development is developed. In this model, the motivational and the management factors can be shown to be in close interaction with each other over the existence of a partnership between hub and spoke. The Innovative product developed by a spoke in combination with an existing platform of the hub give both a better market reach. However, as IS development is probably one of the most dynamic industries in the world, successful partnerships do not necessarily have to last for a long time. While some do, other are quickly coming to an end, either through acquisition of the spoke or through imitation of its solution by the hub. The perceived ideal way for the spokes to avoid this fate is the development of new innovations, in which case the partnership process starts anew. This constant pressure can be considered one of the integral parts of the newly emerging networked structure and its ability to generate even more innovative products at a faster pace than it was possible in the old industry structure. This study is the first to offer a model that is able to explain exactly these dynamics within the IS development industry