Tight versus Loose Organizational Coupling within Inter-Firm Networks in the Enterprise Software Industry – The Perspective of Complementors

Facilitated by new standards and middleware technologies, enterprise application software is increasingly characterized by a high degree of modularity. On an organizational level, this is reflected by the goal of dominant system vendors (hubs) to form loosely-coupled hub-and-spoke networks with smaller niche players (spokes) that complement their solutions. This paper aims at explaining differences regarding the extent to which spokes strive for loosely-coupled partnerships as opposed to closely-tied relationships with a particular hub. The type of coupling is indicated by the level of hub-specific investments and the application of informal governance mechanisms. Following existing theory, the synergistic specificity between the partners’ technological, commercial, and social capital is suggested to determine the aspired type of coupling. Moreover, it is argued that a tighter coupling leads to an increased threat of opportunism. However, instead of loosening the partnership, spokes tie themselves even closer to the hub

Add-on Solution Success: A Configurational View on Knowledge Sharing in Digital Platforms

Digital platforms serve as a foundation upon which manifold firms develop complementary add-ons to address heterogeneous customer needs. In order to successfully stimulate partner contributions platform vendors need to share knowledge with partners that enables them to develop add-ons. Vendors face a trade-off between addressing idiosyncratic needs of partners while ensuring the scalability of knowledge sharing. Literature indicates that standardized or idiosyncratic knowledge sharing does not per se result in successful outcomes, but rather depends on how knowledge sharing addresses characteristics of the platform’s architecture. In order to increase our understanding of this trade-off we derive a typology of platform architecture and knowledge sharing. We conduct an empirical study at a large enterprise platform vendor to uncover configurations of knowledge sharing approaches. We distill successful knowledge sharing approaches following a set-theoretic approach. Our research in progress offers insights into our preliminary results and gives an outlook on our future research

Complementarity, relation-specific investment, and opportunism : explaining asymmetric governance modes in hub-and-spoke networks within the enterprise application software industry

In the enterprise application software industry, dominant system vendors (hubs) have formed strategic partnerships with small software companies (spokes), resulting in the emergence of hub-and-spoke networks. Based upon the concept of software stacks, we argue that the governance mechanisms applied by hub and spokes depend on the complementarity between hub’s and spoke’s resources. Specifically, we draw on the relational view and combine it with the resource dependence theory to develop a theoretical framework that explains the link between the type of complementarity and differential governance mechanisms. We are able to show that while hubs seek to take advantage of complementarities with the entire network of partners, spokes are primarily interested in gaining access to complementary resources and capabilities of the hub organization. In order to leverage the benefits of resource complementarity, hubs mainly invest in networkspecific resources to generate value. On the contrary, the spokes’ investments are hub-specific. Accordingly, hubs only face minor threats of opportunistic behavior on the part of a specific spoke, whereas the spokes’ existence is endangered by the threat of opportunistic behavior by the hub. Due to these three asymmetries, hubs apply formal governance mechanisms in order to efficiently coordinate the network of spokes, whereas spokes rely on informal governance mechanisms

LAUNCH STRATEGIES OF DIGITAL PLATFORMS: PLATFORMS WITH SWITCHING AND NON-SWITCHING USERS

Due to two-sidedness and network effects, digital platforms face a coordination problem to attract producers and consumers upon launch. Scholars have suggested launch strategies for solving this problem with only limited empirical evidence. In this paper, we relate to the strategies of sequential and simultaneous entry of consumers and producers. We conducted a qualitative study interviewing 14 founders and CEOs of digital platforms. We used an analysis of 1st and 2nd order concepts to relate the emerging data to existing theory. We observe that the ability to switch between the producer and consumer side, (i.e., being producer in one transaction and consumer in another one), has so far remained unexplored in the platform literature despite its importance for the implementation of launch strategies.Our findings suggest that digital platforms with switching sides implement a simultaneous entry strategy, whereas digital platforms without switching sides implement a sequential entry strategy. We conclude by providing implications for researchers, entrepreneurs, and investors and by giving directions for future research

How Strategy and Governance Choices Influence Innovation Success in Software Products and Services

This research studies the effect of key strategy and governance choices on chances of success of innovation in software products, and we test our hypotheses based on data from more than 150 professionals in the United States who are responsible for new software product development. We find the right balance of onshore and offshore team members to be more salient in influencing innovation success than decisions related to insourced versus outsourced development. Our findings suggest a greater likelihood of innovation when business executives make technical decisions, particularly if firms compete by selling high price margin software products or services

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

Artificial Intelligence and IT Professionals

How will continuing developments in artificial intelligence (AI) and machine learning influence IT professionals? This article approaches this question by identifying the factors that influence the demand for software developers and IT professionals, describing how these factors relate to AI, and articulating the likely impact on IT professionals

How Agile Practices Influence the Performance of Software Development Teams: The Role of Shared Mental Models and Backup

This study draws on team adaptation theory to examine how agile behavior within Information Systems development (ISD) teams influences team performance. We conceptualize agile behavior as the degree to which ISD teams use agile practices and test a theoretical model that links agile practice use to two key components of team adaptation—shared mental models and backup behavior. Moreover, in line with team adaption theory, shared mental models among team members are hypothesized to increase backup behavior, which in turn is suggested to lead to higher levels of ISD team performance in complex environments. To test our hypotheses, we collected data from Scrum masters, project leaders and more than 490 professional software engineers of a global enterprise software development company. Our findings broadly confirm our theoretical model linking agility, adaptation, and ISD team performance, leading to several theoretical and practical contributions

“The Second Vice is Lying, the First is Running into Debt.” Antecedents and Mitigating Practices of Social Debt: an Exploratory Study in Distributed Software Development Teams

Although much is known about the concept of technical debt in software development, less is known about its social counterpart, also known as social debt. Social debt refers to future consequences of decisions related to people and their interactions. Omissions in social interactions or reduction of communication can foster social debt – and in turn result in negative outcomes in the long run. In this paper, we explore what factors drive and mitigate social debt in distributed agile software development teams. Utilizing an exploratory case study approach, we derive insights from two case organizations. We present antecedents and mitigating factors of social debt related to communication, collaboration, and coordination