Essays on within-platform competitive dynamics
Kang, Hye Young
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This dissertation contains three studies on competitive dynamics within digital platforms. All of my three essays focus on platform complementors (producers of complementary products to the platform) and their competitive landscape within the platform. The empirical settings of my dissertation are based on novel datasets that I constructed from multiple sources in the context of the U.S. leading mobile platforms. The first study investigates the factors associated with performance in digital platforms’ complementor markets, focusing on two product strategies: a) the extent to which complementors imitate features from competitors’ products and b) their reaction speed to changes introduced by the platform owner. The paper suggests an inverted U-shaped relationship between imitation and performance. The analysis also finds that the speed by which complementors react to owner-induced changes is positively associated with product performance. The paper further identifies platform-wide contingent factors which moderate the hypothesized relationships. The second study explores the coopetitive dynamics within a platform. The paper explores under-researched competitive dynamics between a platform owner and its complementors, focusing on an owner’s entry into its complementors’ product space – a phenomenon termed as intra-platform envelopment in this paper. The analysis shows that the overall effect of intra-platform envelopment on complementor performance is negative with a pooled data of Apple and Google platforms together. However, interesting divergent effects are found when analyzing each platform separately. These differences can be explained by idiosyncratic platform characteristics, particularly differences in the way that platform owners implemented their intra-platform envelopment actions. Further, the effect of these actions is found to vary not only across platforms, but with complementor-specific characteristics within a given platform. The third study investigates platform complementors’ strategic decision process of innovation adoption within the platform. The paper conceptualizes and empirically shows how competitive rivalry shapes platform entrepreneurs’ propensity to adopt innovation brought by the platform owner – that is, a rule-setter of the institution. The analysis finds that competition generally discourages adoption. The adoption by peer rivals has an inverted U-shaped effect on adoption likelihood where decreasing curve is driven by competitive rivalry, and competition from the institutional rule-setter negatively affects adoption likelihood.