Rahul Kapoor, Wharton, University of Pennsylvania
Rahul Kapoor, Wharton, University of Pennsylvania
Two Faces of Value Creation in Business Ecosystems: Leveraging Complementarities and Managing Interdependencies
Two Faces of Value Creation in Business Ecosystems: Leveraging Complementarities and Managing Interdependencies
A given innovation often does
not stand alone. Rather it is connected with other elements in the ecosystem
that impacts its value creation. We draw on this premise in a platform-based
ecosystem in which participating firms innovate around a platform. We introduce
the notion of connectedness to refer to the extent to which a given innovation
interacts with the platform (i.e., platform connectedness) and also with the
other complements in the ecosystem (i.e., complement connectedness). On the one
hand, higher connectedness may allow the innovation to leverage
complementarities. On the other hand, it may subject the innovation to an array
of interdependencies that may limit its value creation. We explore these
arguments on apps launched by software developers for Apple’s iPhone platform
between 2008 and 2013. We find that higher platform and complement
connectedness is in general associated with a greater likelihood of app’s
successful commercialization. However, the benefit of platform connectedness is
weakened when Apple updates its platform with a new generation. In
contrast, the benefit of complement connectedness is strengthened when Apple
updates its platform and if the complements themselves have low platform
connectedness. These findings shed light on two faces of value creation in
ecosystems -- the opportunities associated with leveraging complementarities
and the challenges associated with managing technological interdependencies.