Article | Strategic Management Journal | October 2018

Competing with Complementors: An Empirical Look at Amazon.com

by Feng Zhu and Qihong Liu

Abstract

Platform owners sometimes enter complementors' product spaces to compete against them directly. Prior studies have offered two possible explanations for such entries: platform owners may target the most successful complementors so as to appropriate value from their innovations, or they may target poor performing complementors to improve the platforms' overall quality. Using data from Amazon.com, we analyze the patterns of Amazon's entry into its third-party sellers' product spaces. We find evidence consistent with the former explanation: the likelihood of Amazon's entry is positively correlated with the popularity and customer ratings of third-party sellers' products. We also find that Amazon's entry reduces the shipping costs of affected products and hence increases demand. Results also show that small third-party sellers affected by Amazon's entry appear to be discouraged from growing their businesses on the platform subsequently. The results have implications for complementors participating in various platform-based markets.

Keywords: Competition; Market Platforms; Competitive Strategy;

Format: Print Find at Harvard Read Now

Citation:

Zhu, Feng, and Qihong Liu. "Competing with Complementors: An Empirical Look at Amazon.com." Strategic Management Journal 39, no. 10 (October 2018): 2618–2642.

About the Author

Photo
Feng Zhu
Piramal Associate Professor of Business Administration
Technology and Operations Management

View Profile »
View Publications »

 
Campus Map
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→ Map & Directions
Copyright © President & Fellows of Harvard College