Article | Strategic Management Journal | Forthcoming

Threat of Platform-Owner Entry and Complementor Responses: Evidence from the Mobile App Market

by Wen Wen and Feng Zhu

Abstract

We examine how app developers on the Android mobile platform adjust their innovation efforts (rate and direction) and value-capture strategies in response to Google’s entry threat and actual entry into their markets. We find that, after Google’s entry threat increases, affected developers reduce innovation and raise the prices for the affected apps. Once Google enters, the developers reduce innovation and increase prices further. However, app developers’ incentives to innovate are not completely suppressed; rather, they shift innovation to unaffected and new apps. Given many apps already offering similar features, Google’s entry may reduce such social inefficiency.

Keywords: platform-owner entry; entry threat; innovation; complementors; mobile app industry; Technology Platform; Mobile Technology; Market Entry and Exit; Price; Innovation and Invention;

Format: Print Find at Harvard

Citation:

Wen, Wen, and Feng Zhu. "Threat of Platform-Owner Entry and Complementor Responses: Evidence from the Mobile App Market." Strategic Management Journal (forthcoming).

About the Author

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

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