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  • 2018
  • Article
  • Strategic Management Journal

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

By: Wen Wen and Feng Zhu
  • Format:Print
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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; Digital Platforms; Mobile and Wireless Technology; Market Entry and Exit; Price; Innovation and Invention; Applications and Software

Citation

Wen, Wen, and Feng Zhu. "Threat of Platform-Owner Entry and Complementor Responses: Evidence from the Mobile App Market." Strategic Management Journal 40, no. 9 (September 2019): 1336–1367.
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About The Author

Feng Zhu

Technology and Operations Management
→More Publications

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  • TSG Hoffenheim: Step-by-Step Analysis in Excel By: Feng Zhu, Karim R. Lakhani, Sascha L. Schmidt and Kerry Herman
  • TSG Hoffenheim; Step by Step Analysis in Excel By: Feng Zhu, Karim R. Lakhani, Kerry Herman and Sascha L. Schmidt
  • Competition, Contracts, and Creativity: Evidence from Novel Writing in a Platform Market By: Yanhui Wu and Feng Zhu
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