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Does Opening a Platform Stimulate Innovation? Effects on Systemic and Modular Innovations

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  • Kevin Boudreau

    (Department of Strategy and International Management - London Business School)

Abstract

The question of whether opening a new technology to secondary developers stimulates innovation is central to public policy and firm strategies in many high-tech industries. Yet there is scant systematic evidence on this relationship. This paper analyzes how opening handheld computer platforms to multiple outside hardware developer firms affected the rate and direction of product innovations. I introduce a novel data set covering multiple measures of product innovation and the extent to which platforms were opened. Consistent with past research, systemic innovations clearly benefitted from tight, integrated control. In relation to modular hardware innovations, I find that incremental shifts in control devolved to hardware developers were far less important than the extent to which hardware developers were allowed or encouraged to enter. The response of platform innovations to changes in openness was far more ambivalent. Guided by a formal characterization of the innovation process, I interpret the results as suggesting that innovators need to choose both the extent and mode of their openness if they are to manage the tradeoffs between creating a diverse supplier pool, managing suppliers' investment incentives and ensuring effective coordination. Thus, opening with the intent of influencing technical change is far more nuanced than doing so to simply promote diffusion of a technology.

Suggested Citation

  • Kevin Boudreau, 2007. "Does Opening a Platform Stimulate Innovation? Effects on Systemic and Modular Innovations," Working Papers hal-00597764, HAL.
    • Handle: RePEc:hal:wpaper:hal-00597764
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    Citations

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    Cited by:

    1. Täuscher, Karl & Laudien, Sven M., 2018. "Understanding platform business models: A mixed methods study of marketplaces," European Management Journal, Elsevier, vol. 36(3), pages 319-329.
    2. Marc Rysman, 2009. "The Economics of Two-Sided Markets," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 125-143, Summer.
    3. JinHyo Joseph Yun & DongKyu Won & KyungBae Park & JeongHo Yang & Xiaofei Zhao, 2017. "Growth of a platform business model as an entrepreneurial ecosystem and its effects on regional development," European Planning Studies, Taylor & Francis Journals, vol. 25(5), pages 805-826, May.
    4. Wilson, Scott & Tanguturi, Praveen, 2012. "Meeting the growth challenge in the open mobile era," 23rd European Regional ITS Conference, Vienna 2012 60349, International Telecommunications Society (ITS).
    5. JinHyo Joseph Yun & Philip Cooke & JiYoung Park, 2017. "Evolution and variety in complex geographies and enterprise policies," European Planning Studies, Taylor & Francis Journals, vol. 25(5), pages 729-738, May.
    6. Kevin Boudreau, 2010. "Open Platform Strategies and Innovation: Granting Access vs. Devolving Control," Management Science, INFORMS, vol. 56(10), pages 1849-1872, October.
    7. Peng Huang & Marco Ceccagnoli & Chris Forman & D.J. Wu, 2009. "Participation in a Platform Ecosystem: Appropriability, Competition, and Access to the Installed Base," Working Papers 09-14, NET Institute, revised Sep 2009.

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