Value Creation Tradeoff in Business Ecosystems: Leveraging Complementarities While Managing Interdependencies

2023 | Organization Science | Citations: 0

Authors: Agarwal, Shiva; Kapoor, Rahul

Abstract: Complementary assets play an important role in shaping an innovation’s commercia ... Expand

Abstract: Complementary assets play an important role in shaping an innovation’s commercialization success. In this paper, we broaden the locus of complementarities to examine the role of complementary technologies residing in the business ecosystems that are becoming an important source of value creation for innovating firms. We argue that, on one hand, complementary technologies help innovations create more value for their users. On the other hand, they can also limit the focal innovation’s value creation by exposing them to performance bottlenecks as the underlying technological architecture of the ecosystem evolves. We further extend the notion of specialization of complementary assets to ecosystems by considering complementary technologies that are specialized to a focal ecosystem and those that are available across multiple ecosystems. We highlight that, although the complementary technologies that are specialized to an ecosystem facilitate greater value creation, they are more likely to subject the focal innovation to performance bottlenecks. Evidence from 244,034 apps launched by software developers for Apple’s iPhone ecosystem during 2008–2015 offers strong support for our framework. In summary, the study sheds light on the value creation tradeoff for firms innovating in business ecosystems—the opportunities associated with leveraging complementarities and the challenges associated with managing technological interdependencies. Funding: S. Agarwal was funded by the McCombs School of Business at The University of Texas at Austin [Research Excellence Grant]. Collapse

Topics: mobile application innovation management value creation Apple iPhone iOS

Methods: statistical hypothesis test instrumental variables estimation cross sectional research proportional hazards model robustness check

Impressionable or Immune? Examining the Influence of Marquee Sellers in B2B Secondary Market Platforms for IT Products

2023 | Information Systems Research | Citations: 0

Authors: Alhauli, Abdullah; Elmaghraby, Wedad J.; Gopal, Anandasivam

Abstract: Although digital platforms have become mainstream, there still remain some unans ... Expand

Abstract: Although digital platforms have become mainstream, there still remain some unanswered questions pertaining to managing platform ecosystems. One such unexplored question pertains to the effect of marquee sellers on the platform—marquee sellers arguably attract other sellers and buyers to the platform, thereby enhancing the platform’s value. In this paper, we study how adding a marquee seller to a business-to-business (B2B) secondary-market platform for IT products affects other sellers, in terms of the prices they obtain for comparable products. Using proprietary data on B2B secondary-market auctions obtained from a platform provider, we show that the entry of a marquee seller has a positive effect on the prices obtained by other sellers on the platform, reflecting a reference-price effect. We further show that this positive effect on final prices is moderated by the extent to which bidders are active on multiple seller sites on the same platform and the extent to which bidders participate in the marquee seller site. We explain these effects using theory in multihoming and involvement, in terms of how reference prices are set. Our work extends the platforms literature by considering the specific influence of a marquee seller on other sellers, thereby informing platform owners on the implications of the advice to add more marquee sellers to platforms. We also contribute to the literature on secondary markets for durable, used IT products, which are instrumental in reducing electronic waste and mitigating the environmental damage done by electronic products in landfills.History: Raghu Santanam, Senior Editor; Pallab Sanyal, Associate Editor.Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.1137. Collapse

Topics: Apple iPhone business-to-business willingness to pay network effect mobile system

Methods: robustness check descriptive statistic statistical hypothesis test post-hoc analysis ordinary least square

Theories: involvement theory

On Predicting ESG Ratings Using Dynamic Company Networks

2023 | ACM Transactions on Management Information Systems | Citations: 0

Authors: Ang, Gary; Guo, Zhiling; Lim, Ee-Peng

Abstract: Environmental, social and governance (ESG) considerations play an increasingly i ... Expand

Abstract: Environmental, social and governance (ESG) considerations play an increasingly important role due to the growing focus on sustainability globally. Entities, such as banks and investors, utilize ESG ratings of companies issued by specialized rating agencies to evaluate ESG risks of companies. The process of assigning ESG ratings by human analysts is however laborious and time intensive. Developing methods to predict ESG ratings could alleviate such challenges, allow ESG ratings to be generated in a more timely manner, cover more companies, and be more accessible. Most works study the effects of ESG ratings on target variables such as stock prices or financial fundamentals of companies, but few works study how different types of company information can be utilized to predict ESG ratings. Previous works also largely focus on using only the financial information of individual companies to predict ESG ratings, leaving out the different types of inter-company relationship networks. Such inter-company relationship networks are typically dynamic, i.e., they evolve across time. In this paper, we focus on utilizing dynamic inter-company relationships for ESG ratings prediction, and examine the relative importance of different financial and dynamic network information in this prediction task. Our analysis shows that utilizing dynamic inter-company network information, based on common director, common investor and news event-based knowledge graph relationships, can significantly improve ESG rating prediction performance. Robustness checks over different time-periods and different number of time-steps in the future further validate these insights. Collapse

Topics: shapley additive explanation knowledge graph database system missing data network effect

Methods: machine learning econometric modeling longitudinal research Granger causality robustness check

Strategic Investments for Platform Launch and Ecosystem Growth: A Dynamic Analysis

2023 | Journal of Management Information Systems | Citations: 0

Authors: Anderson Jr., Edward G.; Parker, Geoffrey G.; Tan, Burcu

Abstract: Multi-sided platforms must make decisions on both pricing and engineering invest ... Expand

Abstract: Multi-sided platforms must make decisions on both pricing and engineering investment and must continually adjust them as the platform scales over its lifecycle. Engineering investments can be allocated to features that improve a platform's standalone value, social features to take advantage of same-side network effects, or integration tools and boundary resources to facilitate third-party content creation. Guidance in the academic or practitioner literature is not granular. Moreover, relevant normative economic models that consider externalities are rarely dynamic. Hence, there is a gap in knowledge about how to best balance tradeoffs between different strategic decisions throughout the entire platform lifecycle. To begin to address this gap, we explore normative strategies for coordinating pricing and engineering investment decisions on a continuous basis under different ecosystem conditions. We build a simulation model informed by economics and marketing theory and perform extensive sensitivity analyses on key parameters in different ecosystem scenarios over a multi-period lifecycle. We find that pricing and investment strategies must continuously change to perform optimally. In particular, strategies that are most effective at launch often differ from those that are most effective during scaling as well as those most effective at maturity. We also find that the optimal strategy depends strongly on the monetization model and market aversion to price changes. Lastly, we specifically examine four different industry segments: mobile platforms, social media, the sharing economy, and business-to-business. The results provide evidence that the trajectory of platform pricing and investment strategies should greatly differ depending on industrial context. Collapse

Topics: price management digital platform social media decision making business-to-business

Methods: simulation sensitivity analysis system dynamics optimization model conjoint analysis

Theories: control theory marketing theory

TRADING GREEN BONDS USING DISTRIBUTED LEDGER TECHNOLOGY

2023 | European Conference On Information Systems | Citations: 0

Authors: Axelsen, Henrik; Rasmussen, Ulrik; Jensen, Johannes; Ross, Omri; Henglein, Fritz

Abstract: The promising markets for voluntary carbon credits are faced with crippling cha ... Expand

Abstract: The promising markets for voluntary carbon credits are faced with crippling challenges to the certification of carbon sequestration and the lack of scalable market infrastructure in which companies and institutions can invest in carbon offsetting. This amounts to a funding problem for green transition projects, such as in the agricultural sector, since farmers need access to the liquidity needed to fund the transition to sustainable practices. We explore the feasibility of mitigating infrastructural challenges based on a DLT Trading and Settlement System for green bonds. The artefact employs a multi-sharded architecture in which the nodes retain carefully orchestrated responsibilities in the functioning of the network. We evaluate the artefact in a supranational context with an EU-based regulator as part of a regulatory sandbox program targeting the new EU DLT Pilot regime. By conducting design-driven research with stakeholders from industrial and governmental bodies, we contribute to the IS literature on the practical implications of DLT. Collapse

Topics: distributed ledger technology network effect blockchain domain-specific language

Methods: design science qualitative interview design artifact testing design artifact

Value Implications of Sourcing Electronic Health Records: The Role of Physician Practice Integration

2023 | Information Systems Research | Citations: 0

Authors: Bardhan, Indranil R.; Bao, Chenzhang; Ayabakan, Sezgin

Abstract: Should hospitals source electronic health records (EHR) systems from a single ve ... Expand

Abstract: Should hospitals source electronic health records (EHR) systems from a single vendor or multiple vendors to deliver high-value care? We study hospitals’ EHR sourcing strategies based on their degree of integration with physician practices and its impact on the value of healthcare delivered. We propose a novel framework to define healthcare value as the extent to which a hospital effectively expends clinical resources to deliver services that improve patient outcomes. Drawing on modular systems and transaction cost economics theories, we propose a moderated-mediation model that explores the pathways through which EHR sourcing strategies can create value in healthcare. We test our research hypotheses on a large, longitudinal sample of U.S. hospitals and observe that hospitals with EHR configurations closer to single sourcing strategies exhibit greater health information sharing compared with hospitals with multisourced EHR systems. Furthermore, we find that hospital-physician practice integration moderates the impact of single sourcing on health information sharing, which in turn, improves value. Specifically, tighter integration between hospitals and physician practices can create greater value if it is aligned with hospitals’ EHR sourcing strategies. As the healthcare industry moves toward value-based payment reform, our findings provide a useful roadmap to practitioners and policy makers to improve the performance of hospitals and healthcare providers. History: Rajiv Kohli, Senior Editor; Sunil Wattal, Associate Editor. Funding: I.R. Bardhan thanks the Foster Parker Centennial Professorship and the Dean’s Research Excellence Grant at the McCombs School of Business at UT Austin for generous financial support. C. Bao thanks the Spears Fellowship at Oklahoma State University for financial support. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.1183. Collapse

Topics: information exchange healthcare data health information system accounting database system

Methods: longitudinal research survey robustness check econometric modeling design artifact

Theories: transaction cost economics general systems theory institutional theory

The Role of Strong and Weak Ties in the Usage Behaviour of Social Media Apps

2023 | European Conference On Information Systems | Citations: 0

Authors: Beşer, Alper; Erdogan, Aleyna

Abstract: Social media apps like TikTok have influenced the daily lives of billions of us ... Expand

Abstract: Social media apps like TikTok have influenced the daily lives of billions of users. Such apps are forms of network goods and subject to so-called network externalities. They offer a social utility that increases with the number of app users. The social utility can be divided into a strong-tie utility (STU) and weaktie utility (WTU) as it may emerge from strong ties (e.g. close friends) and weak ties (e.g. friends of friends) respectively. To investigate their influence on the usage behaviour more closely, we develop a research model and conduct an online experiment (N=291) for collecting data for seven popular social media apps. The results prove that strong and weak ties can influence users in two ways: providing utility and exerting social pressure. While the level of these effects varies for the tested apps, the utility has a generally greater influence on the intention to use. Collapse

Topics: mobile application social media usage intention information system use YouTube

Methods: survey statistical hypothesis test experiment structural equation modeling partial least squares regression

Theories: technology acceptance model social network theory self determination theory

DO NEGATIVE EXTERNALITIES AFFECT PLATFORM MEMBERSHIP CONDITIONS? THE IMPACT OF MORAL AND REGULATORY LEGITIMACY ON PLATFORM GOVERNANCE

2023 | European Conference On Information Systems | Citations: 0

Authors: Brandwijk, Noah; Reuver, Mark de

Abstract: When allowing third parties to join their platforms, platform owners run the ri ... Expand

Abstract: When allowing third parties to join their platforms, platform owners run the risk of attracting harmful third-party complements. Existing literature considers that low-quality offerings negatively affect crossside user satisfaction and attractiveness, ultimately harming the platform's reputation and stability. However, recent events show that negative externalities from third-party offerings can also motivate platform sponsors to adapt their membership conditions. Existing platform literature does not explain the underlying theoretical mechanisms. In this paper, we examine why platform sponsors adjust the conditions that govern third parties joining their platforms in response to negative externalities. We apply legitimacy theory to a critical case on a payment transaction platform. We find that negative externalities affect both moral and regulatory legitimacy, which in turn motivate the platform sponsor to adjust the conditions under which third parties may join the platform. Collapse

Topics: platform governance digital ecosystem digital platform user satisfaction network effect

Methods: qualitative interview case study theory development single case study

Balancing on the Triple-Bottom-Line: Tensions in the Success Factors of Digital Business Models for Sustainability

2023 | HICSS | Citations: 0

Authors: Böttcher, Timo; Petry, Jana; Weking, Jörg; Hein, Andreas

Abstract: We need innovations that enable a sustainable economy and sustainable private co ... Expand

Abstract: We need innovations that enable a sustainable economy and sustainable private consumption to meet the grand challenges of the UN Sustainable Development Goals. As an essential source of innovation, startups play a crucial role in improving sustainability by creating innovative and sustainable products and services as part of their business models (BMs). Since BMs are at a firm's core, BMs are a decisive factor that influences whether startups fail or thrive; we analyze the success factors of sustainable BMs. We interviewed 16 experts from 15 startups implementing sustainable BMs based on digital technologies and one incubator specializing in sustainability. We identify six success factors representing tensions in digital BM design that entrepreneurs need to address. Our analysis shows how the design of sustainable digital BMs differs from regular digital BMs and how the tensions affect the success of startups. For established firms, the results guide BM design and technology use. Collapse

Topics: business-to-business value creation systems implementation entrepreneurship innovation management

Methods: qualitative interview qualitative coding theory development

Token Incentives in a Volatile Crypto Market: The Effects of Token Price Volatility on User Contribution

2023 | Journal of Management Information Systems | Citations: 0

Authors: Chen, Kun; Fan, Yifan; Liao, Shaoyi Stephen

Abstract: Crypto tokens, issued and managed via smart contracts, function as rewards in bl ... Expand

Abstract: Crypto tokens, issued and managed via smart contracts, function as rewards in blockchain systems to encourage user participation. Distinct from monetary incentives, token incentives are uncertain in reward magnitude due to the large swings in token prices on crypto markets. By focusing on token price volatility, this study investigates how the reward uncertainty affects user contribution in a tokenized digital platform. Our empirical setting is Steemit, a platform where bloggers write posts and share token rewards based on their posts' popularity. We find that while high token price volatility induces a large volume of blog posts, it diminishes post quality. The dichotomous effects are explained via two mechanisms: users' direct reactions to reward uncertainties and their indirect reactions, mediated by altered token preference amid volatility shocks. Deeply exploring this dynamic process, our results reveal that token price volatility facilitates a platform's network short-term effect but impairs long-term user creativity. Our empirical findings thus extend the literature on blockchain economics and cryptocurrencies and have practical implications for the design of incentive mechanisms on tokenized digital platforms. Collapse

Topics: blog blockchain digital platform cryptocurrency user behavior

Methods: longitudinal research instrumental variables estimation data transformation principal component analysis vector autoregression

Theories: motivation crowding theory