Platform Strategy: Managing Ecosystem Value Through Selective Promotion of Complements
Friday, February 8, 2019 - 12:00pm to 1:30pm
Platform sponsors typically have both incentive and opportunity to manage the overall value of their ecosystems. Through selective promotion, a platform sponsor can reward successful complements, bring attention to underappreciated complements, and influence the consumer’s perception of the ecosystem’s depth and breadth. It can use promotion to induce and reward loyalty of powerful complements producers, and it can time such promotion to both boost sales during slow periods and reduce competitive interactions between complements. We develop arguments about whether and when a platform sponsor will selectively promote individual complements, and test these arguments on data from the console video game industry in the United Kingdom. We find that platform sponsors do not simply promote “best in class” complements; they strategically invest in complements in ways that address complex tradeoffs in ecosystem value. Our arguments and results build significant new theory that helps us understand how a platform sponsor orchestrates value creation in the overall ecosystem.
Melissa A. Schilling is the Herzog Family Professor of Management at New York University Stern School of Business. She received her Bachelor of Science in business administration from the University of Colorado at Boulder. She received her Doctor of Philosophy in strategic management from the University of Washington. Professor Schilling’s research focuses on innovation and strategy in high technology industries such as smartphones, video games, pharmaceuticals, biotechnology, electric vehicles, and renewable energies. She is particularly interested in platform dynamics, networks, creativity, and breakthrough innovation. Her textbook, Strategic Management of Technological Innovation (now in its fifth edition), is the number one innovation strategy text in the world. She is also coauthor of Strategic Management: An integrated approach (now in its twelfth edition).