Published: Feb. 13, 2019 By
black iphone

Entrepreneurs and startups are increasingly turning to platforms nowadaysā€”whether it is about creating a new platform, or providing product offerings and soliciting ideas on a platform. ĢżConsider Kickstarterā€™s platform that features listings of thousands of entrepreneurial projects to connect with the millions of registered backers online, or Appleā€™s iOS platform hosting millions of mobile apps published by developers and billions of users of iOS devices. ĢżIndeed, platforms are now being seen as ā€œsemi-regulatedā€ marketplaces that foster entrepreneurship under the coordination and direction of the platform owner (Kickstarter, Apple). Yet, such coordination is surely easier said than done. Platforms do not own the product offerings (entrepreneurial projects, apps) or have direct control over their partners (entrepreneurs, app developers). Ģż

So what can a platform owner do to orchestrate the value creation activities of autonomous business partners which are critical to the vibrancy and success of a platform?

This question was the focus of a research project carried out by Leeds Schoolā€™s Strategy & Entrepreneurship professor Tony Tong, in collaboration with two Ph.D. alumni, (currently assistant professor at Tulane University) and (currently assistant professor at the University of Virginia), who recently presented at the National Bureau of Economic Research in Boston. The researchers argue that platform owners can use what they call ā€œaccess controlā€ to shape business partnersā€™ activities. Specifically, they looked at how ā€œjailbreakingā€ā€”shapes app developersā€™ activities. Appleā€™s iOS is well-known for adopting a strict gatekeeping policy that controls for what (apps) or who (app develops) has access to the platform.

The ā€œjailbreakā€ of the iOS is hacking that exploits loopholes to remove Appleā€™s built-in restrictions, allowing users to install apps not officially approved by Appleā€™s App Store. After jailbreaking, many apps that were previously denied by Appleā€™s App Store can gain access to a sizable number of users with jailbroken iOS devices, and may present competitive pressure to existing iOS developers who profit from app-related sales.

The researchers leveraged the unexpected timing of the jailbreak of iOS 7 in December 2013 to conduct a natural experiment. They compared the posting activity of iOS app developers (which they consider the ā€œtreatment groupā€) and the activity of otherwise comparable Android app developers unaffected by the jailbreak (the ā€œcontrol groupā€) on StackOverflow.com, an active online forum of software developers. They found that with the jailbreaking, the resulting deficiency in iOSā€™s gatekeepingā€”and weakened platform access controlā€”reduced the amount, as well as the quality, of the information being shared by iOS app developers. The findings suggest that increased competitive threatā€”due to the ā€œunauthorizedā€ entry of imitating products into the platformā€”dampens app developersā€™ incentives to share knowledge.

The teamā€™s findings suggest that platform access control, at least in the case of Appleā€™s iOS, may be beneficial to platform owners. Ģż

Although ecosystem partners often collaborate with each other to create value, this study highlights that opening platform access too widely to partners with substitutive product offerings can significantly shift the dynamics among partners toward a more competitive stance. These dynamics ultimately shape the success of the platform, and thus are worth close attention for entrepreneurs aiming to create a platform or release their product offerings on the platform. ĢżOverall, the findings suggest that while openness may help a platform orchestrate innovation, too much opennessā€”especially to partners with highly similar products or servicesā€”may dampen innovation.