Abstract: Relevant information about how much value can be created in a buyer-supplier relationship is often difficult to evaluate before exchange takes place. For instance, in professional services, the fit between buyers and suppliers can be hard to assess ex ante. We use a formal model to explore the implications of the lack of ex ante observability of bilateral value creation on the process of value discovery. We study how the cost of resolving uncertainty about value creation potential is amplified due to conflicts over value distribution. Compared to an efficient benchmark we find for example that a buyer leading the value discovery process will spend too much resources to include unproven suppliers in the consideration set and yet be biased against actually trying these suppliers.

Abstract: Our study adds to the growing literature on open innovation and mechanisms for platform-based ecosystem growth by identifying an alternative approach to ecosystem growth -- a platform provisioning both supply- and demand-side resources to external parties (complements) for co-innovation projects. Studies emphasize the importance of demand-side resources in promoting partner relationships in platform-based ecosystems. Unaddressed is the role of other types of resources, capabilities, and processes in shaping and growing an ecosystem. Studying a novel context, a platform with a high degree of resource-openness that is governed and controlled by a single firm, we address this gap. The findings demonstrate how a platform’s degree of resource openness gives rise to a dynamic capability that yields outcomes vital to building and sustaining an ecosystem’s evolution and durability.

Abstract: Multi-sided platform operators are concerned not only with seller participation but also the extent to which they participate. In this paper, we examine three questions related to sellers’ product decisions that are salient to platform success: Do sellers offer in demand products, their most competitive products, and their most important products? We study e-books on Amazon Kindle. We find that publishers offer their popular titles (as opposed to niche titles), and titles that they possess competitive advantage over other publishers. These products help attract buyers to the platform, thereby contributing to the indirect network effect. However, publishers withhold titles that constitute a high percentage of their printed books sales, which suggests that publishers guard their most important products against Amazon’s control.

Abstract: Established firms struggle to survive competence-destroying discontinuities unless they own valuable specialized complementary assets. But what happens in the opposite case, when discontinuities destroy incumbents’ complementary assets while sparing their core know-how? We address this important question with an inductive study of the Italian newspaper industry during the Internet revolution (1995–2014). We find that when a discontinuity substitutes incumbents’ specialized complementary assets with generic complementary assets, many more goods can be produced. The condition of product abundance undermines incumbents’ ability to create value, while the destruction of specialized assets reduces their ability to appropriate value. Entrants develop new sources of advantage based on orchestrating capabilities that satisfy emerging needs. We offer several contributions for the literatures on technological change and dynamic capabilities.