Seminar on "Two Faces of Value Creation in Business Ecosystems: Leveraging Complementarities and Managing Interdependencies"

A given innovation often does not stand alone. Rather it is connected with other elements in the ecosystem that impacts its value creation. We draw on this premise in a platform-based ecosystem in which participating firms innovate around a platform. We introduce the notion of connectedness to refer to the extent to which a given innovation interacts with the platform (i.e., platform connectedness) and also with the other complements in the ecosystem (i.e., complement connectedness). On the one hand, higher connectedness may allow the innovation to leverage complementarities. On the other hand, it may subject the innovation to an array of interdependencies that may limit its value creation. We explore these arguments on apps launched by software developers for Apple’s iPhone platform between 2008 and 2013. We find that higher platform and complement connectedness is in general associated with a greater likelihood of app’s successful commercialization. However, the benefit of platform connectedness is weakened when Apple updates its platform with a new generation. In contrast, the benefit of complement connectedness is strengthened when Apple updates its platform and if the complements themselves have low platform connectedness. These findings shed light on two faces of value creation in ecosystems - the opportunities associated with leveraging complementarities and the challenges associated with managing technological interdependencies.