Publications

Competing with the Platform: Complementor Positioning and Cross-Platform Response to Entry

Kapacinskaite, A., & Mostajabi, A. (2024). Competing with the platform: Complementor positioning and cross-platform response to entry. Strategic Management Journal, 45(12), 2577–2607. https://doi.org/10.1002/smj.3643 (equal co-authorship)

Research Summary:

This study contrasts traditional entry dynamics with platform owner entry into a complementor market and examines cross-platform complementor response to competition with the platform. Generalists experience low repositioning cost and are more likely to shift effort away, while specialists focus their effort on the focal platform. We examine Apple’s “Files” app entry and find support for our hypotheses: generalists shift effort toward the competing platform, while specialists double down on the focal platform. Moreover, empirically comparing Apple’s entry with that of other large firms, we find that only the platform owner elicits a strong complementor response. This article contributes to the competitive and corporate strategy literatures, underscoring how complementor heterogeneity affects cross-platform allocation of effort when the platform owner becomes a competitor in complementor spaces.

Managerial Summary:

Given the growing managerial and regulatory interest in competitive arenas on digital platforms, we analyze how firms respond to competition with the platform owner. We hypothesize that platform-enabled firms (complementors) with an outside option—those who also operate on a different platform—reposition, while firms only focused on a single platform double down. Examining the case of the “Files” app on Apple’s App Store, we find support for these predictions. We also study other large firm entries on App Store (by Microsoft and SanDisk), but do not observe a meaningful response by complementors. We describe how market entry by the platform owner differs from traditional entry and argue stakeholders may benefit from a deeper understanding of the unique nature of competing with a platform.

Keywords:

platform entry; complementor heterogeneity; specialist and generalist firms; repositioning cost; multihoming

Myopic Expansions on Digital Platforms

Mostajabi, A., Kapacinskaite, A., Vakili, K. (forthcoming). Myopic Expansions on Platforms. Administrative Science Quarterly, forthcoming. https://doi.org/10.1177/00018392261461268/ (equal co-authorship)

Summary:

Digitization has enabled modern firms to expand at unprecedented rates, but there are downsides to rapid expansion. Prior research has highlighted how digital platforms facilitate mass-market expansions by resolving frictions associated with market entry. Accordingly, various studies have emphasized the positive impact of market-friction reduction on aggregate market size and efficiency. In this article, we argue that the extreme resolution of frictions may also have a downside: It can nudge platform participants to overlook the heterogeneous nature of different markets and, consequently, to engage in large-scale, potentially myopic market expansions. These expansions, in turn, may engender lower customer satisfaction and firm performance. We test our arguments in the context of Apple’s App Store. We find that apps that undergo rapid, large-scale market expansions, relative to apps that do not expand or that expand more gradually, see a short-run increase in client base but longer-run declines in ratings, downloads, financial performance, and innovation. By addressing the underexplored negative side of resolving market frictions on platforms, the study advances knowledge of digital strategy and scaling.

Keywords:

digital strategy, multisided platforms, market entry, market frictions, resource allocation, complementor strategy, firm performance, innovation, scaling