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Let a Thousand Flowers Bloom? An Early Look at Large Numbers of Software App Developers and Patterns of Innovation

Let a Thousand Flowers Bloom? An Early Look at Large Numbers of Software App Developers and... In this paper, I study the effect of adding large numbers of producers of application software programs (“apps”) to leading handheld computer platforms, from 1999 to 2004. To isolate causal effects, I exploit changes in the software labor market. Consistent with past theory, I find a tight link between the number of producers on platform and the number of software varieties that were generated. The patterns indicate the link is closely related to the diversity and distinct specializations of producers. Also highlighting the role of heterogeneity and nonrandom entry and sorting, later cohorts generated less compelling software than earlier cohorts. Adding producers to a platform also shaped investment incentives in ways that were consistent with a tension between network effects and competitive crowding, alternately increasing or decreasing innovation incentives depending on whether apps were differentiated or close substitutes. The crowding of similar apps dominated in this case; the average effect of adding producers on innovation incentives was negative. Overall, adding large numbers of producers led innovation to become more dependent on population-level diversity, variation, and experimentation—while drawing less on the heroic efforts of any one individual innovator. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Organization Science INFORMS

Let a Thousand Flowers Bloom? An Early Look at Large Numbers of Software App Developers and Patterns of Innovation

Boudreau, Kevin J.
Organization Science , Volume 23 (5): 19 – Oct 1, 2012
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References (112)

Publisher
INFORMS
Copyright
Copyright © INFORMS
Subject
Research Article
ISSN
1047-7039
eISSN
1526-5455
DOI
10.1287/orsc.1110.0678
Publisher site
See Article on Publisher Site

Abstract

In this paper, I study the effect of adding large numbers of producers of application software programs (“apps”) to leading handheld computer platforms, from 1999 to 2004. To isolate causal effects, I exploit changes in the software labor market. Consistent with past theory, I find a tight link between the number of producers on platform and the number of software varieties that were generated. The patterns indicate the link is closely related to the diversity and distinct specializations of producers. Also highlighting the role of heterogeneity and nonrandom entry and sorting, later cohorts generated less compelling software than earlier cohorts. Adding producers to a platform also shaped investment incentives in ways that were consistent with a tension between network effects and competitive crowding, alternately increasing or decreasing innovation incentives depending on whether apps were differentiated or close substitutes. The crowding of similar apps dominated in this case; the average effect of adding producers on innovation incentives was negative. Overall, adding large numbers of producers led innovation to become more dependent on population-level diversity, variation, and experimentation—while drawing less on the heroic efforts of any one individual innovator.

Journal

Organization Science – INFORMS

Published: Oct 1, 2012

Keywords: Keywords : competition and innovation ; multisided platforms ; distributed and open innovation ; network effects ; software and digital innovation

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