How does competition influence innovative effort within a platform-based ecosystem? Contrasting paid and unpaid contributors |
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| Institution: | 1. University of Southern California, Marshall School of Business, United States of America;2. Copenhagen Business School, Denmark;1. University of Sussex, Business School, Falmer, Brighton BN1 9SL, UK;2. Fairfield University, Charles F. Dolan School of Business, 1073 N Benson Rd, Fairfield, CT 06824, United States of America;1. Federal Reserve Bank of Philadelphia, United States of America;2. Harvard Business School and NBER, United States of America;3. Harvard University, United States of America;4. Yale University, United States of America;1. Universidad Nacional de Colombia, Sede Medellín, Colombia;2. Universidad Católica de Oriente, Rionegro (Antioquia), Colombia;1. Faculty of Business Administration, University of Macau, Macau;2. Department of Marketing and International Business, Lingnan University, Hong Kong, China;3. School of Economics and Management, Southeast University, Nanjing, Jiangsu 210009, China;4. School of Public Economics and Administration, Shanghai University of Finance and Economics, Shanghai, 200433, China;1. Central Bank of Uruguay, Diagonal Fabini 777, 11100 Montevideo, Uruguay;2. University of the Republic, School of Economics and Administration, Institute of Economics, Gonzalo Ramírez 1926, 11200 Montevideo, Uruguay |
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| Abstract: | Unpaid individuals are an important source of contributions to many ecosystems. An understudied phenomenon is how such contributions are shaped by competition. In this paper, we study how the rate and type of new product creation are shaped by competition. We contrast its impact on “paid” developers that profit by selling their products to that on “unpaid” developers that release their software for free. Using a hand-collected dataset on the jailbreak ecosystem, we find that increasing competition has a stronger negative effect on the rate of innovation by paid developers than that of unpaid developers. We also find that increasing competition is associated with a reduction in the reuse of existing technological components by unpaid developers, relative to paid developers, suggesting that the types of products developed also shift as competition increases. The results suggest that competition has an important role in shaping innovation in platform-based ecosystems, but that it differs for paid and unpaid contributors. |
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