BI Norwegian Business School
Department of Strategy and Entrepreneurship
Online Communities on Competing Platforms: Evidence from Game Wikis
(with Tobias Kretschmer)
Strategic Management Journal (2023), 44(2): 441-476
Many platforms rely on volunteer contributions for value creation. Thus, unpaid contributors are valuable for the platform, but control over their activities is limited. We study whether and how volunteer communities can provide a competitive advantage and ask how contributor behavior depends on platform competitive position. We propose two channels: First, a stronger competitive position facilitates contributor coordination, leading to a larger active community. Second, a platform’s competitive position is related to contributor motivation, which drives how much individuals contribute. Studying two competing game wiki platforms, we find that a platform’s stronger competitive position is associated with higher activity, primarily driven by the number of contributors, which in turn triggers increased contributions by existing contributors. Further, high-productivity contributors are especially active on a stronger platform.
Platform Partnership Programs and Content Supply: Evidence from the YouTube “Adpocalypse”
(with Lena Abou El-Komboz and Anna Kerkhof)
Many digital platform host content produced by independent creators and rely on advertising as their primary source of revenues. To ensure a large and engaged audience, some platforms use partnership programs to put into place incentives for creators to produce high-quality content by sharing part of the advertising revenue with them. At the same time, these programs let platforms exercise control over their participation to prevent the presence of low-quality or “bad-faith” actors who can otherwise harm the health of the ecosystem. However, the rules governing access to such programs may have to be adjusted over time, which in turn may disrupt creators’ motivation to produce content. This paper studies a rule change on YouTube that made access to its partner program more restrictive. This also removed all former participants who did not meet the new requirements and made it impossible for them to continue commercializing their content on the platform. Using a regression discontinuity design, we provide causal evidence that affected creators subsequently reduced the frequency of their uploads and provided content of lower quality and diversity. We also investigate and discuss effect heterogeneity between mainstream and niche as well as more and less experienced creators to learn about the underlying financial and non-pecuniary motivations.
Competition and value capture in platform markets: Implications for complementor strategy
(with Ambre Nicolle)
We study how competition between platforms relates to the strategic choices of their complementors. In particular, we are interested in how an increase in competition due to the entry of a new player affects the cooperative value co-creation efforts of complementors on the incumbent platform. Drawing on value capture theory, we argue that this has ambiguous implications for their incentives to continue to cooperate. On the one hand, the entry threatens complementors’ value creation and capture on the incumbent – a demand-side effect that increases cooperation to protect their profitability there. On the other hand, the entrant may constitute an attractive alternative, leading to misaligned value capture expectations on the incumbent – an outside-option effect that decreases their cooperation. We test predictions from a simple theoretical model in the context of the PC video game distribution market: Here, the dominant incumbent “Steam” faced competition with the launch of the “Epic Games Store”. We study two types of (non-)cooperative strategic choices of game developers on Steam: Multihoming by joining the rival, and their tendency to participate in Steam sales – the platform’s most salient ecosystem orchestration efforts. Our empirical analysis provides broad support for our theoretical predictions: Complementors who are subject to a detrimental demand-side effect increased their cooperation with the incumbent, and those subject to an outside-option effect decreased their cooperation.
Working paper available upon request.
Selection, Consumption, and New Music Exploration in an Online Social Network: A Dyadic Approach
We study peer influence in an online social network on a platform where consumers purchase music albums. They can follow their peers and become informed about their consumption choices. In particular, we are interested in how this affects consumers’ exploration of new music that exhibits unfamiliar attributes (e.g. artist, genre, or instrumentation). Our empirical analysis contains two parts: First, we analyze how the formation of new dyads in the network depends on consumer-peer similarities in their preference for certain album attributes. This affects music exploration because it determines which peer purchases consumers are exposed to. Second, conditional on the determinants of dyad formation, we investigate how within-dyad information flows affect consumers’ purchase decisions, and in particular their exploration of unfamiliar attributes. Our analysis produces three key findings: First, preference similarities between consumers and peers are the strongest predictor of the formation of dyads. This likely stifles consumers’ exploration of new music because it limits their exposure to unfamiliar attributes. Second, we find a strong positive peer effect of consumers observing peer purchases after the formation of a dyad. Third, this effect is stronger for albums from unfamiliar artists, but weaker for those that exhibit unfamiliar horizontal attributes (e.g. its genre). Together, this suggests that new music exploration in online social networks is limited and subject to nuance.
Earlier title: “Peer Recommendations, Consumption Variety, and Product Performance: Evidence from a Digital Music Platform”
Disruption, Specialization and Employee Exit: Vertical Acquisitions in the U.S. Video Game Industry
(with Pooyan Khashabi, Jörg Claussen & Tobias Kretschmer)
In knowledge-intensive industries, targets often get acquired for their human capital. However, acquisitions are also known to trigger employee exit, which may diminish the very asset acquirers are trying to get under their control. We argue that acquisitions disrupt the complementarity between employee skills and employer activities and thereby impact the productivity in the value creation process, which ultimately drives exit decisions. Analyzing vertical acquisitions in the U.S. video game industry we find strong evidence that a higher degree of individual disruption translates into a higher likelihood of post-acquisition employee exit. Moreover, employees with specialized skills are more strongly affected by disruption, while generalized employees are less affected by disruption through acquisition. The findings have implications for the likely success of related and unrelated acquisitions.
Work in Progress
Project on the merger of two community-driven platforms (data analysis)
(with Tobias Kretschmer)
Project on strategic choices of crowdfunding entrepreneurs (data analysis)
(with Ed Saiedi)