Innovation, Openness, and Platform Control
Tulane University - A.B. Freeman School of Business
Marshall W. Van Alstyne
Boston University - Department of Management Information Systems; MIT Sloan School
January 14, 2013
We examine how exercising control rights over a technology platform can increase profits and innovation. By choosing how much to open and when to bundle enhancements, platform sponsors can influence choices of ecosystem partners. Platform openness invites developer participation but sacrifices direct sales. Bundling enhancements early destroys developer profits but bundling late delays R&D spillovers that promote platform growth. Interestingly, developers can prefer sponsored platforms to unmanaged open standards despite giving up rights to their applications. Results can inform innovation strategy, choice of organizational form, antitrust and intellectual property law, and the management of competition.
Number of Pages in PDF File: 41
Keywords: Open Innovation, Sequential Innovation, Two-Sided Markets, Two Sided Networks, Platforms, Patent Length, Network Effects, Externalities, R&D Spillovers, Bundling, Vertical Integration
JEL Classification: L00, L11, L5, O3, O31, O32working papers series
Date posted: January 2, 2008 ; Last revised: February 5, 2013
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
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