Unpaid Crowd Complementors: The Platform Network Effect Mirage

36 Pages Posted: 2 Aug 2014

See all articles by Kevin Boudreau

Kevin Boudreau

Northeastern University; National Bureau of Economic Research (NBER)

Lars Bo Jeppesen

Copenhagen Business School - Department of Innovation and Organizational Economics

Date Written: August 1, 2014

Abstract

Platforms have evolved beyond just being organized as multi-sided markets with complementors selling to users. Complementors are often unpaid, working outside of a price system and driven by heterogeneous sources of motivation — which should affect how they respond to platform growth. Does reliance on network effects and strategies to attract large numbers of complementors remain advisable in such contexts? We test hypotheses related to these issues using data from 85 online multi-player game platforms with unpaid complementors. We find that complementor development responds to platform growth even without sales incentives, but that attracting complementors has a net zero effect on on-going development and fails to stimulate network effects. We discuss conditions under which a strategy of using unpaid crowd complementors remains advantageous.

Keywords: platforms, innovation, network effects, crowds, heterogeneous motivations, digital innovation

JEL Classification: L14, L17, L41, O31, O32

Suggested Citation

Boudreau, Kevin and Jeppesen, Lars Bo, Unpaid Crowd Complementors: The Platform Network Effect Mirage (August 1, 2014). Available at SSRN: https://ssrn.com/abstract=2475034 or http://dx.doi.org/10.2139/ssrn.2475034

Kevin Boudreau (Contact Author)

Northeastern University ( email )

805 Columbus Ave, Interdisciplinary Sci & Eng Bldg
Huntington Ave
Boston, MA 02115
United States

HOME PAGE: http://www.kevinboudreau.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Lars Bo Jeppesen

Copenhagen Business School - Department of Innovation and Organizational Economics ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

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