The Ecosystem of Software Platform: A Study of Asymmetric Cross-Side Network Effects and Platform Governance

Posted: 25 Feb 2015

See all articles by Peijian Song

Peijian Song

Nanjing University

Ling Xue

Georgia State University

Arun Rai

Georgia State University - J. Mack Robinson College of Business

Cheng Zhang

Fudan University

Date Written: February 2015

Abstract

While past research on software platform has recognized the existence of cross-side network effects (CNEs) between the application side and the user side, little is known about the asymmetry between the CNEs of the two sides on each other. Informed by a perspective of complex adaptive systems, this study theorizes how the user-to-application CNE is temporally different from the application-to-user CNE, and how these CNEs may be influenced by the governance mechanisms of the platform. We empirically test our theoretical arguments using a longitudinal data about a leading software browser. Our first main finding is the temporal asymmetry between the user-to-application CNE and the application-to-user CNE. Specifically, while the increased installed base of end users has a primarily long-term impact on the growth of application number and variety, the increased number and variety of applications have primarily short-term impacts on the growth of end users. Our second finding is that the length of application review time weakens the long-term user-to-application effect, but not the short-term application-to-user effect. Third, we also find that frequent platform updating can significantly weaken both the long-term user-to-application CNE and the short-term application-to-user CNE. Our study generates important theoretical and practical implications.

Keywords: Software platform, two-sided market, network effect, IS governance, complex adaptive systems

Suggested Citation

Song, Peijian and Xue, Ling and Rai, Arun and Zhang, Cheng, The Ecosystem of Software Platform: A Study of Asymmetric Cross-Side Network Effects and Platform Governance (February 2015). Available at SSRN: https://ssrn.com/abstract=2568817

Peijian Song

Nanjing University ( email )

No. 22 Hankou Road
Nanjing, Jiangsu 210093
China

Ling Xue (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Arun Rai

Georgia State University - J. Mack Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States

Cheng Zhang

Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China

HOME PAGE: http://homepage.fudan.edu.cn/~zccheng

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