Designing Modular Platforms: Implications of Application Programming Interfaces for Innovation and Imitation

Posted: 11 May 2018

See all articles by Ling Xue

Ling Xue

Georgia State University

Peijian Song

Nanjing University

Arun Rai

Georgia State University - J. Mack Robinson College of Business

Zhang Cheng

Fudan University

Xia Zhao

University of North Carolina at Greensboro - Information Systems & Supply Chain Management

Date Written: April 27, 2018

Abstract

Application programming interfaces (APIs) are the foundation of digital platform ecosystems. Based on APIs, platforms can explore growth opportunities to expand the scope of platform’s ecosystem at an unprecedented scale. Although APIs can facilitate the app development, there is also a dilemma between innovation and imitation, suggested by the resource deployment perspective and the modularity perspective. Motivated by the tension, we examine how platform APIs may influence innovation behavior and imitation behavior in third-party app development, and how these influences may be dependent on the app market environment. We empirically test our theoretical ideas using data about a leading web browser platform, and applying analytics techniques on app source code to identify original apps and copycat apps. Based on the difference-in-differences identification strategy, our finding suggests that the provision of platform APIs fosters app innovation and dampens app imitation. The fostering effect of platform APIs on app innovation is strengthened in app markets with greater demand potential and higher market-level app complexity. The dampening effect of platform APIs on app imitation is weakened in app markets with greater demand potentials and higher market concentration. Our study generates important theoretical and practical implications.

Keywords: Software platform, Application Programming Interfaces, Innovation, Imitation, Modularity

Suggested Citation

Xue, Ling and Song, Peijian and Rai, Arun and Cheng, Zhang and Zhao, Xia, Designing Modular Platforms: Implications of Application Programming Interfaces for Innovation and Imitation (April 27, 2018). Available at SSRN: https://ssrn.com/abstract=3170176

Ling Xue (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Peijian Song

Nanjing University ( email )

No. 22 Hankou Road
Nanjing, Jiangsu 210093
China

Arun Rai

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

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

Zhang Cheng

Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China

Xia Zhao

University of North Carolina at Greensboro - Information Systems & Supply Chain Management ( email )

401 Bryan Building
Greensboro, NC 27402-6179
United States

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