When to Be Agile: Ratings and Version Updates in Mobile Apps

35 Pages Posted: 6 Nov 2019

See all articles by Gad Allon

Gad Allon

University of Pennsylvania - The Wharton School

Georgios Askalidis

affiliation not provided to SSRN

Randall Berry

Northwestern University

Nicole Immorlica

Microsoft Research

Ken Moon

University of Pennsylvania - The Wharton School

Amandeep Singh

University of Pennsylvania - The Wharton School

Date Written: September 11, 2019

Abstract

Lean and agile models of product development organize flexible capacity to rapidly update individual products in response to customer feedback. While agile operations have been adopted across numerous industries, neither the benefits nor the factors explaining when firms choose to become agile are validated and understood. We study these questions using data on the development of mobile apps, which occurs through the dynamic release of new versions into the mobile app marketplace, in conjunction with customer ratings. We develop a structural model estimating the dependence of product versioning on (A) market feedback in the form of customer ratings, against (B) project and work-based considerations, such as development timelines, scale economies, and operational constraints. In contrast to when they actually benefit from operational agility, firms become agile when launching riskier products (in terms of uncertainty in initial customer reception) and less agile when able to exploit scale economies from coordinating development over a portfolio of apps. Agile operations increase firm payoffs by margins of 20-80%, and interestingly partial agility is often sufficient to capture the bulk of these returns. Finally turning to a question of marketplace design, we study how the mobile app marketplace should design the display of ratings to incentivize quality (increasing app categories’ average user satisfaction rates by as much as 26%).

Keywords: Agile product development, Empirical operations management, Mobile apps, Online marketplace, Product quality and reviews, Product versioning, Sequential innovation, Structural estimation

Suggested Citation

Allon, Gad and Askalidis, Georgios and Berry, Randall and Immorlica, Nicole and Moon, Ken and Singh, Amandeep, When to Be Agile: Ratings and Version Updates in Mobile Apps (September 11, 2019). Available at SSRN: https://ssrn.com/abstract=3476286 or http://dx.doi.org/10.2139/ssrn.3476286

Gad Allon

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Georgios Askalidis

affiliation not provided to SSRN

Randall Berry

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

HOME PAGE: http://users.eecs.northwestern.edu/~rberry/

Nicole Immorlica

Microsoft Research ( email )

One Memorial Drive, 14th Floor
Cambridge, MA 02142
United States

Ken Moon

University of Pennsylvania - The Wharton School ( email )

Jon M. Huntsman Hall
3730 Walnut St.
Philadelphia, PA 19104-6365
United States

Amandeep Singh (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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