Open innovation, information, and entrepreneurship within platform ecosystems

• Author: Michael P. Ciuchta,Mason Carpenter,Jonathan T. Eckhardt
• Published date: 01 September 2018
• DOI: http://doi.org/10.1002/sej.1298
• Date: 01 September 2018

SPECIAL ISSUE ARTICLE

Open innovation, information, and

entrepreneurship within platform ecosystems

Jonathan T. Eckhardt

1

| Michael P. Ciuchta

2

| Mason Carpenter

1

1

Wisconsin School of Business, University of

Wisconsin-Madison, Madison, Wisconsin

2

Manning School of Business, University of

Massachusetts Lowell, Lowell, Massachusetts

Correspondence

Jonathan T. Eckhardt, Wisconsin School of

Business, University of Wisconsin-Madison,

Grainger Hall, 975 University Avenue,

Madison, WI 53706.

Email: jon.eckhardt@wisc.edu

Funding information

Ewing Marion Kauffman Foundation; Richard

M. Schulze Family Foundation; Wisconsin

Alumni Research Foundation

Research Summary:Companies sponsor platform ecosystems as an

open innovation strategy to encourage complementors to develop

complementary products, services, or technologies that can add

value to the platform ecosystem. In this study, we develop and test

an information-based theory of entrepreneurial activity within plat-

form ecosystems. We postulate that ecosystems produce different

types of information—a subset of which will foster entrepreneur-

ship in the form of the commercialization of complementary prod-

ucts that were previously released for free. Our results indicate

that product-specific information is associated with commercializa-

tion, but we fail to detect a relationship between market informa-

tion and subsequent commercialization activity.

Managerial Summary:The digital economy has led to a proliferation

of platform ecosystems that harness external innovation. These

ecosystems rely on complementors who enhance the value of plat-

forms by creating complementary technologies. Hence, comple-

mentors' commercial viability is important. One such type of

ecosystem is an app store, which enables complementors to intro-

duce software that improves the platform product. App stores exist

for a variety of software platforms, ranging from mobile phone

operating systems (iOS and Android) to electronic medical record

systems (Epic and Cerner). In this research, we find that comple-

mentors who introduce a free version of a mobile app are more

likely to commercialize their app in response to specific types of

information and platform designers should manage information in

their platforms to foster platform viability.

KEYWORDS

corporate entrepreneurship, entrepreneurial strategy,

entrepreneurship, innovation, opportunity

Received: 15 May 2015 Revised: 1 February 2018 Accepted: 1 March 2018 Published on: 24 July 2018

DOI: 10.1002/sej.1298

Strategic Entrepreneurship Journal. 2018;12:369–391. wileyonlinelibrary.com/journal/sej © 2018 Strategic Management Society 369

1|INTRODUCTION

Open innovation is a means of utilizing external as well as internal ideas as inputs to the innovation process

(Chesbrough, 2003). In this study, we examine how entrepreneurship is fostered in open innovation platform ecosys-

tems. Platforms are products or services that function as foundations upon which others—termed complementors—

can build complementary products, services, or technologies (Boudreau & Jeppesen, 2015; Gawer, 2009).

Platforms are dependent on the ecosystem of complementors that produce innovations that increase the suc-

cess of the platform (Eisenmann, Parker, & Van Alstyne, 2009; Gawer & Cusumano, 2002; Kenney & Pon, 2011).

Often, platforms turn to open business models to access the innovations generated by these complementors

(Vanhaverbeke & Chesbrough, 2014). Complementors contribute to these ecosystems for various reasons, which

may or may not relate to financial gain (Boudreau & Jeppesen, 2015; Hilkert, Benlian, & Hess, 2010; Jeppesen & Fre-

deriksen, 2006). However, complementors' inability to create a sustainable business model could undermine the suc-

cess of the overall ecosystem (West, 2014). Despite the importance of complementary organizations and

commercialization within an ecosystem, we still know little about the factors that influence the propensity for com-

plementors to engage in commercial activity. In this study, we address this gap by examining how the presence of

certain types of information about entrepreneurial opportunities in a platform ecosystem is associated with commer-

cialization rates among complementors.

Our context is a platform-based software ecosystem in which the platform relies on a diverse software devel-

oper community to create and market complementary products (mobile apps) needed to improve and sustain the

platform (Tiwana, 2013). Open-innovation platform ecosystems are often used to enhance the value of platform

technologies (Gawer & Cusumano, 2014), ranging from mobile phones to sophisticated computer-aided design sys-

tems like SolidWorks. In our context, platform companies provide the necessary boundary resources (such as soft-

ware development kits) to complementors (the mobile app developers) but leave decisions, such as which app to

develop and what to commercialize, up to developers (Ghazawneh & Henfridsson, 2013). Central to our theoretical

model is the supposition that information on an entrepreneurial opportunity can stimulate opportunity recognition

by a complementor that may lead them to commercialize a technology. Consistent with the prior literature, we define

commercialization as the process of developing and then selling a technology in a market (Mitchell & Singh, 1996).

1

Our opportunity-focused perspective of ecosystem development is valuable for several reasons. First, despite

the importance of ecosystems to open innovation models in a wide variety of industries (Gawer & Cusumano, 2014;

Rohrbeck, Hölzle, & Gemünden, 2009; West, 2014), prior work has not examined specific mechanisms by which

information generated within ecosystems fosters entrepreneurship by complementors. Examining these mechanisms

is important because the health and vibrancy of open innovation ecosystems may rely in part on the ability of com-

plementors to sustain themselves financially. Thus, our work responds to calls to advance our understanding of open

innovation by empirically connecting research on open innovation to research in entrepreneurship (Bogers et al.,

2017; Zahra & Nambisan, 2012).

Second, our study contributes to information-based theories of entrepreneurship (Casson, 2005; Kirzner, 1973;

Venkataraman, 1997). In theories that emphasize the role of information in entrepreneurship, actors decide to com-

mercialize an idea because they receive information that leads them to believe that a profitable opportunity exists.

Central to this widely accepted view is the idea that information about the specific characteristics of opportunities is

not static. However, despite the central role of information to this perspective, the conceptual definition of such

information remains vague, and the specific characteristics of the information that individuals respond to are

1

We use this definition instead of the definition used in the technology transfer literature, which typically emphasizes the process of

transferring technology-based innovation from the creator of a technology to a separate commercializing organizat ion because the

Palm OS software context includes commercializing activity that extends beyond the narrower definition adopted in the technology

transfer literature.

370 ECKHARDT ET AL.