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Cited by 220Digital Platforms and EconomicsEconomic Theory and InstitutionsInnovation and Knowledge Management

Externalities and complementarities in platforms and ecosystems: From structural solutions to endogenous failures

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Jacobides, Michael G., Cennamo, Carmelo, Gawer, Annabelle·2024·Research Policy
DOI 10.1016/j.respol.2023.104906
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Abstract

Platforms and ecosystems provide structures for constellations of economic actors to engage and interact as they seek to create and capture value. We consider how the constructs of platforms and ecosystems relate and explore why they have become more ubiquitous by focusing on the nature of their value-add. We propose that they emerge as a response to distinct market failures, which we identify, and we explain which specific externalities they help overcome. We also identify post-hoc endogenous functional and distributional failures that platforms and ecosystems, in turn, generate. We discuss implications for theory and practice.

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Crossref · 10.1016/j.respol.2023.104906

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  • Value creation for consumers occurs when the value produced by individual actors' efforts exceeds the value complementors capture.

    “Value creation for consumers occurs when the value produced by individual actors' efforts exceeds the value complementors capture (Jacobides et al., 2024;Lepak et al., 2007).”

    From What role do data network effects play for multihoming complements? An empirical analysis of platform complementors’ strategies for consumer value creation (2025) · cites this paper as Jacobides et al., 2024

    Section 3.3 describes actors’ joint value production and value propositions for end customers. It does not say that consumer value creation occurs when the value produced by individual actors exceeds what complementors capture; section 4.3 instead discusses how value-capture tensions can discourage investment and reduce value delivered to customers. Page numbers are unavailable in our copy. (LLM, conf=0.82)

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  • As they design their digital product, complementors in platform ecosystems face a trade-off between value creation and value capture in their strategic decisions.

    “As they design their digital product, complementors in platform ecosystems face a trade-off between value creation and value capture in their strategic decisions (Cennamo & Santaló, 2019;Jacobides et al., 2024).”

    From What role do data network effects play for multihoming complements? An empirical analysis of platform complementors’ strategies for consumer value creation (2025) · cites this paper as Jacobides et al., 2024

    Section 3.3 (page not supplied) reports that videogame complementors underinvested in quality because they could not capture the value of their innovation. This connects product decisions, value creation, and value capture, but does not establish the claimed general trade-off faced by complementors when designing digital products. (LLM, conf=0.81)

    Experimental — accuracy not yet measured

  • Due to network interaction, individual actors' choices affect other actors' value.

    “Due to network interaction, individual actors' choices affect other actors' value (Jacobides et al., 2024;Rochet & Tirole, 2003)”

    From What role do data network effects play for multihoming complements? An empirical analysis of platform complementors’ strategies for consumer value creation (2025) · cites this paper as Jacobides et al., 2024

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5 of the 194 references couldn’t be matched to a known paper.

Research works printed but not linked: 13

  1. Adner, R., 2021. Winning the Right Game: How to Disrupt, Defend, and Deliver in a Changing World. MIT Press.
  2. Baldwin, C.Y., 2022. Design rules, volume 2: how technologies shape organizations. Chapter 15: ecosystems and complementarities. In: Working Paper. https://papers.ss rn.com/sol3/papers.cfm?abstract_id=3690595.
  3. Baldwin, C.Y., 2023. Design Rules, Volume 2: How Technologies Shape Organizations. MIT Press, Cambridge, MA (In press).
  4. Benzell, S., Hersh, J.S., van Alstyne, M., Lagarda, G., 2019. How APIs Create Growth by Inverting the Firm. Working Paper, Available at. https://papers.ssrn.com/sol3/ papers.cfm?abstract_id=3432591.
  5. Caffarra, C., Valletti, T., 2020. Google/Fitbit Review: Privacy IS a Competition Issue. Vox EU / CEPR, 4 March. https://voxeu.org/content/googlefitbit-review-privac-competit ion-issue.
  6. Cennamo, C., Özalp, H., Kretschmer, T., 2018. Platform architecture and quality tradeoffs of multihoming complements. Inf. Syst. Res. 29 (2), 461-478.
  7. Dasgupta, P., 1982. The Control of Resources. Harvard University Press, Cambridge, Mass.
  8. Eaton, B., Elaluf-Calderwood, S., Sørensen, C., Yoo, Y., 2015. Distributed tuning of boundary resources. MIS Q. 39 (1), 217-244.
  9. Evans, D.S., Hagiu, A., Schmalensee, R., 2008. Invisible Engines: How Software Platforms Drive Innovation and Transform Industries. MIT Press, Cambridge, MA.
  10. Jacobides, M., Sundararajan, A., Van Alstyne, M., 2019. Platforms and ecosystems: enabling the digital economy. In: World Economic Forum White Paper, pp. 1-32.
  11. Leten, B., Vanhaverbeke, W., Roijakkers, N., Clerix, A., Van Helleputte, J., 2013. IP models to orchestrate innovation ecosystems. Calif. Manag. Rev. 55 (4), 51-64.
  12. Martens, B., 2020. Data Access, Consumer Interests and Social Welfare: An Economic Perspective on Data. Working Paper. https://ssrn.com/abstract=3605383.
  13. Williamson, P.J., De Meyer, A., 2020. Ecosystem Edge: Sustaining Competitiveness in the Face of Disruption. Stanford University Press.

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Authors
Jacobides, M. G., Cennamo, C., & Gawer, A.
Affiliations
  • London Business School (GB)
  • Copenhagen Business School (DK)
  • University of Surrey (GB)
Corresponding author
Jacobides, Michael G.
ORCID
Venue
Research Policy
Publisher
Elsevier BV
Published
2024-01
Volume
53
Issue
1
Pages
104906
ISSN
0048-7333 (ISSN-L)
DOI
10.1016/j.respol.2023.104906
OpenAlex
W4388361755
Cited by
220
References
194
Citations by year
2026: 95 · 2025: 79 · 2024: 41 · 2023: 5
FWCI
47.27
Type
journal article
Language
en
Open access
Licence
Locations
  • Research Policy (publishedVersion, cc-by)
  • SSRN Electronic Journal (acceptedVersion)
  • London Business School Research Online (London Business School) (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • CBS Research Portal (Copenhagen Business School) (submittedVersion, cc-by)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Theory and Institutions
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Innovation and Knowledge Management
Keywords
digital platforms, digital ecosystems, externalities, market failure, value creation, value capture, complementarity, platform governance

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