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Cited by 408Digital Platforms and EconomicsService and Product InnovationOpen Source Software Innovations

Generativity Tension and Value Creation in Platform Ecosystems

Cennamo, Carmelo, Santaló, Juan·2019·Organization Science
DOI 10.1287/orsc.2018.1270
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Abstract

Platform-based technology ecosystems are new forms of organizing independent actors’ innovations around a stable product system. This collective organization is proving superior to traditional, vertically integrated systems in many sectors because of greater “generativity”—the ecosystem’s capacity to foster complementary innovation from autonomous, heterogeneous firms—which extends the usage scope and value of the platform to users. However, greater generativity can also lead to greater variance in the way ecosystem members’ contributions satisfy users’ needs, and it could potentially hinder the ecosystems’ value creation. We draw on collective action theory to examine generativity’s impact on user satisfaction and the mechanisms driving it. We argue that products enhancing user satisfaction contribute to a collective, shared asset, the platform system reputation, from which all participants benefit. Thus, generativity has both a positive (system reputation) and negative (free-riding) effect on the ecosystem members’ incentives for developing products that enhance user satisfaction. We argue that the negative free-riding effect prevails as the platform system matures and competition with alternative platform systems increases. Using data from the video game industry, we find supportive evidence for the free-riding effect, which generates an average loss in total revenue for first-rate games of about $36.5 million and a drop of about 3.3% in the console’s market share. By identifying the conditions that exacerbate free riding in platform ecosystems, our study contributes to the understanding of the evolutionary dynamics of platform ecosystems. It also highlights one feedback mechanism governing collective action in ecosystems and its implications for value creation.

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Authors
Cennamo, C., & Santaló, J.
Affiliations
  • Bocconi University (IT)
  • Department of Strategy, IE Business School, 28006 Madrid, Spain
ORCID
Venue
Organization Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2019-05
Volume
30
Issue
3
Pages
617-641
ISSN
  • 1047-7039 (ISSN-L)
  • 1526-5455
DOI
10.1287/orsc.2018.1270
OpenAlex
W2946420406
Cited by
408
References
58
Citations by year
2026: 63 · 2025: 77 · 2024: 79 · 2023: 63 · 2022: 56 · 2021: 46 · 2020: 18 · 2019: 6
FWCI
48.40
Type
journal article
Language
en
Open access
closed
Locations
  • Organization Science (publishedVersion)
  • Archivio istituzionale della Ricerca - Bocconi (submittedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
  • Social Sciences › Business, Management and Accounting › Marketing › Service and Product Innovation
  • Physical Sciences › Computer Science › Computer Science Applications › Open Source Software Innovations
Keywords
platform ecosystems, generativity, value creation, free-riding, user satisfaction, collective action theory, complementary innovation, video game industry

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