Advanced Search
MyIDEAS: Login to save this paper or follow this series

Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel

Contents:

Author Info

  • Annabelle Gawer
  • Rebecca Henderson

Abstract

This paper draws on a detailed history of Intel's strategy with respect to the complementary markets for microprocessors to explore the usefulness of the current theoretical literature for explaining behavior. We find that as the literature predicts, Intel invests heavily in these markets, both through direct entry and through subsidy. We also find, again consistent with the literature, that the firm's entry decisions are shaped by the belief that it does not have either the capabilities or the resources to enter all possible markets, and thus that it believes it is critical to encourage widespread entry. As several authors have pointed out, this imperative places the firm in a difficult strategic position, since it needs to attempt to commit to potential entrants that it will not engage in an ex-post "squeeze", despite the fact that ex post it has very strong incentives to do so. We find that the fact that the complementary markets in which Intel competes are complex, dynamic and multilayered considerably sharpens this dilemma. We explore the ways in which Intel attempts to solve it, highlighting in particular the organizational structure and processes through which they attempt to commit to making money in the markets which they choose to enter while also committing not to making too much. Our results have implications for both our understanding of the dynamics of competition in complements and of the role of organizational structures and processes in shaping competition.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w11852.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11852.

as in new window
Length:
Date of creation: Dec 2005
Date of revision:
Publication status: published as Gawer, Annabelle and Rebecca Henderson. "Platform Owner Entry and Innovation in Complementary Markets: Evidence from Intel." Journal of Economics and Management Strategy 16, 1 (spring 2007): 1-34.
Handle: RePEc:nbr:nberwo:11852

Note: IO
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Joseph Farrell & Michael L. Katz, 2003. "Innovation, Rent Extraction, and Integration in Systems Markets," Development and Comp Systems, EconWPA 0303005, EconWPA.
  2. Michael D. Whinston, 1989. "Tying, Foreclosure, and Exclusion," NBER Working Papers, National Bureau of Economic Research, Inc 2995, National Bureau of Economic Research, Inc.
  3. Choi, Jay Pil & Stefanadis, Christodoulos, 2001. "Tying, Investment, and the Dynamic Leverage Theory," RAND Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 32(1), pages 52-71, Spring.
  4. Jean-Charles Rochet & Jean Triole, 2002. "Platform Competition in Two Sided Markets," FMG Discussion Papers, Financial Markets Group dp409, Financial Markets Group.
  5. Becchetti, Leonardo & Paganetto, Luigi, 2001. "The determinants of suboptimal technological development in the system company-component producers relationship," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 19(9), pages 1407-1421, November.
  6. Timothy F. Bresnahan & Shane Greenstein, 1997. "Technological Competition and the Structure of the Computer Industry," Working Papers, Stanford University, Department of Economics 97028, Stanford University, Department of Economics.
  7. Panzar, John C., 1989. "Technological determinants of firm and industry structure," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 1, pages 3-59 Elsevier.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Leonhard Dobusch & Elke Schü�ler, 2013. "Theorizing path dependence: a review of positive feedback mechanisms in technology markets, regional clusters, and organizations," Industrial and Corporate Change, Oxford University Press, Oxford University Press, vol. 22(3), pages 617-647, June.
  2. Timothy S. Simcoe & Stuart J.H. Graham & Maryann Feldman, 2007. "Competing on Standards? Entrepreneurship, Intellectual Property and the Platform Paradox," NBER Working Papers, National Bureau of Economic Research, Inc 13632, National Bureau of Economic Research, Inc.
  3. Andrea Mantovani & Francisco Ruiz-Aliseda, 2011. "Equilibrium Innovation Ecosystems: The Dark Side of Collaborating with Complementors," Working Papers, NET Institute 11-31, NET Institute.
  4. Ansari, Shahzad & Garud, Raghu, 2009. "Inter-generational transitions in socio-technical systems: The case of mobile communications," Research Policy, Elsevier, Elsevier, vol. 38(2), pages 382-392, March.
  5. Perrons, Robert K., 2009. "The open kimono: How Intel balances trust and power to maintain platform leadership," Research Policy, Elsevier, Elsevier, vol. 38(8), pages 1300-1312, October.
  6. Koslowski, Thomas G. & Longstaff, Patricia H. & Vidal, Miguel & Grob, Thomas, 2012. "Resilience analysis of the ICT ecosystem," 23rd European Regional ITS Conference, Vienna 2012, International Telecommunications Society (ITS) 60390, International Telecommunications Society (ITS).
  7. Martin Kenney & Bryan Pon, 2011. "Structuring the Smartphone Industry: Is the Mobile Internet OS Platform the Key?," Journal of Industry, Competition and Trade, Springer, Springer, vol. 11(3), pages 239-261, September.
  8. Packalen, Mikko, 2010. "Complements and potential competition," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 28(3), pages 244-253, May.
  9. Çakır, Metin & Nolan, James, 2014. "Revisiting Concentration in Food and Agricultural Supply Chains: The Welfare Implications of Market Power in a Complementary Input Sector," Staff Papers, University of Minnesota, Department of Applied Economics 179168, University of Minnesota, Department of Applied Economics.
  10. Pascal Le Masson & Benoît Weil & Armand Hatchuel & Patrick Cogez, 2012. "Why aren't they locked in waiting games? Unlocking rules and the ecology of concepts in the semiconductor industry," Post-Print, HAL hal-00870358, HAL.
  11. Niedermayer, Andras, 2013. "On platforms, incomplete contracts, and open source software," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 31(6), pages 714-722.
  12. Tim COWEN & Annabelle GAWER, 2012. "Competition in the Cloud: Unleashing Investment and Innovation Within and Across Platforms," Communications & Strategies, IDATE, Com&Strat dept., IDATE, Com&Strat dept., vol. 1(85), pages 45-62, 1st quart.
  13. Peng Huang & Marco Ceccagnoli & Chris Forman & D.J. Wu, 2009. "Participation in a Platform Ecosystem: Appropriability, Competition, and Access to the Installed Base," Working Papers, NET Institute 09-14, NET Institute, revised Sep 2009.
  14. Jason P. Davis & Yulia Muzyrya & Pai-Ling Yin, 2014. "Experimentation Strategies and Entrepreneurial Innovation: Inherited Market Differences in the iPhone Ecosystem," Discussion Papers, Stanford Institute for Economic Policy Research 13-029, Stanford Institute for Economic Policy Research.
  15. Carolin Haeussler & Matthew J. Higgins, 2012. "Explaining Preferences for Control Rights in Strategic Alliances: A Property Rights and Capabilities Perspective Approach," NBER Working Papers, National Bureau of Economic Research, Inc 18364, National Bureau of Economic Research, Inc.
  16. Arora, Ashish & Forman, Chris & Yoon, Ji Woong, 2010. "Complementarity and information technology adoption: Local area networks and the Internet," Information Economics and Policy, Elsevier, Elsevier, vol. 22(3), pages 228-242, July.
  17. Andras Niedermayer, 2007. "On Platforms, Incomplete Contracts, and Open Source Software," Diskussionsschriften, Universitaet Bern, Departement Volkswirtschaft dp0707, Universitaet Bern, Departement Volkswirtschaft.
  18. Amel Attour & Maëlle Della Peruta, 2013. "Le rôle des connaissances architecturales dans l’élaboration de la plateforme technologique d’un écosystème en émergence: le cas des plateformes NFC," GREDEG Working Papers, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis 2013-15, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  19. Kevin J. Boudreau & Andrei Hagiu, 2008. "Platform Rules: Multi-Sided Platforms as Regulators," Harvard Business School Working Papers, Harvard Business School 09-061, Harvard Business School.
  20. Alexy, Oliver & Reitzig, Markus, 2013. "Private–collective innovation, competition, and firms’ counterintuitive appropriation strategies," Research Policy, Elsevier, Elsevier, vol. 42(4), pages 895-913.
  21. Ding, Ke, 2013. "Platforms and firm capabilities : a study of emerging global value chains," IDE Discussion Papers, Institute of Developing Economies, Japan External Trade Organization(JETRO) 432, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  22. Campbell-Kelly, Martin & Garcia-Swartz, Daniel D., 2009. "Pragmatism, not ideology: Historical perspectives on IBM's adoption of open-source software," Information Economics and Policy, Elsevier, Elsevier, vol. 21(3), pages 229-244, August.
  23. Timothy Simcoe, 2013. "Governing the Anticommons: Institutional Design for Standard-Setting Organizations," NBER Chapters, National Bureau of Economic Research, Inc, in: Innovation Policy and the Economy, Volume 14, pages 99-128 National Bureau of Economic Research, Inc.
  24. Rahul Basole & Jürgen Karla, 2011. "On the Evolution of Mobile Platform Ecosystem Structure and Strategy," Business & Information Systems Engineering, Springer, Springer, vol. 3(5), pages 313-322, October.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:11852. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.