IDEAS home Printed from https://ideas.repec.org/a/inm/orisre/v34y2023i4p1339-1374.html
   My bibliography  Save this article

Software Components and Product Variety in a Platform Ecosystem: A Dynamic Network Analysis of WordPress

Author

Listed:
  • Sungyong Um

    (Department of Information Systems and Analytics, School of Computing, National University of Singapore, Singapore 119391)

  • Bin Zhang

    (Department of Information and Operations Management, Mays Business School, Texas A&M University, College Station, Texas 77843)

  • Sunil Wattal

    (Department of Management Information Systems, Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122)

  • Youngjin Yoo

    (Department of Design and Innovation, Weatherhead School of Management, Case Western Reserve University, Cleveland, Ohio 44106)

Abstract

Software components, such as application programming interfaces (APIs), provided by both the platform owner and external developers in a platform ecosystem are vital to online digital platforms. These APIs are associated with functionality provided by the platform. A larger number of APIs used is generally associated with an increase in the platform ecosystem’s variety of products. However, the precise nature of the relationship between the use of APIs and product variety in a platform ecosystem is not yet known because of the lack of appropriate methodologies to analyze the complex data generated in such platform ecosystems. Drawing on a recombinatorial design perspective, we use a dynamic network model to create metrics for product variety in a digital ecosystem and study how the use of different types of APIs affects product variety. In particular, we theorize that, contrary to existing models, the structure of APIs in a large platform ecosystem is not limited to a core–periphery structure, but includes an additional third layer that we refer to as the regular core. We further hypothesize that external APIs in the regular core play a crucial role in increasing product variety in the ecosystem. To test our hypothesis, we conduct an empirical study using longitudinal data of all available digital product (i.e., plug-in) source codes on WordPress.org, the world’s largest content management system and one of the most extensive digital platform ecosystems. By analyzing all of the plug-ins on WordPress over 10 years from its inception, we find the support of our three-layer structure of APIs in a platform ecosystem: complete core, regular core, and periphery. Our empirical analysis further supports the role of external APIs in the regular core in increasing product variety. We, however, find that the strength of this effect diminishes in a newly created product category.

Suggested Citation

  • Sungyong Um & Bin Zhang & Sunil Wattal & Youngjin Yoo, 2023. "Software Components and Product Variety in a Platform Ecosystem: A Dynamic Network Analysis of WordPress," Information Systems Research, INFORMS, vol. 34(4), pages 1339-1374, December.
    • Handle: RePEc:inm:orisre:v:34:y:2023:i:4:p:1339-1374
    DOI: 10.1287/isre.2022.1172
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/isre.2022.1172
    Download Restriction: no
    File URL: https://libkey.io/10.1287/isre.2022.1172?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    2. Kelvin Lancaster, 1990. "The Economics of Product Variety: A Survey," Marketing Science, INFORMS, vol. 9(3), pages 189-206.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. Reza Mousavi & Bin Gu, 2019. "The Impact of Twitter Adoption on Lawmakers’ Voting Orientations," Service Science, INFORMS, vol. 30(1), pages 133-153, March.
    5. Battke, Benedikt & Schmidt, Tobias S. & Stollenwerk, Stephan & Hoffmann, Volker H., 2016. "Internal or external spillovers—Which kind of knowledge is more likely to flow within or across technologies," Research Policy, Elsevier, vol. 45(1), pages 27-41.
    6. Sendil K. Ethiraj & Daniel Levinthal, 2004. "Modularity and Innovation in Complex Systems," Management Science, INFORMS, vol. 50(2), pages 159-173, February.
    7. Stefan Haefliger & Georg von Krogh & Sebastian Spaeth, 2008. "Code Reuse in Open Source Software," Management Science, INFORMS, vol. 54(1), pages 180-193, January.
    8. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    9. Landon Kleis & Paul Chwelos & Ronald V. Ramirez & Iain Cockburn, 2012. "Information Technology and Intangible Output: The Impact of IT Investment on Innovation Productivity," Information Systems Research, INFORMS, vol. 23(1), pages 42-59, March.
    10. Daron Acemoglu & David H. Autor & David Lyle, 2004. "Women, War, and Wages: The Effect of Female Labor Supply on the Wage Structure at Midcentury," Journal of Political Economy, University of Chicago Press, vol. 112(3), pages 497-551, June.
    11. Helfat, Constance E. & Raubitschek, Ruth S., 2018. "Dynamic and integrative capabilities for profiting from innovation in digital platform-based ecosystems," Research Policy, Elsevier, vol. 47(8), pages 1391-1399.
    12. Carliss Y. Baldwin & Kim B. Clark, 2000. "Design Rules, Volume 1: The Power of Modularity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024667, December.
    13. Carliss Y. Baldwin & Kim B. Clark, 2006. "The Architecture of Participation: Does Code Architecture Mitigate Free Riding in the Open Source Development Model?," Management Science, INFORMS, vol. 52(7), pages 1116-1127, July.
    14. Daniel A. Levinthal & James G. March, 1993. "The myopia of learning," Strategic Management Journal, Wiley Blackwell, vol. 14(S2), pages 95-112, December.
    15. Fleming, Lee & Sorenson, Olav, 2001. "Technology as a complex adaptive system: evidence from patent data," Research Policy, Elsevier, vol. 30(7), pages 1019-1039, August.
    16. Herbert A. Simon, 1996. "The Sciences of the Artificial, 3rd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691914, December.
    17. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    18. Yue M. Zhou & Xiang Wan, 2017. "Product variety, sourcing complexity, and the bottleneck of coordination," Strategic Management Journal, Wiley Blackwell, vol. 38(8), pages 1569-1587, August.
    19. Andrés Musalem & Marcelo Olivares & Eric T. Bradlow & Christian Terwiesch & Daniel Corsten, 2010. "Structural Estimation of the Effect of Out-of-Stocks," Management Science, INFORMS, vol. 56(7), pages 1180-1197, July.
    20. Ron Adner & Rahul Kapoor, 2010. "Value creation in innovation ecosystems: how the structure of technological interdependence affects firm performance in new technology generations," Strategic Management Journal, Wiley Blackwell, vol. 31(3), pages 306-333, March.
    21. Alan MacCormack & John Rusnak & Carliss Y. Baldwin, 2006. "Exploring the Structure of Complex Software Designs: An Empirical Study of Open Source and Proprietary Code," Management Science, INFORMS, vol. 52(7), pages 1015-1030, July.
    22. Michael J. Hawrylycz & Ed S. Lein & Angela L. Guillozet-Bongaarts & Elaine H. Shen & Lydia Ng & Jeremy A. Miller & Louie N. van de Lagemaat & Kimberly A. Smith & Amanda Ebbert & Zackery L. Riley & Chr, 2012. "An anatomically comprehensive atlas of the adult human brain transcriptome," Nature, Nature, vol. 489(7416), pages 391-399, September.
    23. Trygve E. Bakken & Nikolas L. Jorstad & Qiwen Hu & Blue B. Lake & Wei Tian & Brian E. Kalmbach & Megan Crow & Rebecca D. Hodge & Fenna M. Krienen & Staci A. Sorensen & Jeroen Eggermont & Zizhen Yao & , 2021. "Comparative cellular analysis of motor cortex in human, marmoset and mouse," Nature, Nature, vol. 598(7879), pages 111-119, October.
    24. Manuel E. Sosa & Steven D. Eppinger & Craig M. Rowles, 2004. "The Misalignment of Product Architecture and Organizational Structure in Complex Product Development," Management Science, INFORMS, vol. 50(12), pages 1674-1689, December.
    25. Lee Fleming & Olav Sorenson, 2004. "Science as a map in technological search," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 909-928, August.
    26. Manuel E. Sosa & Jürgen Mihm & Tyson R. Browning, 2013. "Linking Cyclicality and Product Quality," Manufacturing & Service Operations Management, INFORMS, vol. 15(3), pages 473-491, July.
    27. Dandan Qiao & Shun-Yang Lee & Andrew B. Whinston & Qiang Wei, 2020. "Financial Incentives Dampen Altruism in Online Prosocial Contributions: A Study of Online Reviews," Information Systems Research, INFORMS, vol. 31(4), pages 1361-1375, December.
    28. Daniel A. Levinthal, 1997. "Adaptation on Rugged Landscapes," Management Science, INFORMS, vol. 43(7), pages 934-950, July.
    29. Kevin J. Boudreau & Lars B. Jeppesen, 2015. "Unpaid crowd complementors: The platform network effect mirage," Strategic Management Journal, Wiley Blackwell, vol. 36(12), pages 1761-1777, December.
    30. Baldwin, Carliss & MacCormack, Alan & Rusnak, John, 2014. "Hidden structure: Using network methods to map system architecture," Research Policy, Elsevier, vol. 43(8), pages 1381-1397.
    31. Rishika Rishika & Jui Ramaprasad, 2019. "The Effects of Asymmetric Social Ties, Structural Embeddedness, and Tie Strength on Online Content Contribution Behavior," Management Science, INFORMS, vol. 65(7), pages 3398-3422, July.
    32. Laursen, Keld & Salter, Ammon J., 2014. "The paradox of openness: Appropriability, external search and collaboration," Research Policy, Elsevier, vol. 43(5), pages 867-878.
    33. Amrit Tiwana, 2015. "Evolutionary Competition in Platform Ecosystems," Information Systems Research, INFORMS, vol. 26(2), pages 266-281, June.
    34. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    35. Amrit Tiwana, 2018. "Platform Synergy: Architectural Origins and Competitive Consequences," Information Systems Research, INFORMS, vol. 29(4), pages 829-848, December.
    36. Youngjin Yoo & Ola Henfridsson & Kalle Lyytinen, 2010. "Research Commentary ---The New Organizing Logic of Digital Innovation: An Agenda for Information Systems Research," Information Systems Research, INFORMS, vol. 21(4), pages 724-735, December.
    37. Lee Fleming, 2001. "Recombinant Uncertainty in Technological Search," Management Science, INFORMS, vol. 47(1), pages 117-132, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gatti, Corrado & Volpe, Loredana & Vagnani, Gianluca, 2015. "Interdependence among productive activities: Implications for exploration and exploitation," Journal of Business Research, Elsevier, vol. 68(3), pages 711-722.
    2. Mohsen Jafari Songhori & Madjid Tavana & Takao Terano, 2020. "Product development team formation: effects of organizational- and product-related factors," Computational and Mathematical Organization Theory, Springer, vol. 26(1), pages 88-122, March.
    3. Brunswicker, Sabine & Schecter, Aaron, 2019. "Coherence or flexibility? The paradox of change for developers’ digital innovation trajectory on open platforms," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    4. Natalie Burford & Andrew V. Shipilov & Nathan R. Furr, 2022. "How ecosystem structure affects firm performance in response to a negative shock to interdependencies," Strategic Management Journal, Wiley Blackwell, vol. 43(1), pages 30-57, January.
    5. Yuchen Zhang & Wei Yang, 2022. "Breakthrough invention and problem complexity: Evidence from a quasi‐experiment," Strategic Management Journal, Wiley Blackwell, vol. 43(12), pages 2510-2544, December.
    6. Simge Tuna & Stefano Brusoni & Anja Schulze, 2019. "Architectural knowledge generation: evidence from a field study," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(5), pages 977-1009.
    7. Oliver Baumann & Nicolaj Siggelkow, 2013. "Dealing with Complexity: Integrated vs. Chunky Search Processes," Organization Science, INFORMS, vol. 24(1), pages 116-132, February.
    8. Bleda, Mercedes & Querbes, Adrien & Healey, Mark, 2021. "The influence of motivational factors on ongoing product design decisions," Journal of Business Research, Elsevier, vol. 129(C), pages 562-569.
    9. Liang Chen & Mengmeng Wang & Lin Cui & Sali Li, 2021. "Experience base, strategy‐by‐doing and new product performance," Strategic Management Journal, Wiley Blackwell, vol. 42(7), pages 1379-1398, July.
    10. Ashish Arora & Michelle Gittelman & Sarah Kaplan & John Lynch & Will Mitchell & Nicolaj Siggelkow & Chi-Hyon Lee & Manuela N. Hoehn-Weiss & Samina Karim, 2016. "Grouping interdependent tasks: Using spectral graph partitioning to study complex systems," Strategic Management Journal, Wiley Blackwell, vol. 37(1), pages 177-191, January.
    11. Natalicchio, A. & Messeni Petruzzelli, A. & Garavelli, A.C., 2017. "Innovation problems and search for solutions in crowdsourcing platforms – A simulation approach," Technovation, Elsevier, vol. 64, pages 28-42.
    12. Milan Miric & Hakan Ozalp & Erdem Dogukan Yilmaz, 2023. "Trade‐offs to using standardized tools: Innovation enablers or creativity constraints?," Strategic Management Journal, Wiley Blackwell, vol. 44(4), pages 909-942, April.
    13. Kathryn Rudie Harrigan & Maria Chiara Guardo & Bo Cowgill, 2017. "Multiplicative-innovation synergies: tests in technological acquisitions," The Journal of Technology Transfer, Springer, vol. 42(5), pages 1212-1233, October.
    14. Sai Yayavaram & Wei-Ru Chen, 2015. "Changes in firm knowledge couplings and firm innovation performance: The moderating role of technological complexity," Strategic Management Journal, Wiley Blackwell, vol. 36(3), pages 377-396, March.
    15. Ganco, Martin, 2017. "NK model as a representation of innovative search," Research Policy, Elsevier, vol. 46(10), pages 1783-1800.
    16. Jens Foerderer & Thomas Kude & Sunil Mithas & Armin Heinzl, 2018. "Does Platform Owner’s Entry Crowd Out Innovation? Evidence from Google Photos," Information Systems Research, INFORMS, vol. 29(2), pages 444-460, June.
    17. Moaniba, Igam M. & Su, Hsin-Ning & Lee, Pei-Chun, 2019. "On the drivers of innovation: Does the co-evolution of technological diversification and international collaboration matter?," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    18. Oliver Baumann, 2015. "Models of complex adaptive systems in strategy and organization research," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 14(2), pages 169-183, November.
    19. Becker, Markus C. & Rullani, Francesco & Zirpoli, Francesco, 2021. "The role of digital artefacts in early stages of distributed innovation processes," Research Policy, Elsevier, vol. 50(10).
    20. Thorsten Beck, 2009. "The Econometrics of Finance and Growth," Palgrave Macmillan Books, in: Terence C. Mills & Kerry Patterson (ed.), Palgrave Handbook of Econometrics, chapter 25, pages 1180-1209, Palgrave Macmillan.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orisre:v:34:y:2023:i:4:p:1339-1374. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.