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Strategic Responses to Innovation Shocks: Evidence from the Video Game Industry

Author

Listed:
  • Nicholas Argyres

    (Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130)

  • Lyda Bigelow

    (Eccles School of Business, University of Utah, Salt Lake City, Utah 84112)

  • Jackson Nickerson

    (Richard A. Chaifetz School of Business, Saint Louis University, St. Louis, Missouri 63108)

  • Hakan Ozalp

    (Amsterdam Business School, University of Amsterdam, 1018 TV Amsterdam, Netherlands)

  • Erdem Dogukan Yilmaz

    (INSEAD, 77300 Fontainebleau, France)

Abstract

A major concern of the strategy and innovation literature on platforms has been how complementors are affected by and respond to innovations in platform characteristics. We contribute to this research by examining how complementors choose their homing strategies in response to a platform innovation shock. We theorize that comparative adjustment and opportunity costs can predict these choices, and we test our predictions using data on complementor responses to the introduction of Generation 6 video game consoles. Consistent with our predictions, we find that complementors’ choices of whether to develop games for a single console, multiple consoles sequentially, or multiple consoles simultaneously depend on proxies for their comparative adjustment and opportunity costs of adopting each of these strategies.

Suggested Citation

  • Nicholas Argyres & Lyda Bigelow & Jackson Nickerson & Hakan Ozalp & Erdem Dogukan Yilmaz, 2025. "Strategic Responses to Innovation Shocks: Evidence from the Video Game Industry," Strategy Science, INFORMS, vol. 10(2), pages 128-147, June.
    • Handle: RePEc:inm:orstsc:v:10:y:2025:i:2:p:128-147
    DOI: 10.1287/stsc.2023.0104
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