The Ecosystem of Software Platform: A Study of Asymmetric Cross Side Network Effects and Platform Governance
While past research on software platform has recognized the existence of cross side network effects (CNEs) between the application side and the user side, little is known about the asymmetry between the CNEs of the two sides on each other. Informed by a perspective of complex adaptive systems, this study theorizes how the user to application CNE is temporally different from the application to user CNE, and how these CNEs may be influenced by the governance mechanisms of the platform. We empirically test our theoretical arguments using a longitudinal data about a leading software browser. Our first main finding is the temporal asymmetry between the user to application CNE and the application to user CNE. Specifically, while the increased installed base of end users has a primarily long term impact on the growth of application number and variety, the increased number and variety of applications have primarily short term impacts on the growth of end users. Our second finding is that the length of application review time weakens the long term user to application effect, but not the short term application to user effect. Third, we also find that frequent platform updating can significantly weaken both the long term user to application CNE and the short term application to user CNE. Our study generates important theoretical and practical implications.
MIS Q.