Value Creation, Appropriation, And Product Design Strategies In Technology Ecosystems: Three Essays On The Role Of Complementary Technologies

Abstract

Firms are often embedded in a technology ecosystem comprised of complementary technologies that span multiple product markets. In this dissertation, I examine how complementarity between the firm’s technologies influences its strategies to create and appropriate value in the ecosystem. I investigate this overarching question in two contexts: firm’s participation in compatibility standards and how it designs products for a new market. In Chapter 2 and 3, I explore how complementarity within the firm’s technology portfolio affects how and where it creates and appropriates value from intellectual property disclosures to major compatibility standards. In Chapter 2, I theorize as to how a portfolio of complementary technologies allows the firm to create value from its technological position in an industry standard. I empirically test my prediction using data on major compatibility standards in the information and communications technology industry. I find that firms generate positive returns from disclosure only when they own complementary technologies. In Chapter 3, I extend this argument to study value appropriation. I find that firms focus their appropriation strategy around their complementary technologies. Chapter 4 examines how product complementarities influence product strategy in a new market. I propose that firms with complementary products will enter markets with products that exhibit lower technical performance than firms without complementary products. I also argue that firms choose features that function with their complementary products and will tradeoff non-complementary features when necessary. Examining entry into the nascent smartphone market using a rich set of data on smartphone product technology and features, I find strong support for these conclusions. I identify complementarities within the firm’s product portfolio as an important driver of firm’s product strategy. Through this dissertation, I demonstrate the benefit of a more systemic view of the firm’s portfolio, one that appreciates the relationships between the firm’s various technologies and products, and how these relationships influence the firm’s technology strategy.