Complementors' engagement in an ecosystem: A study of publishers' e‐book offerings on Amazon Kindle

Research Summary In ecosystems, tensions between value creation and appropriation can arise when complementors form relationships with a partner that benefits from network effects. While creating value collectively, these relationships strengthen the network effects, which increase the partner'...

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Bibliographic Details
Published in:Strategic management journal 2020-01, Vol.41 (1), p.3-26
Main Authors: Wang, Richard D., Miller, Cameron D.
Format: Article
Language:English
Subjects:
Bargaining
Book industry
Consumers
digital innovation
Economic models
Ecosystems
Electronic book readers
Innovations
Interorganizational relationships
Leverage
network effects
platform ecosystems
Portfolios
Power
product offering decisions
Publishing
Savings
Technology
value creation and appropriation
Viability
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Summary:Research Summary In ecosystems, tensions between value creation and appropriation can arise when complementors form relationships with a partner that benefits from network effects. While creating value collectively, these relationships strengthen the network effects, which increase the partner's ability to appropriate value. We posit that complementors strategize their product offerings to benefit from the relationship with the partner while preserving bargaining power by keeping relationships with other partners as outside options. We examine book publishers' product portfolios in the Amazon Kindle e‐book and the printed book ecosystems. Our results illuminate specific product offering decisions by large publishers that are more protective of the printed book ecosystem and less conducive to Kindle's success. This research adds to the literature on interorganizational relationships, platform ecosystems, and managing digital innovations. Managerial Summary How do book publishers deal with Amazon? This paper compares book publishers' product offerings on Amazon's Kindle digital platform and in the physical print channel. We find that publishers offer high demand products as e‐books on Kindle to benefit from logistics savings. Yet, relative to small publishers, large publishers product decisions that support Kindle less, such as withholding some of their greatest revenue generating books. Such decisions could both limit Kindle's attractiveness to the consumers and preserve the economic viability of the print channel as an outside option. These findings improve our understanding of how companies can leverage their product portfolios to both benefit from digital technology efficiencies and maintain their bargaining power vis‐à‐vis digital platforms.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.3076