Séminaire KTO-GREDEG-OFCE - Fernando Suarez (Northeastern University)

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"Smart timing for smart products? Complementor multihoming in nascent platform markets"

06-05-2019 - 12h15 à 13h45 - GREDEG - Salle Picasso

Fernando Suarez (Northeastern University)

Séminaire joint KTO-GREDEG-OFCE

Title: Smart timing for smart products? Complementor multihoming in nascent platform markets.

Abstract: Entry timing strategies in platform-mediated markets differ substantially from those in traditional, stand-alone product markets. In traditional markets, firms typically face one key entry timing decision: whether or not to enter the product market.  Platforms represent de facto a partition of the original industry into separate markets, hence prompting firms to make multiple entry decisions. In platform-mediated industries, firms must now decide not only whether to enter a first platform (become a complementors to that platform), but also whether to enter other platforms (multihoming). Complementor multihoming is becoming pervasive in platform-mediated markets populated by multiple platforms. With data from the nascent “smart home” industry, we examine complementor strategies regarding timing of entry and timing of multihoming, with their corresponding performance implications. We find that early entrants to a platform market multihome faster than later entrants. While received theory suggests that early entrants are expected to achieve lower performance than later entrants in fast-moving markets, our findings show no evidence for this negative performance effect. However, our results suggest that early entrants in a platform-mediated market can perform better if they multihome fast; this implies that multihoming is an effective hedging strategy for early entrants in multi-platform markets characterized by high uncertainty. Multihoming scope (the number of platforms a complementor joins) is associated with higher complementor performance.

 

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