Ceccagnoli 2012—Yiran Week 4

This paper investigated whether participation in an ecosystem partnership will improve the business performance in the context of the enterprise software industry (ISV). The key research questions of this study are (1) Is participation in a platform ecosystem, on average, associated with an increase in performance?  (2) How is this improvement in performance affected by an ISV’s ownership of IPRs and specialized downstream capabilities? Two critical performance measures for ISVs were used as DV in this paper: sales and the likelihood of obtaining an initial public offering (IPO). They used a longitudinal data set of 1,210 small ISVs over the period of 1996 – 2004, with information on both ISVs’ decisions to join SAP’s platform ecosystem and information on their business performance. To operatize the participation in platform ecosystem (IV), they also collect partnership formation events through press releases. The stock of software trademarks registered in the United States is used as the measurement of another IV.  The research framework is shown in Figure 1

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Except for H4b, all the hypotheses are supported, showing that ISVs can achieve significant benefits through participation in a platform ecosystem. Joining a major platform owner’s platform ecosystem is associated with an increase in sales and a greater likelihood of issuing an initial public offering (IPO). Furthermore, these impacts are greater when ISVs have greater intellectual property rights or stronger downstream capabilities. The theoretical contribution lie in implying strong IPRs directly mitigate the negative impact of  technology commercialization by ISVs. by affecting the likelihood of platform owner entry. In other words, IPRs appear to favor both value appropriation and value cocreation in the enterprise software industry