Week4 Paper Summary-Jack Tong

Paper: Ceccagnoli, Marco, Chris Forman, Peng Huang, and D. J. Wu. “Cocreation of Value in a Platform Ecosystem! The Case of Enterprise Software.” MIS quarterly (2012): 263-290.

This paper examines whether participating in an ecosystem platform improves the business performance of small independent software vendors(ISVs). By analyzing the partnering activities and performance indicators of a sample of 1,210 small ISVs with SAP over 12-year period (the data source:  CorpTech database), the authors find that collaborating with an ecosystem platform is generally associated with an increase in sales and a greater likelihood of IPO. The effect is stronger for ISVs that have stronger downstream capabilities and greater intellectual property rights.

To evaluate the performance of ISVs, the authors measure two metrics: sales and the likelihood of IPO. They present robust empirical evidence showing that the decision to partner is, on average, associated with both an increase in sales and a greater likelihood of an IPO. To enhance identification of causal effects they adopt a variety of approaches, including the use of fixed effects panel data models with instrumental variables. The instruments are based on an ISV’s personal connections to SAP in the years prior to partnering, obtained from Linkedln, and the propensity of similar ISVs to partner with SAP