Organization and Strategy Seminar（2016-12）

Topic:Fools Rush In Where Angels Fear to Tread: Entry into Platform-based Markets Following Acquisitions

Speaker: Yongzhi Wang, University of Southern California

Time: Thursday, 3 November, 10:00-11:30 am

Location: Room 111, Guanghua Building 2

Abstract:

I study how acquisitions in an app category of the iOS mobile platform influence subsequent entries by app developers. In this fast growing market filled with uncertainties, developers need to discern the correct entry timing following market signals to successfully build installed bases, an important source of competitive advantage in information-based markets. My paper theoretically integrates insights from the platform literature with two major perspectives in strategic management—industrial organization and the literature on organizational experiences (of the behavioral theory of the firm)—and empirically examines the influence of 1,009 acquisitions on category entries of more than 280,000 iOS developers, during 2008-2015. Empirical results support the following conclusions. First, although acquisitions present both benefits and costs for potential entrants, I found that, on average, acquisition intensity in a product category has a positive and significant effect on entry probability. Second, experiences moderate the effect of acquisition intensity on entry probability. While acquisition intensity is positively related with the entry likelihood by inexperienced and broad-scope developers, it is negatively associated with entry probability by more experienced and narrow-scope developers. These differential effects of experiences may reflect the underlying heterogeneity in potential entrants’ interpretations of the effects of acquisitions on post-entry costs versus benefits. In sum, the empirical findings indicate that segment-entry decisions are shaped by both market structures and developer heterogeneities.

Introduction:

Yongzhi Wang is a doctoral candidate at the Management and Organization Department in the Marshall School of Business at the University of Southern California. His research covers strategies in platform-based competition and strategic alliances.

Yongzhi’s dissertation is a winner of the Strategy Research Foundation dissertation research grant and a finalist of the 2016 INFORMS / Organization Science Dissertation Proposal Competition. He studies mobile app developers’ market-entry decisions and subsequent performance when competing across and within the Apple iOS and Google Android platforms. Specifically, he examines how complementors sequentially adopt competing platforms and how they selectively enter market segments within a platform following industry mega events, such as acquisitions. Theoretically, his dissertation draws upon and integrates the external view of industrial organization and the internal view of organizational experiences (more broadly, the Behavioral Theory of the Firm). Empirically, Yongzhi specializes in panel data analysis. He has put together a rich data set that combines archival and proprietary data sources and covers nearly the entire 2015 population of iOS and Android mobile app developers.

Regarding cooperative strategy, his review article on alliance capabilities, coauthored with adviser Professor Nandini Rajagopalan, has been published in the Journal of Management. Building on the theory developed in the review article, he is working with coauthors on empirical research that integrates alliance capabilities with the literature on boards of directors in international joint ventures.

Personal website: www.yongzhiwang.com

Your participation is warmly welcomed!