Variety creation as an entrepreneurial act in digital multisided platforms with creative products : a longitudinal analysis
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This study focuses on the problem of how complementors, or supply side in digital multisided platforms, increase their performance levels by strategically responding to consumer demand as the size of platforms grows and competition intensifies over time. Platform providers seek to increase product variety at the platform level to attract more consumers, create indirect network effects, and in turn, attract even more complementors. Increases in product variety at the platform level may contribute to platform growth through this virtuous cycle. This study shows, however, that individual complementors should strategically create variety in the products they launch rather than relying on these platform-level increases for network benefits, and adjust their strategies as a platform grows in size and competition intensifies. Extending the entrepreneurship theories of value creation to complementor behavior in platforms, this study finds that complementors gain superior performance advantages from concentrating their focus in creating product variety that meets the needs and preferences of consumers. Complementors benefit more from specializing within product categories than from spanning across categories when creating a variety of products in platforms. The study limits its examination of within-complementor performance changes in a platform in which complementor offerings are creative products.