Platform-Driven Innovation Within and Across Firms

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This award is funded under the American Recovery and Reinvestment Act of 2009 (Public Law 111-5).In this set of studies, a research team from Tulane, University of Texas, and Boston University examines questions about how to better coordinate innovation by means of platforms. They conduct work first at an industry level and then at a within-firm level, looking to understand principles pertinent to both external and internal innovation environments. The two projects should yield distinct but complementary insights into managing innovation.(1) External Platform Innovation. This portion of the study considers optimal ecosystem growth. Common products such as personal computers, cell phones, games, and telecommunications systems often serve as platforms upon which third party developers build new features. The research will perform analysis of sequential innovation to answer: When should a platform sponsor open a resource to outside development? How does competition affect openness? How does the ability to reuse information assets affect the level of openness? If downstream developers do add value, should the firm privately subcontract with a subset or should the firm open the platform to all developers? Should the lead firm bundle new features into the platform or does this eliminate developers' incentives to create new features?(2) Internal Platform Innovation. This portion of the study will explore the creation of internal knowledge markets. The project uses the principles of two-sided network theory, information asymmetry, and price theory to design markets. The team will build and deploy actual market systems to seek answers to the following questions: What adoption problems arise during the launch of an internal knowledge market? What incentives motivate participation and contribution? How can we verify contributed information? Can we measure the value of new information resources either directly in terms of dollars or indirectly in terms of increased white-collar productivity? This project will gather new micro-level data based on novel software tools.The studies will employ model building, data collection, tool development, and direct intervention methodologies. Understanding these issues should benefit not only platform firms but also help regulators who seek to create environments that foster innovation.