Ecosystem governance: How focal firms manage complementors?

Abstract

Research on business ecosystems highlights the strategic importance of complementors in determining focal firms' successes in various aspects. There are scarce systematic studies on ecosystem governance, especially, how focal firms can manage complementors to develop competitive advantages. We develop a formal model to explore this topic by examining the focal firm's strategic decisions on choosing complements (extensive margins) and depth of using the complements (intensive margins). We analyzed how various factors affect extensive margins and intensive margins and how ecosystem governance can have impacts on the whole ecosystem as well as the relative value appropriation power between focal firms and complementors.