Fostering Value Creation with Digital Platforms: A Unified Theory of the Application Programming Interface Design

Abstract

ABSTRACTWhile many firms in recent years have started to offer public Application Programming Interfaces (APIs), firms struggle with shaping digital platform strategies that align API design with aspired business goals and the demands of external developers. We address the lack of theory that explains the performance impacts of three API archetypes (professional, mediation, and open asset services). We couple survey data from 152 API product managers with manually coded API design classifications. With this data, we conduct cluster and regression analyses that reveal moderating effects of two value creation strategies (economies of scope in production and innovation) on the relationships between API archetype similarity and two API performance outcomes: return on investment and diffusion. We contribute to IS literature by developing a unifying theory that consolidates different theoretical perspectives on API design, by extending current knowledge on the performance effects of API design, and by empirically studying the distinct circumstances under which digital platforms facilitate economies of scope in production or in innovation. Our results provide practical implications on how API providers can align API archetype choice with the value creation strategy and the API’s business objective.