Hitting Reset: How the Dynamics of Platform Evolution Affect the Value of Firm Experience

Abstract

In this study, we explore and unpack how the potential value of two broad classifications of experience depth and breadth shift and change as the industry evolves. We suggest that experience breadth builds organizational flexibility that is especially valuable during times of transition, while experience depth builds powerful resources that are especially important during stable periods. By testing our theory in the console video game industry, where game developers face repeated periods of transition and maturity across multiple console generations, we both reduce concerns about endogeneity and offer novel theory about how and why the value of experience depth though reduced by transition may generally increase over the industry's evolution, while experience breadth may correspondingly become less important over time.