The value and structuring role of web APIs in digital innovation ecosystems: The case of the online travel ecosystem

Abstract

Interfaces play a key role in facilitating the integration of external sources of innovation and structuring ecosystems. They have been conceptualized as design rules that ensure the interoperability of independently produced modules, with important strategic value for lead firms to attract and control access to complementary assets in platform ecosystems. While meaningful, these theorizations do not fully capture the value and structuring role of web APIs in digital innovation ecosystems. We show this with an empirical study of the online travel ecosystem in the 26 years (1995–2021) after the first Online Travel Agencies (OTAs) were launched. Our findings reveal that web APIs foster a dynamic digital innovation ecosystem with a distributed networked structure in which multiple actors design and use them. We provide evidence of an ecosystem where decentralized interfaces enable decentralized governance and where interfaces establish not only cooperative relationships, but also competitive ones. Instead of locking in complementors, web APIs enable the integration of capabilities from multiple organizations for the co-production of services and products, by interfacing their information systems. Web APIs are important sources of value creation and capture, increasingly being used to offer or sell services, constituting important sources of revenue.