User-Generated Feedback and New Complement Introductions: Evidence from a Sharing Economy App

Abstract

We study the relationship between user feedback and new complement introductions (NCI), a crucial element of indirect network effects, in two-sided platforms. We propose that complementors with higher ratings, a strategic resource to leverage, shy away from introducing new complements that have uncertain outcomes ex ante and can harm the resource. Complementor experience further exacerbates this negative relationship, because experienced complementors have developed capabilities related to their existing products. These hypotheses are supported by a large-scale data on 9,831 complementors with over 2,289,000 observations of a sharing economy mobile app platform. An exogenous platform policy change on user feedback provides further causal evidence for the novel and cautionary account of how complementors’ NCI is shaped by user-generated feedback and their experience heterogeneity on the platform.