Re-strategizing Product-related Decisions in Response to Platform Owner’s Entry

By offering products on self-owned platform marketplace, platform owner enters complementary market and poses competition that would trigger complementors to revise their product portfolio. Building on past works, we distinguish between three product-related decisions: new product launch, product variety and product differentiation. Using two-year data from Amazon.com, we empirically test how complementors re-strategize product-related decisions in response to platform owner’s entry. We find that complementors decrease new product launch, and revise their product portfolio by reducing product variety but increasing product differentiation (i.e., position away) from platform owner. Furthermore, we show that complementors agglomerate together, offering products with lower differentiation from one another. Our results inform about the implications of platform owner’s entry on complementors’ products. We call for potential mechanisms to incentivize complementors’ efforts in new products and direct complementors to specialize and agglomerate in products complementing platform owner’ product offerings