The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter

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Reference

Wessel, M., Thies, F., & Benlian, A. (2015). The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter. Paper presented at the International Conference on Information Systems, Fort Worth, Texas, USA. (VHB_3: A)

Publication type

Paper in Conference Proceedings

Abstract

Managing platform ecosystems requires the providers to maintain a delicate balance between retaining control and devolving autonomy to complementors in order to encourage contribution and innovation. In this study, we make use of a policy change that abolished the previously mandatory approval process for campaigns on Kickstarter, one of the dominant reward-based crowdfunding platforms. Analyzing a total of 67,384 Kickstarter campaigns under conditions of a natural experiment, we find that abolishing the input control was a double-edged sword for Kickstarter’s ecosystem: While the average platform revenue increased after the policy change, it became more volatile, and while project diversity increased, average campaign quality decreased. Project creators are now confronted with an even higher level of competition, while backers face greater uncertainties about campaign quality, which shifts their focus to alternative quality signals. The new strategy might threaten Kickstarter’s unique status as a high-quality platform in the striving business of crowdfunding.

Persons

Organizational Units

  • Institute for Entrepreneurship
  • Chair of Entrepreneurship and Technology

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