Chi-Hyon Lee

Within-Industry Diversification and Firm Performance in the Presence of Network Externalities: Evidence From the Software Industry

In the presence of network externalities, complementary related diversification strategies in production and consumption can be critical for achieving positive returns to within-industry diversific...

Monitoring Platform Emergence: Guidelines from Software Networks

In this paper we explore how platforms emerge and evolve due to independent actions by companies providing them or launching products on them. We use the software industry as the setting for our study. We analyze the pattern of evolution for Windows, Unix, and Linux over 14 years. Based on this, we derive some lessons for companies aspiring to compete in settings where platforms and complementors play a major role. We support our analysis using visualizations.

Interconnect to win: the joint effects of business strategy and network positions on the performance of software firms

We develop and test a model of how a software firms business strategy (product scope and market scope) interacts with the firms network position (alliance degree and structural holes) to impact performance. We test the joint-effects hypotheses on a sample 359 packaged software firms that have entered into 5,489 alliances involving 2,849 distinct firms during the time period, 1990–2002. While prior studies have demonstrated the importance of network positions as a determinant of firm strategy and performance, this chapter begins to examine the performance effects of how a firms business strategy and network positions interact. We find support for three of the four hypotheses lending empirical support for our theoretical model. We develop implications for network-based perspectives of strategy and outline areas for further research.

The Impact of Design Moves on Platform Adoption: The Case of Microsoft Windows OS

How soon will firms form alliances with a platform provider? What factors impact the decision and the speed with which firms first move into partnerships with a platform provider such as Microsoft? This study uses the theories of design rules and network effects as its theoretical anchors to explore the timing of the alliance decision with Microsoft. We develop a model that incorporates platform design changes and its impact on the decision of firms to form an alliance with Microsoft. In particular, we analyze two design moves that a platform provider can make — augmenting and inversion. We empirically test the impact of each design move using a sample spanning the years 1989 to 1994. Study results provide an initial design theoretic based examination of platform design changes and its impact on alliance formation.

Examining Alliance Portfolios Beyond the Dyads: The Relevance of Redundancy and Nonuniformity Across and Between Partners

In this research, we unpack how interdependencies affect not just individual dyads but also value creation across an alliance portfolio and ultimately a focal firm’s performance. Moving beyond the collection of dyadic relationships of individual alliances, we examine more holistically the distribution of power imbalances and mutual dependences within alliance portfolios, as well as the impact of redundancies in portfolio partners’ resources. Building on resource dependence theory, we develop and test arguments on a sample of 59 firms in the U.S. passenger airline industry during 1998–2011. We find that nonuniform distributions of power imbalances and mutual dependences within the alliance portfolio as well as redundancy affect firm performance in different ways, which has implications for the management of alliance portfolios.

Competing in the Era of Emergent Architecture: The Case of Packaged Software Industry

The firms that comprise the prepackaged software industry form a complex system engaged in systems-based competition. This complex system survives and grows because it follows emergent design principles notably articulated by Herbert Simon. In particular, complex systems form stable subsystems -clusters - that can be described (in this industry) as a stack. In this research, we study the evolution of the software industry using data on packaged software development firms over 13 years (1990-2002) across functional markets. We show that by exploiting complementarities based on the emergent architecture, firms can outperform competitors that use complementarities that are based on the espoused architecture/stack, which outperform those that ignore architecture altogether