Does digital platform governance improve process innovation? Evidence from Apple's tracking policies

Wei Wu and Wei Han

Economic Modelling, 2025, vol. 152, issue C

Abstract: This study investigates whether digital platform governance improves firms' process innovation, addressing gaps in understanding how platform policies influence innovation dynamics in digital markets. Existing literature predominantly focuses on static innovation measures, failing to capture the iterative nature of digital product development cycles. Using gaming app data from iOS and Android platforms across 60 countries from 2019 to 2022, we employ a difference-in-differences approach to examine Apple's privacy policy impact on process innovation. Our analysis reveals that Apple's tracking policy significantly accelerates app update frequency, with developers increasing updates by 32.45% following policy announcement and 7 times more frequently after implementation. Cross-platform and cross-product knowledge flows moderate these effects, with advantages emerging during policy announcement but reversing during implementation phases. These findings demonstrate that appropriately designed platform governance can stimulate rather than stifle innovation through constraint-induced adaptation mechanisms, providing new insights into digital platform economics and implications for privacy policy design.

Keywords: Digital platform governance; Process innovation; Privacy policy; Knowledge-based view; Dynamics capabilities; Mobile applications (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:152:y:2025:i:c:s0264999325002937

DOI: 10.1016/j.econmod.2025.107298

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