Strategic Responses to Innovation Shocks: Evidence from the Video Game Industry

Nicholas Argyres (), Lyda Bigelow (), Jackson Nickerson (), Hakan Ozalp () and Erdem Dogukan Yilmaz ()
Additional contact information
Nicholas Argyres: Olin Business School, Washington University in St. Louis, St. Louis, Missouri 63130
Lyda Bigelow: Eccles School of Business, University of Utah, Salt Lake City, Utah 84112
Jackson Nickerson: Richard A. Chaifetz School of Business, Saint Louis University, St. Louis, Missouri 63108
Hakan Ozalp: Amsterdam Business School, University of Amsterdam, 1018 TV Amsterdam, Netherlands
Erdem Dogukan Yilmaz: INSEAD, 77300 Fontainebleau, France

Strategy Science, 2025, vol. 10, issue 2, 128-147

Abstract: A major concern of the strategy and innovation literature on platforms has been how complementors are affected by and respond to innovations in platform characteristics. We contribute to this research by examining how complementors choose their homing strategies in response to a platform innovation shock. We theorize that comparative adjustment and opportunity costs can predict these choices, and we test our predictions using data on complementor responses to the introduction of Generation 6 video game consoles. Consistent with our predictions, we find that complementors’ choices of whether to develop games for a single console, multiple consoles sequentially, or multiple consoles simultaneously depend on proxies for their comparative adjustment and opportunity costs of adopting each of these strategies.

Keywords: platforms; homing decisions; adjustment costs; opportunity costs; innovation shocks; adaptation (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/stsc.2023.0104 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:orstsc:v:10:y:2025:i:2:p:128-147

Access Statistics for this article

More articles in Strategy Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().