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

Michael Wessel, Ferdinand Thies, Alexander Benlian

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

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.
Original languageEnglish
Title of host publicationProceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015 : Exploring the Information Frontier
EditorsTraci Carte, Armin Heinzl, Cathy Urquhart
Number of pages19
Place of PublicationAtlanta, GA
PublisherAssociation for Information Systems. AIS Electronic Library (AISeL)
Publication date2015
ISBN (Print)9780996683111
Publication statusPublished - 2015
Externally publishedYes
EventThe 36th International Conference on Information Systems. ICIS 2015: Exploring the Information Frontier - Fort Worth Convention Center, Fort Worth, Texas, United States
Duration: 13 Dec 201516 Dec 2015
Conference number: 36
http://icis2015.aisnet.org/

Conference

ConferenceThe 36th International Conference on Information Systems. ICIS 2015
Number36
LocationFort Worth Convention Center
CountryUnited States
CityFort Worth, Texas
Period13/12/201516/12/2015
Internet address
SeriesProceedings of the International Conference on Information Systems
ISSN0000-0033

Keywords

  • Crowdfunding
  • Platform ecosystems
  • Platform openness
  • Policy change
  • Input control
  • Two-sided markets
  • Natural experiment

Cite this

Wessel, M., Thies, F., & Benlian, A. (2015). The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter. In T. Carte, A. Heinzl, & C. Urquhart (Eds.), Proceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015: Exploring the Information Frontier Atlanta, GA: Association for Information Systems. AIS Electronic Library (AISeL). Proceedings of the International Conference on Information Systems
Wessel, Michael ; Thies, Ferdinand ; Benlian, Alexander. / The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter. Proceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015: Exploring the Information Frontier. editor / Traci Carte ; Armin Heinzl ; Cathy Urquhart. Atlanta, GA : Association for Information Systems. AIS Electronic Library (AISeL), 2015. (Proceedings of the International Conference on Information Systems).
@inproceedings{4707ae497b964d7ab2a5c05c50aac29d,
title = "The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter",
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.",
keywords = "Crowdfunding, Platform ecosystems, Platform openness, Policy change, Input control, Two-sided markets, Natural experiment, Crowdfunding, Platform ecosystems, Platform openness, Policy change, Input control, Two-sided markets, Natural experiment",
author = "Michael Wessel and Ferdinand Thies and Alexander Benlian",
year = "2015",
language = "English",
isbn = "9780996683111",
series = "Proceedings of the International Conference on Information Systems",
editor = "Traci Carte and Armin Heinzl and Cathy Urquhart",
booktitle = "Proceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015",
publisher = "Association for Information Systems. AIS Electronic Library (AISeL)",

}

Wessel, M, Thies, F & Benlian, A 2015, The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter. in T Carte, A Heinzl & C Urquhart (eds), Proceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015: Exploring the Information Frontier. Association for Information Systems. AIS Electronic Library (AISeL), Atlanta, GA, Proceedings of the International Conference on Information Systems, Fort Worth, Texas, United States, 13/12/2015.

The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter. / Wessel, Michael; Thies, Ferdinand; Benlian, Alexander.

Proceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015: Exploring the Information Frontier. ed. / Traci Carte; Armin Heinzl; Cathy Urquhart. Atlanta, GA : Association for Information Systems. AIS Electronic Library (AISeL), 2015. (Proceedings of the International Conference on Information Systems).

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

TY - GEN

T1 - The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter

AU - Wessel, Michael

AU - Thies, Ferdinand

AU - Benlian, Alexander

PY - 2015

Y1 - 2015

N2 - 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.

AB - 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.

KW - Crowdfunding

KW - Platform ecosystems

KW - Platform openness

KW - Policy change

KW - Input control

KW - Two-sided markets

KW - Natural experiment

KW - Crowdfunding

KW - Platform ecosystems

KW - Platform openness

KW - Policy change

KW - Input control

KW - Two-sided markets

KW - Natural experiment

M3 - Article in proceedings

SN - 9780996683111

T3 - Proceedings of the International Conference on Information Systems

BT - Proceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015

A2 - Carte, Traci

A2 - Heinzl, Armin

A2 - Urquhart, Cathy

PB - Association for Information Systems. AIS Electronic Library (AISeL)

CY - Atlanta, GA

ER -

Wessel M, Thies F, Benlian A. The Effects of Relinquishing Control in Platform Ecosystems: Implications from a Policy Change on Kickstarter. In Carte T, Heinzl A, Urquhart C, editors, Proceedings of the Thirty Sixth International Conference on Information Systems. ICIS 2015: Exploring the Information Frontier. Atlanta, GA: Association for Information Systems. AIS Electronic Library (AISeL). 2015. (Proceedings of the International Conference on Information Systems).