Inward or Outward? Direction of Knowledge Flow and Firm Efficiency
A meta-frontier analysis
Highlights
We categorize content providers (CPs) into three groups.
We compare the efficiency of CPs within and between the groups.
The average efficiency of CPs within each group is the highest in a closed platform.
The efficiency of CPs between groups is higher in an open platform than closed one.
Abstract
This paper analyzes the platform environments in which content providers (CPs) may succeed by using a meta-frontier analysis that compares the efficiency of different groups in identical industries. The results illustrate that a group focusing on an iOS platform achieves a high average efficiency with low variance within the group because the iOS ecosystem manages the content novelty and uncertainty risk in the selection process. This quality control enables a CP to maximize value once the CP enters the ecosystem. From the meta-frontier viewpoint, however, Android-group firms have a higher efficiency level than iOS-group firms. Android transfers risk management to CPs who can conduct additional trial and error, causing CPs to endure the tough selection process. This explains the low initial technical efficiency, but in the long term, this group has the potential to achieve high efficiency. In addition, the group providing content to both platforms was the most efficient group because of the economies of scale.