A Dynamic Model of Platform Versioning and Its Impact on Third-Party Developers

Abstract

Using the system dynamics methodology, we leverage extant research on digital platforms and Agile development from the information systems and strategic management literatures to create a dynamic framework for considering the effect of digital platform versioning under different levels of market dynamism. We find that the impact of platform versioning release cycle time (RCT) and the scope of platform updates on platform outcomes (number of packages available and number of downloads) depends on market dynamism, sensitivity of users’ utility to app breakage, and value of the platform’s core functionality to the developers. Among other results, we show that smaller, incremental updates of functionality are generally preferable to larger, radical updates, even in dynamic markets. In contrast, longer RCTs are preferred in less dynamic markets, while small to moderate RCTs are preferred in more dynamic markets. We conclude with an agenda for future research.