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Increasing Demand While Hurting Innovation? The Curious Case of Mobile App Promotions
Abstract: Mobile app platforms, such as the iOS App Store, select and promote apps regularly to showcase uniqueness and innovation. Prior literature has shown that these promotions result in attention spillover, whereby competing apps may enjoy increased demand. However, there are few insights on the impact of such promotions on the design changes of competing apps and their subsequent market performance. We examine these questions using a panel dataset from the iOS App Store spanning the years 2017 to 2023. We initially develop a hierarchical deep learning model to extract features of an app from its version release notes. We then assess the influence of app promotions on the competing apps' feature similarity to the promoted apps, and in turn the impact of this similarity on the demand for competing apps. We find that after a promotion by the App Store, competing apps act as copycats by adding features similar to those of the promoted app. Even new apps introduced after a promotion tend to imitate showcased products. We also observe that this imitation helps in increasing the demand for competing apps. However, these benefits in demand are predominantly seen in popular apps compared to niche or tail apps. Curiously, though, tail apps are more likely than the head apps to add features that are already present in the featured apps. We explore plausible mechanisms behind these findings, which imply that simultaneously increasing the demand and uniqueness of products may be at odds with each other. These findings provide key managerial implications for platform governance related to app promotions and inform the response strategies of app developers.
Bio: Aditya Karanam is an assistant professor in the Department of Information Systems and Analytics, National University of Singapore. Prior to joining NUS, Aditya obtained his PhD from the McCombs School of Business, University of Texas at Austin in 2021. Additionally, he holds a master’s degree in economics from the University of Texas at Austin and bachelor’s degree in information systems from Birla Institute of Technology and Sciences, Pilani. His research focuses on examining the economic impacts and underlying mechanisms of mobile app ecosystems, Artificial Intelligence (AI), and the networked economy. His research has been published in leading journals and conferences of Information Systems such as Information Systems Research. He also received numerous grants and awards for his research including the Tier-1 grant of SGD 250K from the Ministry of Education, Singapore, McCombs research excellence grant, Kauffman best student paper nomination at ICIS - 2021, and the best paper nomination at the Workshop in Information Technology and Systems in 2020. For his teaching, Aditya has been nominated for the Fred Moore Teaching Excellence Award in 2020 at UT, Austin. He serves as a reviewer for leading information systems journals including Management Science, Information Systems Research, and Management Information Systems Quarterly.