Marshall Van Alstyne

Boston University | BU · Department of Information Systems

This Handbook is the first reference created for the large, diverse, and growing field of Open Innovation. Four editors, 75 reviewers, and 136 contributors collaboratively developed 57 handbook chapters. These present the current state of the growing body of work in Open Innovation from leading scholars and researchers in the field. It brings toget...

In this chapter, we describe platforms and their structure and how that structure differs from traditional linear value chains. We then discuss some of the key economic factors, including two-sided and multi-sided network effects, which underpin both the platform value proposition and the ability to create welfare for users. Platform and technology...

Traditional asset management strategy has emphasized building barriers to entry or closely guarding unique assets to maintain a firm’s comparative advantage. A new “inverted firm” paradigm, however, has emerged. Under this strategy, firms share data seeking to become platforms by opening digital services to third parties and capturing part of their...

Proposing a framework for a decentralized market where no one party controls the flow of information.

Improving on data portability.

Should internet era merger policy differ from industrial era merger policy? Platform ecosystems rely on economies of scale, data-driven economies of scope, high-quality algorithmic systems, and strong network effects that frequently promote winner-take-most markets. Their market dominance has generated competition concerns that appear difficult to...

As the number and scope of platform companies grow, platform-specific talent and leadership demands have grown. This paper explores the growing demand for platform professionals and leadership competencies. The authors collected and analyzed over 11,080 platform job postings over one year by 2,700 companies worldwide. Analysis of this data reveals...

Three technical and legal approaches that create value from data and foster user trust.

Guaranteeing truth in advertising.

How boundaries on speech could free the market for speech.

At the heart of economic activity, digital platforms connect multi-sided markets of producers and consumers of various goods and services. Their market power and privileged ecosystem position raise concerns that they may engage in anti-competitive practices that reduce innovation and consumer welfare. This chapter deals with the role of market comp...

This article summarizes the platform strategy literature and is organized around launch strategies, governance and competition. A platform strategy is the mobilization of a networked business platform to expand into and operate in a given market. A business platform, in turn, is a nexus of rules and infrastructure that facilitate interactions among...

Suppose that a firm in charge of a business ecosystem is a firm in charge of a microeconomy. To achieve the highest growth rate, how open should that economy be? To encourage third-party developers, how long should their intellectual property interests last? We develop a sequential innovation model that addresses the trade-offs inherent in these tw...

Platform strategies, which highlight the interdependence in and evolution of business ecosystems, are increasingly relevant for sustainable business models in the digital era. So far, platform research has existed as a fragmented body of insights from different fields, but an integrated theoretical perspective can lead to a more coherent understand...

The driving force behind our internet economy is demand-side economies of scale, also known as network effects. These arise when users create value for other users and are enhanced by technologies that create efficiencies in social networking. While resource control and supply side efficiency used to be key success factors in the past, building pla...

This article summarizes the platform strategy literature and is organized around launch strategies, governance and competition. A platform strategy is the mobilization of a networked business platform to expand into and operate in a given market. A business platform, in turn, is a nexus of rules and infrastructure that facilitate interactions among...

For a period starting in 2015, Apple, Google, and Microsoft became the most valuable companies in the world. Each was marked by an external developer ecosystem. Anecdotally, at least, developers matter. Using a formal model of code spillovers, we show how a rising number of developers can invert the firm. That is, firms will choose to innovate usin...

Using proprietary information from a significant percentage of the API-tool provision and API-management industry, we explore the impact of API adoption on firm performance. We use a difference in difference approach centered on the date of first use to show that API adoption leads to increased profitability in the short and long run. APIs vary in...

Seeking a better approach to pharmaceutical research and development.

Seeking to balance intellectual property protection with incentives for investment in innovation.

Improving the sharing economy will require addressing myriad problems

Evaluating the evolving controversial digital currency.

This article provides an encyclopedic survey of the platform strategy literature and is organized around launch strategies, governance, and competition. A platform strategy is the mobilization of a networked business platform to expand into and operate in a given market. A business platform, in turn, is a nexus of rules and infrastructure that faci...

An economy based on the exchange of capital, assets and services between individuals has grown significantly, spurred by proliferation of internet-based platforms that allow people to share underutilized resources and trade with reasonably low transaction costs. The movement toward this economy of "sharing" translates into market efficiencies that...

This paper applies the theory of real options to analyze how the value of information-based flexibility should affect the decision to centralize or decentralize data management under low and high uncertainty. This study makes two main contributions. First, we show that in the presence of low uncertainty, centralization of data management decisions...

Old cellular machinery accumulates in one half of a cell while new cellular machinery accumulates in the other. Cell division causes the oldest mechanics to become isolated in the same cell during cell division, and cell death isolates and clears these pockets of damage. Computer networks survive nodes that come and go and they control behaviors of...

Considering new business models for massive open online courses.

We examine how exercising control rights over a technology platform can increase profits and innovation. By choosing how much to open and when to bundle enhancements, platform sponsors can influence choices of ecosystem partners. Platform openness invites developer participation but sacrifices direct sales. Bundling enhancements early destroys deve...

What drives workers to seek information from their peers? And how does communication affect employee performance? Answers have proven elusive due to problems obtaining precise measures of white collar output and of observing the information individuals consume. We address these questions using an original panel data set that includes all accesses t...

Information markets benefit the communities they serve by facilitating electronic distributed exchange and enhancing knowledge sharing, innovation, and productivity. This research explores innovative market mechanisms to build incentives while encouraging pro-social behavior. A key advantage of this study is a direct appeal to theories of informati...

Almost every major consulting firm offers a variation on IT benchmarking or knowledge management to help companies improve their resource use and gauge the efficacy of their IT investments. Despite the perceived importance that such ubiquitous offerings imply, general evidence for any productivity enhancements did not appear until 1996

We econometrically evaluate information worker productivity at a midsize executive recruiting firm and assess whether the knowledge that workers accessed through their electronic communication networks enabled them to multitask more productively. We estimate dynamic panel data models of multitasking, knowledge networks and productivity using severa...

This talk will apply standard economic theories -- on prices, on money supply, and on networks -- to the design of a market for information exchange. The premise is that much prior work on "knowledge management" has been atheoretical and that practical systems therefore need to borrow from existing theories that have much to say about the movement...

Revolutions in measurement inevitably revolutionize science and practice. Over 300 years ago, Anton van Leeuwenhoek developed a better microscope to verify thread counts on imported carpets. Using this new tool, he discovered microorganisms he called “animalcules” in drops of water and individual blood corpuscles in drops of blood. Biology and medi...

A large and growing portion of the economy transpires within software platforms. These environments are bounded high growth economies that embed many novel fea-tures: the platform owner sets rules for participation; R&D occurs rapidly, with gener-ations of innovations building on one another; there are profit and adoption tradeoffs in open versus c...

Internal markets can improve information exchange, forecasting, innovation, and productivity within the firm. Despite their widespread popularity, however, the strategies to implement and manage markets inside organizational boundaries are not well understood. This article provides a design framework for developing knowledge markets inside firms; i...

Due to network effects and switching costs in platform markets, entrants generally must offer revolutionary functionality. We explore a second entry path that does not rely upon Schumpeterian innovation: platform envelopment. Through envelopment, a provider in one platform market can enter another platform market, combining its own functionality wi...

In markets characterized by platforms, their ecosystems of com- plementary applications, and sequential innovation, we nd that competition among application developers can reduce innovation while competition among platforms can increase innovation. De- velopers can be better producing for proprietary platforms as op- posed to unsponsored platforms....

The authors propose that a tradeoff between network diversity and communications bandwidth regulates the degree to which social networks deliver non-redundant information to actors in brokerage positions. As the structural diversity of a network increases, the bandwidth of the communication channels in that network decrease, creating countervailing...

Property rights provide incentives to create information but they also provide incentives to hoard it prior to the award of protection. All-or-nothing rights, in particular, limit prior sharing. An unintended consequence is to slow, not hasten, forward progress when innovation hinges on combining disparately owned private ideas. In response, we pro...

Using attention bonds to create attention markets has been proposed as a solution to the spam problem. One critique leveled at this approach is that criminals might then try to seize the bonds and not just CPU cycles. We propose a simple solution based on insurance and two sided networks in order to show that markets can address this critique.

This article describes six common challenges of design, incentives, and governance that arise in establishing platform businesses. It also proposes solutions. It considers, for example, how to open a platform to decentralized innovation yet still earn a return; how to incorporate best-of-breed innovations from different sources while avoiding probl...

A field is emerging that leverages the capacity to collect and analyze data at a scale that may reveal patterns of individual and group behaviors. Government Version of Record

Rather than Zombies killing a market-based solution to spam, Zombies themselves will be killed off, according to Marshall Van Alstyne of Boston University and MIT and Sarah Zatko of Boston University and BBN Technologies.

To understand the relationship between information flows and white-collar output, we collected unique data on email communications to study the network connecting individuals in a management recruiting firm. We also gathered data on revenues and contracts at the individual level. Our empirical results suggest that the size of an individual's intern...

A tension exists between two well-established streams of literature on the performance of teams. One stream contends that teams with diverse backgrounds, social structures, knowledge, and experience function more effectively because they bring novel information to bear on problems that cannot be solved by groups of homogeneous individuals. In contr...

Platform-mediated networks encompass several distinct types of participants, including end users, complementors, platform providers who facilitate users' access to complements, and sponsors who develop platform technologies. Each of these roles can be opened - that is, structured to encourage participation - or closed. This paper reviews factors th...

IntroductionDo Social Networks Matter?Knowledge Management ApplicationsFuture Research and TrendsReferences

This article identifies two significant challenges in implementing Knowledge Management Systems (KMS), then, proposes solutions based on information economics. A knowledge market perspective is suggested to (i) elicit new contributions and (ii) identify higher quality content. Case studies from Siemens and HP, illustrate their application, and are...

This paper investigates how information flows enable social networks to constitute social capital. By analyzing the information content encoded in email communication in an executive recruiting firm, we examine the long held but empirically untested assumption that diverse networks drive economic performance by providing access to novel information...

We examine how control over a technology platform can increase profits and innovation. By choosing how much to open and when to bundle enhancements, platform sponsors can influence choices of ecosystem partners. Platform openness invites developer participation but sacrifices direct sales. Bundling enhancements early drives developers away but bund...

We report on a four-year investigation of how information flows affect white- collar productivity. For this research, we developed software to track all e-mail activity within a midsize executive recruiting firm. We also negotiated access to three separate data sets including: (1) project level accounting measures o f revenues and completion rates,...

We examine what drives the diffusion of different types of information through email networks and the effects of these diffusion patterns on the productivity and performance of information workers. In particular, we ask: What predicts the likelihood of an individual becoming aware of a strategic piece of information, or becoming aware of it sooner?...

We employ a unique data set on white-collar workers that combines direct observations of individual use of information technology as well as objective information on individual performance. The main hypothesis we examine is whether heavier users of IT are more productive, and if heavier users of IT are indeed more productive, how does this increase...

Certain default rules for adjudicating property rights disputes retard innovation by discouraging information sharing. Reasons, identified as far back as Arrow 1962, include inspecting the value of information and uncertainty over future contingent claims. In response, we propose a solution based on a simple definition of "fairness." This unblocks...

Recognizing spam as a pollution problem points to a market-based approach that could be more effective than prior approaches based on technology or law. Marshall Van Alstyne argues that an imperfect market could create more value than even a hypothetical "perfect" filter.

Recognizing spam as a pollution problem points to a market-based approach that could be more effective than prior approaches based on technology or law. Marshall Van Alstyne argues that an imperfect market could create more value than even a hypothetical "perfect" filter.

We examine the diffusion of different types of information through email networks and the effects of these diffusion patterns on the performance of information workers. In particular, we ask: What predicts the likelihood of individuals becoming aware of a new piece of information, and how quickly they obtain it? Do different types of information ex...

This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indices for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political auton...

If you listed the blockbuster products and services that have redefined the global business landscape, you'd find that many of them tie together two distinct groups of users in a network. Case in point: The most important innovation in financial services since World War II is almost certainly the credit card, which links consumers and merchants. Th...

This paper addresses the tension between benefits of centralized data control against the benefits of decentralized control at the level of the business unit. Centralized data control provides the benefit of uniform standards whereas business unit data control grants flexibility to react to rapidly changing environments. Many data standardization e...

This research examines hypotheses about the efficient and strategic uses of social networks by a specific group of white collar workers. We examine existing theory that relates network structure to performance and put forward two new hypotheses. The first addition merges explore/exploit theory with social networks, proposing that optimal network ch...

If communication involves some transactions cost to both sender and recipient, what policy ensures that correct messages -- those with positive social surplus -- get sent? Filters block messages that harm recipients but benefit senders by more than transactions costs. Taxes can block positive value messages, and allow harmful messages through. In c...

How can firms profitably give away free products? This paper provides a novel answer and articulates trade-offs in a space of information product design. We introduce a formal model of two-sided network externalities based in textbook economics—a mix of Katz and Shapiro network effects, price discrimination, and product differentiation. Externality...

We consider openness in private and socially optimal licenses under conditions where network effects and multiperiod innovation are both possible. For private firms, we model a variety of possible business models from completely closed to fully open, and find that opening a platform can increase profits based on network effects exclusively, innovat...

To maximize information exchange among employees, don't reward individual performance.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 1998. Includes bibliographical references (p. 233-246).

Title as it appears in the M.I.T. Graduate List, Sept. 1991: Valuing information. Thesis (M.S.)--Massachusetts Institute of Technology, Sloan School of Management, 1991. Includes bibliographical references (leaves 85-89).

Information technology can link geographically separated people and help them locate interesting or useful resources. These attributes have the potential to bridge gaps and unite communities. Paradoxically, they also have the potential to fragment interaction and divide groups. Advances in technology can make it easier for people to spend more time...

Some economic strategists now assert that the greatest value in information goods is not created by thestrongest and most restrictive intellectual property protection. Proponents of Open Source Software argue for value created by peer review and openly modifiable shared code. To explore these ideas, we articulate a balance of incentives as indexed...

We explore an alternative approach to spam based on economic rather than technological or regulatory screening mechanisms. We employ a model of email value which supports two intuitive notions: 1) mechanisms designed to promote valuable communication can often outperform those designed merely to block wasteful communication, and 2) designers of suc...

Compare to searching online information directly, asking friends or finding referral to a human expert is preferred in many information-gathering tasks. It's easier to judge the quality of the information from a personal referral as well as to obtain information that is not publicly published [1]. Instant Messaging (IM) has potentials to effectivel...