Hakan Ozalp

Research Summary We study how the value of depth and breadth of experience shifts across generational technology cycles and industry evolution. Experience breadth builds organizational flexibility that is valuable during technology transitions and when the industry is younger, while experience depth builds domain‐specific resources that are important during periods of technology stability and later periods of industry evolution. We test our theory in the console game industry, where publishers face repeated periods of transition and stability across multiple console generations. We find support for most hypotheses, except that the value of breadth correlates with the magnitude of any transition instead of decreasing linearly over time. We contribute to research on the changing value of firm experience and to the understanding of generational technological change during industry evolution. Managerial Abstract Many industries face generational changes. How incumbent firms handle those transitions is important to firm survival and success. We study how the prior experience of video game publishers helps them navigate transitions. First, we find that firms with deep experience in a genre produce more successful games in that genre only during stable periods in the industry. Second, the benefits of deep experience increase over time as some of the experience‐built capabilities of the firm survive technological transitions. Third, broad and diversified firms perform best during generational transitions as they successfully enter new domains made popular by the generational shift. We suggest that the product strategies of video game firms should depend on the relevant experience they possess and the degree of environmental change.

Research Summary In platform ecosystems, the creation of new products is often based on standardized development tools. Complementors often have a choice between either using these tools or creating the functionality themselves. In this paper, we study how the use of standardized development tools is related to the type of products created. By using data on the use of middleware (e.g., game engines) in the console video game market, we show that the use of development tools is associated with products that are less novel but with higher sales on average. We exploit a policy change that affected the ability of U.S.‐based developers to hire foreign workers as an instrument for the use of development tools and find further support for these patterns. Managerial Abstract When developing new products, firms often have to decide whether they base their technology on preexisting components and standardized tools or develop that technology themselves. In general, it has not been clear how using standardized third‐party tools that may be available to all firms in an industry affects the nature of the products that are created. Using data on middleware components, such as game engines, in the console video game industry, this paper shows the use of such standardized tools is associated with the creation of products that are less novel but generate higher sales on average. This is an important strategic consideration for firms, but also for platforms that make decisions regarding whether such tools should be allowed on their platform.