And the Winner Is … ? The Desirable and Undesirable Effects of Platform Awards

We study platform firms’ decision to recognize innovation by complementors ex post through awards. Despite being purely symbolic, awards might set incentives for complementors’ product strategies that can eventually lead to both desirable and undesirable outcomes for the platform firm. We depart from signaling theory and derive hypotheses on the effects of awards on complementors’ product strategies. To test them, we implement a quasi-experiment in the context of the Google Android mobile platform and the prestigious Google Play Award. We infer the effect of the award by estimating the difference-in-differences between award winners and runners-up, before and after the conferral. The main sample encompasses 125 award nominees and their 793 apps between 2016 and 2018. We report three findings. First, the award encourages recipients to focus on releasing complement improvements rather than new complements. Second, the award increases recipients’ likelihood of multihoming. Finally, the award increases new complement releases in the recipients’ market niche by attracting other complementors. We contribute to the platform governance literature by informing about the effects of awards. Additionally, our findings have theoretical implications for understanding “soft” platform governance mechanisms.