Sequential Innovation in Mobile App Development

Document Type

Article

Publication Title

Manufacturing and Service Operations Management

Abstract

Problem definition: In today’s highly dynamic and competitive app markets, asignificant portion of development takes place after the initial product launch via the addi-tion of new features and the enhancement of existing products. In managing the sequentialinnovation process in mobile app development, two key operational questions arise. (i)What features and attributes should be added to existing products in successive versions?(ii) How should these features and attributes be implemented for greater market success?We investigate the implications of three different types of mobile app development activ-ities on market performance. Academic/practical relevance: Our study contributes to theoperations management literature by providing an empirically based understanding ofsequential innovation and its market performance implications in mobile app develop-ment, an important industry in terms of size, scope and potential. Methodology: Using anovel data set of mobile apps in the Productivity category, we leverage text-mining andinformation retrieval techniques to study the rich information in the release notes of apps.We then characterize product development activities at each version release and link theseactivities with app performance in a dynamic estimation model. We also incorporate aninstrumental variables analysis to substantiate our findings. Results: We find that greaterupdate dissimilarity (i.e., dissimilarity of the features and attributes of a new update fromthose of previous updates) is associated with higher performance, especially in matureapps. We also find that the greater the product update market orientation (i.e., the greaterthe similarity of the focal firm’s new features and attributes with respect to the recent addi-tions of its competitors), the higher is the market performance. This finding suggests thatthe market rewards those developers who have a responsive policy to their competitors’product innovation efforts. Our results also suggest that a rapid introduction of updatesdampens the potential market benefits that the mobile app developers might gain frommarket orientation. We find no evidence of a beneficial effect of product update scope (i.e.,incorporating features and attributes from other product subcategories) on market per-formance. Managerial implications: Our study offers managerial insights into mobile appdevelopment by exploring the sequential innovation characteristics that are associatedwith greater market success in pursuing and implementing new features and attributes.

Publication Date

13-10-2022

Publisher

INFORMS

Volume

Vol.25

Issue

Iss.1

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