The Success Factors for App Store-Like Platform Businesses from the Perspective of Third-Party Developers: An Empirical Study Based on A Dual Model Framework

A platform business, such as Apple Inc.’s App Store, refers to a Web-based business in which anyone can participate and make profits by taking advantage of, with few restrictions, resources and infrastructures of the host firm operating the platform. Such businesses are enabled and thrived primarily by participation of third-parties in the business value chain. Perceiving that in the context of App Store-like businesses, outside application developers' participation and their development practices are crucial for the success of the platform business, we attempted to identify factors that influence developers' intention to develop applications frequently. As an underlying foundation for this study, we used a dual model framework, the theoretical importance of which has recently been verified by Kim & Son (2009). The dual model consists of two different, but related, mechanisms—a dedication-based mechanism and a constraint-based mechanism. The dual model, together with our careful observations, implies that application developers build applications frequently not only because they want to do so (a dedication-based mechanism), but also because they feel constrained to do so (a constraint-based mechanism). Hence, after in-depth interviews with seven application developers and an extensive literature review, we identified seven specific elements that developers take into account when developing applications, and categorized these factors according to the two mechanisms. In total, 112 sets of Web survey responses were collected from iPhone application developers in South Korea, and 10 hypotheses were tested by PLS. Our results indicated that for the dedication-based mechanism, benefit-sharing attractiveness, market demand for applications, usefulness of development tools, and review process fairness have positive impacts on intention to develop frequently through developer satisfaction. For the constraint-based mechanism, learning and set-up cost positively affect termination cost, in turn increasing dependence of developers. Finally, dependence is positively related to intention to develop frequently. This study applied a dual model to the context of the smartphone application development and set out practical guidelines for companies that wish to enter this type of business or to make their App Store-like business flourish.