Should I Diversify My Mobile App Portfolio ? Examining the Effects of App Portfolio Size and Diversity on App

A critical challenge faced by mobile app developers today is to effectively manage their app portfolio, but this issue has rarely been addressed in the IS academic literature. To address this gap, we focus on the impact of category assortment of developers’ app portfolios on their performance. Specifically, we evaluate both the supply and demand of mobile apps with a data set from the Apple App Store. On the supply side, we examine the influence of mobile developers’ app portfolio size and diversity on app quality. A panel-level linear model estimation augmented with two identification strategies of Granger causality test and propensity score matching shows a negative impact of portfolio diversity on developers’ app quality. However, this negative influence is mitigated by the increasing size of app portfolio. On the demand side, we assess the extent and direction of popularity spillover effects between developers’ existing and new apps. Our empirical analysis with a simultaneous equations model shows that popular existing apps of a developer can promote the popularity of new apps in the same category. New apps, in turn, drive demand for a developer’s existing apps both within and across categories. Our findings highlight the important role of learning processes in the product portfolio management for human capital intensive industries.