Vertical and horizontal complementarities in platform ecosystems

Abstract

We develop a framework of vertical and horizontal complementarities in platform ecosystems. Complementarity is a key theoretical construct for scholars investigating digital platforms and ecosystems, often mentioned in the context of complements, components, modularity, interdependence, and synergies. We shortly review the literature on complementarities in general strategy literature and then conceptualise complementarities in platform ecosystems. We distinguish between ‘vertical complementarity’ which signifies how complements (e.g., apps) increase the value of a platform (e.g., Android) and ‘horizontal complementarity’ which relates to the value creating complementarities between complements on a platform (e.g., an email and a calendar app). This distinction helps to clarify the notion of complementarities in platform ecosystems and has implications for our understanding of network effects, interdependence, generativity, platform governance, and platform strategy.