Competing for Temporary Advantage in a Hypercompetitive Mobile App Market

Abstract

Hypercompetitive mobile app stores are characterized by rapid innovation and intense competition. App firms must vie for temporary competitive advantage through competitive actions such as releasing product improvements. We study how competitive indicators influence a particular competitive action—app updates—in a mobile game app market. Our results reveal that app firms take action to improve or sustain their temporary competitive advantage, updating their apps when there are opportunities to capitalize on popularity (e.g., rank and rating volume are increasing) and when their apps’ advantages are threatened (e.g., customer ratings are decreasing). We also find that app updates are released in response to competitors’ actions—specifically, when competitors update their apps and new competitors enter ranking lists. Moreover, our findings show that app firms release app updates when an app’s customer rating volume is increasing or when an app firm’s portfolio of game apps is less diverse, relative to its competitors. We conduct additional analyses that show that older app firms are responsive to more competitive indicators than younger ones and major updates are primarily used to respond to serious threats to apps’ competitive positions. Overall, our results indicate that app updates are competitive actions used to improve or sustain temporary advantage when competitive indicators reveal opportunities to improve or threats to apps’ competitive positions.