Impact of Platform Venture Capital on the Introduction and Withdrawal of Complementary Products

Many platform providers are involved in corporate venturing. Increasingly, platform providers stake out minority equity investments in complementors from their own platform ecosystem as an act of governance, a practice that we refer to as platform venture capital (PVC). We study how other complementors respond to such PVC investments, as it pertains to their decisions to introduce and withdraw complementary products within the platform ecosystem. Building upon the triadic exchange structure and the contingent nature of complementary product adoption that are characteristic of platforms, we theorize the difficulty that complementors face in accessing information about preferences of platform customers and argue that PVC therefore becomes a powerful proxy for customer demand. We examine this in the context of PVC investments in Salesforce’s platform ecosystem. Consistent with our theoretical arguments, we show that a relative lack of customer access prompts complementors to view PVC as a signal of opportunity rather than as a potential threat, such that they are more likely to introduce and less likely to withdraw complementary products in categories affected by PVC. We also show that these effects are weaker for complementors with greater platform ecosystem experience as well as for multihoming complementors, both of whom are better positioned to access information about the preference of platform customers.