I’m happy to share that our paper “The value and structuring role of web APIs in digital innovation ecosystems: The case of the online travel ecosystem” co-authored with Roser Pujadas and Erika Valderrama has been published in Research Policy. It is available free from here (open access). The paper examines the role of interfaces (specifically APIs) within digital ecosystems.

Pujadas, R., Valderrama, E., & Venters, W. (2024). The value and structuring role of web APIs in digital innovation ecosystems: The case of the online travel ecosystem. Research Policy, 53(2), 104931. https://doi.org/https://doi.org/10.1016/j.respol.2023.104931

– We show a dynamic ecosystem where decentralized interfaces enable decentralized governance.

– We show Web APIs are easily replicated and so switching costs are relatively low. Thus, they do not easily lock-in complementors.

– We show Web APIs create synergistic interdependencies between ecosystem actors which are not only cooperative.

– We show Web APIs create networks of interorganizational systems through which services are co-produced.

– We show Web APIs are important sources of value creation and capture in digital innovation ecosystems.

We do all this through an analysis of 26 years of the online hotel booking ecosystem (1995-2021). Within the paper we present network analysis which reveals the complexity of actors involved in booking a hotel room today – see the following image for evidence of how complex this hotel booking ecosystem has become!

Some random choice quotes from the discussion section:

“Our research uncovers the distinctive structuring role and economic value of web APIs within a digital innovation ecosystem that is decentralized, and not organized around a platform technology as the focal value proposition”

“uncovers a dynamic and competitive digital ecosystem, where web APIs are not centrally controlled, and they are not only developed by incumbents, but also by new entrants offering new services or reintermediating existing ones.”

“the competitive advantage that interfaces provide to a platform or firm does not lie so much in the capacity to lock in complementors, nor even on data collection per se, but upon increasing the capacity to process and analyze data in real time, gaining valuable contextual insights within value-adding services, which can be directly monetized.”

The structuring role of web APIs in digital innovation ecosystems

“interfaces can structure directly competitive relationships within an ecosystem. For instance, by revealing, what we term, surreptitious interfacing through web scraping (e.g. by early metasearchers), we show how interfaces can be imposed upon another actor against their will. Jacobides et al. (2018 p. 2285) define an ecosystem as ‘a group of interacting firms that depend on each other’s activities’ –we might add to this: or exploit each other’s activities.“

“our research shows an ecosystem without a single orchestrator, and where a wide range of interfaces are designed and controlled by a range of actors, in a highly decentralized manner. Our research thus contributes to ecosystem orchestration and governance theory.”

The strategic value of web APIs

“Web APIs do not enable control over standards. As web APIs draw upon open shared web standards, parsing them is relatively simple and understandable, and they are agnostic to the systems they interface. This makes them relatively easy to imitate and adapt.”

“Web APIs proved ineffective tools to lock in complementors and so to establish leadership. Once an actor uses a web API, the cost of connecting to a different web API that offers the same or similar service is low, thus potentially increasing the power of suppliers and customers (Porter, 2008).”

A “consequence of low specialization costs is that the cost of establishing connections with multiple firms is relatively low…our research provides evidence of large-scale multihoming in an ecosystem built around decentralized web APIs”  

“We see firms constantly adapting, changing their roles, and adding existing services by replicating web APIs, but also offering new web APIs over time. Together, this helps explain the dynamism, growth, and decentralized governance of the ecosystem”

Web APIs in value creation and capture within the digital economy

“web APIs are used by actors within a decentralized ecosystem to interface their information systems and so, to co-produce services and products…the value of web APIs is not only as a design rule…but also as a technology-in-use that enables the interaction of distributed systems.”

“…the value of web APIs is … in facilitating the production of meaningful data… attention should be focused on the exchange of information and integration of digital capabilities through web APIs, and on the real-time production of information and prediction that web APIs enable.”

“An indirect… form of value that web APIs enable is access to potential customers.”

The problem with Web APIs, AI and policy.

“We also reveal how data analytics and AI are becoming deeply embedded across such decentralized web API-based ecosystems. As AI can benefit from harvesting data from multiple sources so we expect it to become increasingly ingrained. This embedding will make it hard to research and trace AI’s impact within the digital economy– with policy implications for those regulating AI.”

Pujadas, R., Valderrama, E., & Venters, W. (2024). The value and structuring role of web APIs in digital innovation ecosystems: The case of the online travel ecosystem. Research Policy, 53(2), 104931. https://doi.org/https://doi.org/10.1016/j.respol.2023.104931