The Impact of APIs in Firm Performance

Abstract

Using proprietary information from a significant percentage of the API-tool provision and API-management industry, we explore the impact of API adoption on firm performance. We use a difference in difference approach centered on the date of first use to show that API adoption leads to increased profitability in the short and long run. APIs vary in their business function, and we find that B2B, B2C, and Internal API calls are heterogeneous in their association with outcomes. For a firm of 13,500 employees, our preferred specification implies API adoption increases yearly net income by more that $250,000. We also find evidence that having an open developer portal further enhances the gains from API adoption.