Managing Relationships with a Platform: An Empirical Study of Publishers’ e-Book Offerings on Amazon Kindle

Tension between value creation and value appropriation can arise when firms enter relationships with a platform. While creating value collectively, these relationships strengthen the network effects which increase the platform’s ability to appropriate value. This shift in bargaining position could restrain cooperation between the firms and the platform, thereby diminishing joint value creation. We analyze e-book data to study product offerings as a strategic mechanism that publishers use when managing relationships with Amazon Kindle. We find that publishers make product offering choices that increase value creation while alleviate appropriation risks. Compared to small publishers, large publishers make product decisions that are more protective of their own interests and less conducive to Kindle’s success. We discuss our findings in relation to theory and future research.