Startup multihoming in enterprise software ecosystems: The role of skill breadth and organizational learning
Vijayaraghavan Venkataraman, Marco Ceccagnoli, Chris FormanAbstract
Research Summary
We investigate startup decisions to multihome to another platform. We develop a theory that shows startup engagement with the initial platform leads first to exploratory learning and later a shift toward exploitation, leading to an inverted U‐shape relationship between duration of platform partnership and the likelihood of multihoming. This tradeoff is shaped by the breadth of the startup's skill base. Startups with a broader set of skills initially face slower learning, but over time skill breadth provides greater adaptability that better positions them for multihoming. We test our theory using a novel dataset on SAP partners' multihoming decisions, examining the implications of Oracle acquisitions that increased the expected benefits of multihoming. Our empirical findings are consistent with our hypotheses.
Managerial Summary
The growth phase forms an important part of any startup's evolution, particularly when engaging with digital platform ecosystems, where expansion often depends on the ability to multihome. Startups' accumulated experience with a platform shapes how they respond when opportunities to expand to another platform arise. Startups with moderate levels of prior platform experience are most likely to expand, while longer relationships can create dependencies that reduce flexibility. Importantly, the breadth of a startup's skill base changes this trajectory. Startups with diverse skills are better able to avoid lock‐in and remain flexible, even after long partnerships. Evidence from the enterprise software ecosystem shows managers should see platform partnerships as both opportunity and risk, investing in broad skill sets to balance deep collaboration with the ability to grow across platforms.