User-driven Innovation And Competition-driven Innovation

Since the App market is getting more and more competitive, the App developers need to constantly innovate to gain a competitive advantage. While previous studies have begun to explore how mobile developers can better design their own products, but those studies did not probe into the product innovation process. This paper proposes two important factors that influence the innovation of App developers from the view of open competition (Open Innovation):user-driven innovation and competition-driven innovation. User-driven innovation is the mobile application developers understand the advantages and disadvantages of the product from the user’s mouth, and then make appropriate improvements. Competition-driven innovation is that the App developers rival products through research to improve their products.This article relies on the online app-store and studied the user-oriented innovation and competitor-driven innovation in app-store. This article argues that the review mechnism in online app-store provide a platform for users to contribute their knowledge and for developers to learn from users to archieve product innovation while spreading the reputation of products, simultaneously the openness of online app-store lower the barrier for developers to learn from competitors. This paper focus on the process developers learn from feedbacks of internal users and external knowledge spillovers of competitors to archieve innovation, and the impact of such learning and innovation process will have on the performance of apps. In the research I used one of the several leading third-party online app-store in terms of market share in the domestic market as the research object, through the study of the panel data for five consecutive months of 252 apps, this research found that knowledge contributed by users through the review system and the innovations contributed by competitors will triger active innovation behaviors of developers, and such user-oriented innovation and competitor-driven innovation will promote the performance of developers’ apps.In this study, there are three important theoretical contributions:First, this study extends the previous research on innovation in a closed environment and found that in the open innovation environment, companies have more ways to capture knowledge and to innovate. Previous research has mainly focused on the innovation behaviour conducted by enterprises under the protection of intellectual property rights. In the mobile market, however, developers cannot resort to the intellectual property protection for their innovations, competitor can easily access these innovations to improve their own products. Second, the study found that the innovation behaviour after obtaining knowledge under open environment has a direct impact on the performance of Apps. While previous studies have found the external knowledge has a significant influence on innovations, but few of them studied the intermediary role of such innovations. Results of this study can well explain why corporate performance can differ significantly in such an open environment where knowledge can be acquired under the same circumstances. Third, the two different innovation-driven approach proposed in this study, user-driven innovation and competition-driven innovation, will have a positive impact on the innovation behavior of enterprises under an open competitive environment.