How APIs Create Growth by Inverting the Firm
Firms that open public APIs to become platforms for third parties grow substantially faster than similar non-adopters, while using APIs purely for internal efficiency delivers no such growth benefit.
Summary
Benzell, Hersh, and Van Alstyne study the growth effects of firms adopting public application programming interfaces as part of an inverted-firm platform strategy versus a traditional internally focused pipeline approach. They find that public API adopters grew roughly 39% more over sixteen years than similar nonadopters, with faster growth among firms attracting more third-party complementors and gaining network centrality, while purely
Editor's opinion
Well-identified econometric study, but too narrow/academic a mechanism paper to count as a strategy insight.
Key concepts
APIs · Inverted firm strategy · Platform growth