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Competing for Temporary Advantage in a Hypercompetitive Mobile App Market

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DOI: 10.25300/MISQ/2022/15079

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 RESEARCH ARTICLE

COMPETING FOR TEMPORARY ADVANTAGE IN A

HYPERCOMPETITIVE MOBILE APP MARKET1
Tabitha L. James
Department of Business Information Technology, Pamplin College of Business,
Virginia Tech, Blacksburg, VA, U.S.A. {tajames@vt.edu}

Zhilei Qiao
Department of Management, Information Systems and Quantitative Methods, Collat School of Business,
University of Alabama at Birmingham, Birmingham, AL, U.S.A. {qiaozl@uab.edu}

Wenqi Shen and G. Alan Wang

Department of Business Information Technology, Pamplin College of Business,
Virginia Tech, Blacksburg, VA, U.S.A. {shenw@vt.edu} {alanwang@vt.edu}

Weiguo Fan
Department of Business Analytics, Tippie College of Business,
University of Iowa, Ames, IA, U.S.A. {weiguo-fan@uiowa.edu}

Hypercompetitive mobile app stores are characterized by rapid innovation and intense competition. App
firms must vie for temporary competitive advantage through competitive actions such as releasing
product improvements. We study how competitive indicators influence a particular competitive action—
app updates—in a mobile game app market. Our results reveal that app firms take action to improve or
sustain their temporary competitive advantage, updating their apps when there are opportunities to
capitalize on popularity (e.g., rank and rating volume are increasing) and when their apps’ advantages
are threatened (e.g., customer ratings are decreasing). We also find that app updates are released in
response to competitors’ actions—specifically, when competitors update their apps and new competitors
enter ranking lists. Moreover, our findings show that app firms release app updates when an app’s
customer rating volume is increasing or when an app firm’s portfolio of game apps is less diverse, relative
to its competitors. We conduct additional analyses that show that older app firms are responsive to more
competitive indicators than younger ones and major updates are primarily used to respond to serious
threats to apps’ competitive positions. Overall, our results indicate that app updates are competitive
actions used to improve or sustain temporary advantage when competitive indicators reveal opportunities
to improve or threats to apps’ competitive positions.
Keywords: Mobile applications (apps), mobile app updating, apple app store, mobile game apps,
competitive dynamics, competition, rivalry, temporary competitive advantage, hypercompetition

Introduction responses include product improvements and price and

The study of competitive dynamics focuses on competitive
moves (i.e., actions and responses) through which companies
create temporary advantage (Chen & Miller, 2012; Chen &
Miller, 2015; Smith et al., 2006). Competitive actions and
service adjustments (Miller & Chen, 1996). Software updates
are product improvements that can be used to compete by
providing customers with better-quality apps that have
enhanced functionality. The software industry can be
described as a hypercompetitive industry “characterized by

1
Bin Gu was the accepting senior editor for this paper. Xiao Fang served
as the associate editor.

DOI:10.25300/MISQ/2022/15079 MIS Quarterly Vol. 47 No. 3 pp. 1177-1212 / September 2023 1177
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
intense and rapid competitive moves, in which competitors
must move quickly to build advantage and erode the
advantage of their rivals” (D’Aveni & Gunther, 1994, p. 217-
218). In fact, from 1979 to 1991, the competitive response
time in the software industry went from 34 days to 1 day
(Grimm et al., 2006).
A mobile app (hereafter, app) is a software application
designed to run on a mobile device such as a smartphone or
tablet. Today, customers download most apps from the Apple
App Store or Google Play (formerly the Android Market)
(Statista, 2021b), which are the app stores for the two major
platforms. A platform or ecosystem can be defined as “any
combination of hardware and software that provides
standards, interfaces, and rules that enable and allow providers
of complements to add value and interact with each other
and/or users” (Teece, 2018, p. 1375). The iOS (Apple)
ecosystem is an example of such a platform, where Apple
defines and controls the hardware, operating system, store,
and rules for operating within the ecosystem for
complementors who add value by producing products (e.g.,
apps) that power users’ experiences. In this study, we examine
competition in an app market, specifically game apps offered
on the Apple App Store.
High-technology industries, such as software, are emerging
growth industries that are dynamic and uncertain because of
high rates of innovation, and that are also characterized by
many new entrants and low entry barriers (Smith et al., 1989;
Smith et al., 1992). Ecosystems such as Apple’s have low
entry barriers; the cost of app development is low and platform
access to offer an app for download is equitable (Boudreau,
2012; Lee & Raghu, 2014). Low entry barriers and the
perceived potential of a high-growth industry lead to many
new market entrants (Smith et al., 1992). In March of 2022
alone, 580 new game apps were submitted to the Apple App
Store (Statista, 2022b). Of the more than 4.7 million apps
available on the Apple App Store, the games category is the
largest, with more than one million game apps available in
2022 (Statista, 2022c). From 2007 to 2018, the mobile gaming
market saw double-digit growth every year and it is forecasted
to become a 139.5 billion USD market by 2026 (Global
Industry Analysts, 2022; Wijman, 2018).
Traditionally, emerging growth industries have been
characterized by incomplete, uncertain, and unreliable
information about competitors and their actions (Smith et al.,
1992). However, on app stores, information visibility is
controlled and curated by the platform provider as a condition
of participating in the ecosystem (Grover & Kohli, 2012) and
has resulted in “a considerably more transparent market for
deployment of software systems compared to more traditional
2
https://sensortower.com/ and https://apptopia.com/
1178 MIS Quarterly Vol. 47 No. 3 / September 2023
software markets” (Al-Subaihin et al., 2021, p. 2). In fact,
quality (e.g., ratings) and price information is available about all
of a store’s apps in a standard form controlled by the platform.
Standard descriptive information about each app and app
update (e.g., release dates) is also curated by the platform. Such
store data is intended to help customers easily compare and
shop for apps, but it also provides app firms with easily
accessible information from which to determine competitive
opportunities and threats. This data obviously has competitive
value because there are companies (e.g., SensorTower and
Apptopia2) that app firms can pay for sophisticated analytical
displays on and data dumps of data mined from app stores. App
stores also maintain ranking lists of top apps that can serve as
leaderboards of the top competitors in an app market. These
ranking lists provide de facto lists of competitors. Because
comparing competing apps is easier, there is more direct
competition than in similar markets such as music (Lee &
Raghu, 2014). Firms competing in app markets thus have access
to more complete and reliable information about their
competitors and their competitive position than is typical in
emerging growth industries.
In hypercompetitive industries, companies make frequent and
bold competitive moves to topple industry leaders (Ferrier et
al., 1999; Lee et al., 2010; Smith et al., 2001). Companies
compete on price and quality (Matsubayashi, 2007). Prices for
mobile apps are low; the average iOS game app price in March
of 2021 was $0.49 USD (Statista, 2021a). Many apps are
offered for free and generate revenue through advertisements
or in-app purchases. These microprices generate significant
revenues through millions of downloads (Kimbler, 2010),
which indicates that quality considerations to stimulate
downloads are important to profitability. App firms can easily
change their product (i.e., update an app) to improve its quality
in an attempt to gain more customers (i.e., stimulate
downloads) (Lee & Raghu, 2014; Yi et al., 2019). App
updating is part of the software development lifecycle; after
its initial release, an app must be updated to improve its quality
and keep users engaged (Abran et al., 2004; Al-Subaihin et al.,
2021). In fact, Apple advises that “regular app updates can
help [an app] stay competitive on the App Store, as each new
release is an opportunity to reengage existing users and attract
new users” (Apple, 2020, p. 1). An app update can thus be
considered a competitive action that can be taken to improve
the competitive position of an app, or as a response to threats
such as other app firms’ competitive actions to sustain an
app’s competitive position.
Competitive dynamics is the study of how a firm’s moves or
actions affect its competitors, competitive advantage, and
performance (Smith et al., 2006). The moves (actions) and
countermoves (reactions) create competitive dynamics within
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
an industry and reflect the pursuit of profit through innovation
(Smith et al., 2006). The foundation of competitive dynamics
is the concept of creative destruction proposed by Schumpeter
(1950), which describes a process through which companies
take competitive actions in the pursuit of market opportunities
to overtake the market leader and reap greater profits. The
process continues as competitive actions are taken to dethrone
the next leader; thus, creative destruction describes the
eventual decline of firms as a result of competitive action and
reaction (Chen & Miller, 2012; Smith et al., 2006).
Competitive dynamics research has three distinguishing
characteristics: it (1) focuses on specific, real market actions,
(2) emphasizes the competitive context in which the actions
take place, and (3) explains both the drivers and consequences
of market actions (Smith et al., 2006). Grounding our study in
competitive dynamics research, we examine the drivers of a
specific, real market action (i.e., app update) in a novel
competitive context (i.e., an app store). Our research question
is: How do competitive indicators shape app update
competitive actions?
Competitive actions are taken because a company observes an
opportunity to improve or perceives a threat to its competitive
position. Competitive dynamics thus describes a longitudinal
process that is repeated over the lifetime of the product (Ferrier,
2001). This process can be summarized as: (1) an opportunity to
improve or a threat to competitive position is observed (i.e.,
cause), (2) a competitive action is taken to capitalize on the
opportunity or counteract the threat, (3) which, if successful,
results in the competitive position being improved or sustained
(i.e., consequence). Although competitive dynamics research
aspires to explain both the causes and consequences of
competitive actions, researchers often focus on the performance
consequences of competitive actions (Smith et al., 2006).
Similarly, information systems (IS) and management
researchers have studied factors that affect performance in app
stores (Lee & Raghu, 2014; Yi et al., 2019) and have shown that
updating an app can result in performance benefits (Comino et
al., 2019; Lee & Raghu, 2014). However, few studies have
focused on the drivers (i.e., causes) of competitive actions, and
such studies are especially lacking in the software industry
context (Turner et al., 2010; Young et al., 1996). To fill this gap,
our study focuses on the drivers of a specific competitive
action—an app update—rather than on the performance
consequences of this competitive action. We seek to understand
how firms leverage competitive information (i.e., competitive
indicators) made visible by the platform provider to determine
when to execute a competitive move (i.e., app update), which is
key to understanding how firms can be more competitive and
thus more successful in hypercompetitive markets characterized
by high information visibility. We use competitive dynamics as
our theoretical foundation to examine how competitive
indicators prompt firms to leverage a specific competitive action
to act on opportunities or react to threats. The ability to leverage
competitive actions quickly in this context is facilitated by the
visibility of competitive indicators (e.g., rank, rating,
competitors’ updates) characteristic of platform environments.
We study a specific competitive action, an app update, in a
specific context, an app store. Packaged software updates have
rarely been studied through the lens of competitive dynamics
(Turner et al., 2010), and to the best of our knowledge, app
updates in a platform environment have not been studied at all.
There are key differences between packaged software and
apps, most notably the enhanced competitive information
visibility characteristic of an ecosystem. We consider three
types of competitive information made available by the
platform provider reflecting opportunities or threats that may
drive competitive actions: (1) changes in the app’s competitive
position, (2) competitive actions taken by the app’s
competitors, and (3) changes in the app’s competitive position
relative to its competitors. Although some of the general logic
of these drivers has been tested in other industries, we are
among the first to provide a comprehensive examination of the
drivers of this specific competitive action in this context. We
thereby contribute to the literature on competitive dynamics by
providing a robust examination of the drivers of a novel
competitive action in a unique hypercompetitive context
characterized by high information visibility. Studies have
considered how some changes in the app’s marketplace
indicators (e.g., lagged downloads or initial review variance)
influence app firms’ update management strategies (Allon et
al., 2022; Comino et al., 2019), but to the best of our
knowledge, none have provided a holistic examination of how
competitive indicators shape the app update competitive action
through a competitive dynamics lens. Therefore, we also
extend research on app update management (Allon et al., 2022;
Comino et al., 2019) by applying a competitive dynamics lens
to consider how three types of competitive information drive
app update competitive actions.
We found evidence of offensive competitive actions in the
game app market that follows the logic of competitive
dynamics such that apps are updated when they can capitalize
on their upward momentum to improve their position (i.e.,
dethrone competitors). Specifically, when past performance
indicators suggest that an app is experiencing popularity such
as increasing rank or buzz (i.e., customer ratings volume), app
firms update their apps. We also found that defensive
competitive actions are taken by app firms in response to
competitive threats. Specifically, when apps’ competitors
update, new competitors emerge, customers become unhappy
with apps (i.e., customer ratings fall), or app firms compete
across fewer game app subcategories than their competitors,
app firms update their apps as a defensive move to protect
their temporary advantage.
MIS Quarterly Vol. 47 No. 3 / September 2023 1179
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
Theoretical Background
We use competitive dynamics as the theoretical foundation for
our study. In the following sections, we first discuss temporary
advantage in hypercompetitive industries. Then, we provide
background on competitive dynamics in the software industry
before introducing our model.
Temporary Advantage in Hypercompetitive
Markets
Baum and Korn (1996, p. 256) state that “firms constantly take
offensive and defensive actions in their quests for competitive
advantages vis-à-vis competitors.” Hypercompetitive
industries are characterized by rapid and intense competitive
actions taken to obtain temporary advantage over rivals
(D’Aveni et al., 2010; D’Aveni & Gunther, 1994). It is argued
that in disruptive environments characterized by fast-paced
competitive actions among rivals, sustaining competitive
advantage may not be possible (D'Aveni et al., 2010). The
software industry is an example of a hypercompetitive
industry that is characterized by technological change, high-
velocity innovation, and market share turbulence (Lee et al.,
2010). Hypercompetition is explained by the notion of the
gale of creative destruction that proposes a constant state of
disequilibrium arising from innovation-based competition
(Lee et al., 2010; Schumpeter, 1950). The foundations of
competitive dynamics draw from the concept of creative
destruction which suggests that firms undertake competitive
actions to capture market opportunities, eventually dethroning
the market leader, and continuing the cycle as new leaders
emerge (Ferrier et al., 1999; Smith et al., 2006). It explains the
eventual decline of firms as they are dethroned by competitors
(Chen & Miller, 2012; Ferrier et al., 1999; Smith et al., 2006).
It has been argued that high-tech, disruptive environments do not
reach maturity but rather “self-reproduce, cannibalize, innovate,
and self-perpetuate by incessantly innovating, reviving, and
reinitiating the initial stages of different waves of industry and
product lifecycles” (D’Aveni et al., 2010, p. 1372). Such
environments necessitate a dynamic maneuvering strategy of
acting and reacting to achieve temporary competitive advantage
that lasts only until the firm is outmaneuvered by competitors
(D’Aveni et al., 2010). The literature on software development
has similarly argued that “timely responsiveness and rapid and
flexible product innovation are needed in circumstances with
critical time to market, rapid technology change, and difficult-to-
determine future competition and markets” (Cao & Ramesh,
2007, p. 42). To be competitive, software firms must therefore
continuously scan their environment for opportunities and threats
and take innovative action based on these indicators in hopes of
improving or sustaining temporary competitive advantage.
1180 MIS Quarterly Vol. 47 No. 3 / September 2023
A product market can be defined as “a set of goods and
services that serve similar functions, are created with the use
of similar technology, and are used by similar users” (Abell,
1980, p. 17). Following this definition, game apps on
Apple’s App Store are created with similar technology, serve
similar functions, and are used by similar users. Hence, we
refer to our context as a game app market. Game app markets
are the epitome of hypercompetitive markets because game
apps face fierce competition and have very short product
lifecycles; the product lifecycle of a game app was 54.84
days in 2012 (Yi et al., 2019). It is important for game apps
to quickly attract a large user base and to sustain their initial
boom for as long as possible (Yi et al., 2019). Quality
perceptions from customer ratings are crucial to attracting
users and achieving higher rankings as the game builds a
user base (Yi et al., 2019). Game apps that are able to hold
their rank can benefit from informational cascades as
customers seek out popular games (Yi et al., 2019). It is thus
important for a game app to have high customer satisfaction
and capitalize on its initial popularity to achieve the highest
rank possible. Moreover, it must sustain that rank for as long
as possible to prolong its product lifecycle.
A firm’s competitive position is the power it has relative to its
direct competitors, and it determines its performance (e.g.,
profits) (Simmonds, 1986). Creative destruction describes a
race where firms jockey for competitive position (Ferrier,
2001), which in the game app market is formalized by rank on
the ranking lists maintained by the platform provider. Ranks
change as game apps vie for customers’ attention to generate
downloads, which is key to improving or sustaining their
ranks (Yi et al., 2019). Ferrier (2001, p. 858) states that
“especially in hypercompetitive markets, leading firms are
relentlessly pursued by existing and unforeseen challengers
that aggressively find new ways to satisfy customers.”
Releasing an app update is a competitive action that can be
undertaken to vie for market position by finding new ways to
satisfy customers. App updates may fix problems identified in
the app (e.g., bugs) or may be functional improvements to
make the app more appealing. However, regardless of the
quality improvements being made, app updates are intended
to satisfy customers. On app stores, gauging customer
satisfaction is simplified because the platform provider
curates and publicly provides customer feedback data. In fact,
this feature of the app store allows app firms to obtain
customer satisfaction data on their own apps and their
competitors’ apps. It is the app update competitive action that
is the focus of our study. In particular, we are interested in
examining which observable competitive indicators prompt
this competitive action. For our analysis, we observed the app
updates of 2,306 ranked game apps on the Apple App Store
over a 298-day period and collected the store data on those
apps prior to the updates.
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
Competitive Dynamics in the Software Industry
According to Chen and Miller (2012, p. 137), “competitive
dynamics is the study of interfirm rivalry based on specific
competitive actions and reactions, their strategic and
organizational contexts, and their drivers and
consequences.” A competitive action is a move such as a
price cut, product improvement, advertising campaign, new
product introduction, or entry into a new market that a firm
takes to improve or defend its competitive position (Chen &
Miller, 2012; Miller & Chen, 1996; Smith et al., 1992). A
competitive response is a counteraction that a firm takes in
response to the actions of one or more of its competitors, also
to defend or improve its competitive position (Chen &
Miller, 2012; Smith et al., 1992). Competitive actions
“position firms in their competitive environment” (Li et al.,
2010, p. 639). Therefore, an app update, which is a product
improvement, may be a competitive action or response that
positions the app in its competitive environment.
Competitive dynamics research has shown that firms that carry
out more competitive actions and execute them at greater
speeds experience increased profitability and market share
(Ferrier et al., 1999; Smith et al., 1992; Young et al., 1996). In
a study of the software industry, Young et al. (1996) found that
as firms’ competitive actions increase, firm performance
increases, which supports the argument that in
hypercompetitive environments, the advantage from a move
quickly erodes. Moreover, they also found that the negative
consequences of competitor rivalry do not outweigh the benefits
of competitive moves, which suggests that competitive actions
are critical to performance when faced with intense competitive
rivalry (i.e., high levels of competitive activity) (Young et al.,
1996). These findings indicate that in the face of intense rivalry
in the hypercompetitive game app market, app firms should
frequently execute competitive actions to increase performance.
For new software ventures, introducing product refinements
and extensions at a greater intensity than one’s rivals is
associated with increased performance (Zahra & Bogner,
2000). Frequent product upgrades are a key element of a
company’s strategy in dynamic environments such as the
software industry because they can be used to gain market
share, increase profitability, maintain consumer loyalty, and
improve competitive position (Zahra & Bogner, 2000). In
the software industry, updating is an important part of firm
strategy (Allon et al., 2022; Bala & Carr, 2009; Li et al.,
2017; Mehra et al., 2012; Zhang & Seidmann, 2010). Studies
on app stores have alluded to the criticality of app updates to
performance. For example, Lee and Raghu (2014)
3
For completeness, we confirm the previous results that updates can
increase future performance, Steps 2 and 3 in the Appendix.
empirically demonstrated that app updates on the Apple App
Store could result in a threefold increase in survival in the
top-300 chart. App updates are critical to an app’s
performance because they increase visibility and user
engagement and stimulate downloads (Apple, 2020; Comino
et al., 2016, 2019).
Competitive dynamics suggests a longitudinal process in
which (1) observed competitive information (e.g., past
performance, competitors’ actions) indicates an opportunity
or threat at time t-1, (2) which stimulates a competitive
action (e.g., app update) at time t, (3) and which, if
successful, results in improved future performance at time
t+1. In other words, competitive dynamics aspires to study
both the drivers (i.e., indicators of opportunities or threats at
time t-1) and performance consequences (i.e., performance
effects at time t+1) of competitive actions (Chen & Miller,
2012; Smith et al., 2006). As previously described, research
has found that an update at time t can increase future
performance (e.g., survival on the top charts) at time t+1;
therefore, the impact of software updates on performance
has been addressed (e.g., Comino et al., 2019; Lee & Raghu,
2014; Zahra & Bogner, 2000). However, less attention has
been paid to the drivers of software updates, and studies that
have emphasized this part of the longitudinal process have
rarely done so through a competitive dynamics lens which
has limited the types of drivers examined (Allon et al., 2022;
Comino et al., 2019; Turner et al., 2010). The focus of this
study is on steps (1) and (2)3; that is, determining the
competitive indicators a time t-1 that drive the competitive
action (i.e., app update) at time t. Our study can thus help
firms understand how to better leverage the information
visibility characteristic of the app stores to inform their
competitive action decisions in pursuit of improving or
sustaining the temporary competitive advantage that is
ultimately key to maximizing performance.
There are established differences in competitive actions in
stable versus hypercompetitive markets where gaining
temporary advantage is key (Chen et al., 2010). However,
the preponderance of competitive dynamics studies have
been conducted in mature markets such are airlines (Chen et
al., 2010). Only a few studies have explored competitive
strategy in the packaged software industry, and these studies
have often focused more generally on the competitive
environment (e.g., market concentration) (Turner et al.,
2010; Young et al., 1996; Zahra & Bogner, 2000). These
studies do provide necessary insight into how game app
markets may function. Game app markets are highly
concentrated and Turner et al. (2010, p. 854) showed that in
MIS Quarterly Vol. 47 No. 3 / September 2023 1181
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
the packaged software industry, “increasing industry
concentration raises the stakes surrounding market positions
and leads to greater interdependence of innovation strategies
in an industry.” In the 1990s packaged software industry,
firms were more responsive to competitors’ innovations (i.e.,
software releases) as industry concentration increased
(Turner et al., 2010), despite not benefitting from the
internet-enabled platform delivery systems for product
improvements available today. Such findings suggest that in
hypercompetitive app markets, app firms may use app
updates as a response to competitive threats.
Competitive dynamics theory posits that it is necessary for
firms to be aware, motivated, and capable of competitive
actions to respond (Chen & Miller, 2015). Platforms provide
a unique level of visibility about competitive position on the
app store that can aid awareness (Al-Subaihin et al., 2021;
Grover & Kohli, 2012; Lee & Raghu, 2014). Product
improvements are key to performance, which can provide
motivation (Comino et al., 2019; Lee & Raghu, 2014). The
internet-based delivery mechanism for app updates is
efficient, which can assist capability. These characteristics
empower game app firms to compete for temporary
advantage through app update competitive actions.
Specifically, they enable an environment in which app firms
can observe competitive indicators in real time to inform
their app update competitive actions. When competitive
indicators suggest an opportunity to improve or a threat to
an app’s competitive position, an app can be updated to
capitalize on the opportunity or ward off the threat. In this
hypercompetitive platform environment, we thus study the
drivers of app update competitive actions.
Research Model and Hypotheses
Porter (1980, p. 17) states that “rivalry occurs because one
or more competitors either feels the pressure or sees the
opportunities to improve position.” Our interest in this study
is examining how competitive indicators shape app update
competitive actions.4 Our dependent variable is thus app
update competitive actions. As shown in Figure 1, we test
the influence of three types of competitive indicators on the
release of app updates in the game app market.
4
Platform changes (e.g., an iOS update or new device) may also influence
app updates, although these are not competitive indicators because the
influence is consistent for all app firms (i.e., all app firms experience the
iOS updates and new devices) as a condition of participating in the
ecosystem. Such changes by the platform provider are not made in response
1182 MIS Quarterly Vol. 47 No. 3 / September 2023
Although competitive dynamics researchers have studied
factors influencing competitive actions in traditional
industries (Smith et al., 2006), few competitive dynamics
studies have focused on the software industry (Turner et al.,
2010; Young et al., 1996). Turner et al. (2010) studied how
market concentration moderates the relationship between
competitors’ innovations and the likelihood of a new
software release, whereas Young et al. (1996) examined how
cooperation influences competitive activity. Our study
extends these studies by examining how competitive
indicators observable by app firms due to the high
information visibility of the ecosystem shape app updating
competitive actions. We study a larger set of indicators than
these prior studies because the information visibility
characteristic of the ecosystem context enables the
examination of competitive indicators that are not as readily
available in packaged software contexts.
Research on update management practices has provided
some insight into how indicators of an app’s past
performance can affect update timing. Comino et al. (2019)
found that on iTunes, app updates are more likely when
downloads of apps decline. Examining operational agility in
versioning-based app development, Allon et al. (2022)
showed that app firms update their apps when facing quality
threats from poor initial review variance and that app firms
with small product portfolios update more frequently. These
studies did not focus on competition indicators, although
Allon et al. (2022) did examine the effect of the number of
active competitors in a genre at the time an app was launched
on the quality decay rate. Rather, these studies emphasized
how firms manage their updating decisions based on
information about their own app or firm characteristics. Our
study extends this research by examining app updating as a
competitive action, and thus through the lens of competitive
dynamics. Rather than considering only one or two
indicators of the app’s past performance, we examine three
types of competitive indicators that can be observed from
data made visible by the platform. Specifically, we provide
a robust examination of the influence of an app’s own
competitive position (i.e., past performance) on app update
competitive actions. Notably, we also consider the influence
of a robust set of competitive indicators (i.e., apps’
competitors’ actions and indicators of an app’s relative
competitive position) on app update competitive actions.
to competition between complementors, rather they are uniform changes to
the ecosystem. Our interest is in how competition influences app updates,
and therefore, we control for the platform changes (i.e., iOS updates and
supported devices), but we do not hypothesize these effects.
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
(1) Observable indicators of app s competitive position
H1a (-): Rank
H1b (-): Average star rating
H1c (+): Rating volume
(2) Observable indicators of app s competitors actions
H2a (+): Competitors updates
H2b (+): New competitors
(3) Observable indicators of app s relative competitive
position
H3a (-): Relative average star rating
H3b (+): Relative rating volume
H3c (-): Relative portfolio diversity
Figure 1. The Influence of Competitive Indicators on App Update Competitive Actions
We draw our independent variables from the two literature
bases described above: competitive dynamics and software
update management. First, past performance as a driver of
competitive action has been theorized and tested in the
competitive dynamics literature (Ferrier, 2001; Smith et al.,
2006; Young et al., 1996). Ferrier (2001, p., 862) states that
“despite the common use of performance as an outcome
variable, the important issue for organizations is how past
performance impacts preparedness and motivation for future
action.” Performance metrics prior to the app update provide
the app firm with a real-time gauge of the app’s competitive
position that can be used to inform decisions regarding app
update competitive actions. Indicators of past performance
curated by the platform that may drive an app update
competitive action include rank, average star rating, and star
rating volume. Although the general logic of the influence of
past performance on competitive actions has been tested
(Ferrier, 2001; Smith et al., 2006; Young et al., 1996), to the
best of our knowledge, our exact measures of past
performance in the game app market have not been studied in
the competitive dynamics literature. Second, although not
theorized as past performance using a competitive dynamics
lens, the update management literature has shown that
indicators of past performance such as lagged downloads and
initial review variance are drivers of app updates (Allon et al.,
2022; Comino et al., 2019). Together, the two literature
streams suggest that indicators of an app’s past performance
(i.e., competitive position) may influence app update
competitive actions. Therefore, one type of competitive
indicator we examine in this study is past performance—
specifically, indicators of an app’s competitive position: rank,
average star rating, and rating volume.
Competitive action
App update release
Controls:
• iOS update
• Number of supported devices
• App age
• App subcategory
• Number of app firm s app categories
• Number of competitors
• Number of competitors apps
• Weekend
• Holiday
• Free app
Although outside the scope of update management research
(e.g., Allon et al., 2022; Comino et al., 2019), competitive
dynamics research provides general guidance regarding
predictors of competitive actions beyond past performance
(e.g., Chen & Miller, 2012; Smith et al., 2006; Turner et al.,
2010; Zucchini et al., 2019). First, that competitors’ actions
will elicit competitive responses is a central tenet of
competitive dynamics theory (Smith et al., 2006). In the
packaged software industry, Turner et al. (2010) found that
software firms are increasingly responsive to their
competitors’ updates when market concentration increases.
Moreover, studies have shown that a build-up of rivals’
actions creates competitive pressure that prompts firms to take
action (Hsieh & Hyun, 2016; Zucchini et al., 2019). The
number of an app’s competitors’ app updates provides an
aggregate of the competitive actions taken by the app’s
competitors. Although to the best of our knowledge it has not
been studied in our context, it is logical to propose that an
accumulation of competing apps’ updates may stimulate app
update competitive actions.
Second, competitive dynamics researchers have argued that
high entry barriers decrease intense competition (Smith et al.,
2006). However, entry barriers are low on app stores
(Boudreau, 2012; Lee & Raghu, 2014), which means that app
firms will experience competitive pressure from new entrants
(Smith et al., 2006). On app stores, new competitors are most
visible as new entrants on ranking lists. Although to our
knowledge, it has not been studied in our context, it is logical
to suggest that competitive pressure will build as new
competitors enter the ranking lists, increasing the likelihood
MIS Quarterly Vol. 47 No. 3 / September 2023 1183
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
of an app update to ward off the competitive threat. We thus
propose that two observable indicators of an app’s
competitors’ actions may stimulate app update competitive
actions: competitors’ updates and new competitors.
Third, Chen and Miller (2012, p. 138) state that “relativity is
an essential premise—the notion that a firm’s strategy and
market position must be examined within the context of and
vis-à-vis its competitors’ strategies and positions.” Perceived
relative quality involves assessing external perspectives on
quality relative to competitors (Gale & Buzzell, 1989). It has
been shown that relative market quality positively affects
business performance through its effects on market position
(Phillips et al., 1983). It is thus logical to suggest that relative
consumer ratings prior to the release of an update (i.e., relative
past performance) may be a driver of app update competitive
actions. Rating volume can represent consumer interest in a
product (i.e., buzz). Luo and Zhang (2013) found that both a
firm’s own and its rivals’ buzz can influence firm value;
specifically, rivals’ buzz volumes decrease a firm’s returns.
Therefore, relative consumer rating volume prior to the
release of an update may also be a driver of app update
competitive actions. To our knowledge, these relative
competitive indicators have not been studied in our context.
However, the general logic of examining relative competitive
position is supported by the competitive dynamics literature
(Chen & Miller, 2012).
Management scholars have classified common competitive
strategies on a continuum from prospectors to defenders
(Miles & Snow, 1986; Slater & Narver, 1993). Prospectors
seek new product and market opportunities and defenders
attempt to aggressively protect their product and market
(Slater & Narver, 1993). Each game app can list up to two
game subcategories (e.g., Puzzle), and an app firm may
produce multiple games in different subcategories. App firms
with games in more subcategories than their competitors are
more likely to be prospectors, and prospectors are less likely
to aggressively defend their product, which suggests they may
update less. Conversely, app firms with games in fewer
subcategories are more likely to be defenders, and defenders
aggressively protect their app’s competitive position, which
suggests they may update more. Some support for this premise
is provided by Allon et al. (2022), who found that app firms
with small product portfolios are more likely to update.
Moreover, app firms that have apps in multiple subcategories
are more likely to compete with the same competitors in
multiple subcategories, and multi-market contact decreases
competitive actions because competitors have increased
opportunities to retaliate (Gimeno & Woo, 1996). To the best
of our knowledge, the influence of relative portfolio diversity
on app update competitive actions has not been studied, but
the general logic is supported in the competitive dynamics and
update management literature. We thus propose that three
1184 MIS Quarterly Vol. 47 No. 3 / September 2023
observable indicators of an app’s relative competitive position
may stimulate app update competitive actions: relative star
rating, relative rating volume, and relative portfolio diversity.
Observable Indicators of an App’s
Competitive Position
Competitive dynamics describes a process by which firms
jockey to improve their competitive positions (Ferrier, 2001);
thus, competitive actions are often taken when conditions are
opportune to overtake competitors (Ferrier et al., 1999; Smith et
al., 2006). Firms attempt to improve their competitive positions
because there are advantages to being a market share leader
(Ferrier et al., 1999). On app stores, the advantages of market
leadership, designated by a high position on ranking lists, have
been quantified by research showing that the performance
benefit is greater the higher the app’s ranking (Garg & Telang,
2012; Ifrach & Johari, 2014). Specifically, research has shown
that an app that moves from the 20th position to the first position
on a ranking list can experience a doubling of demand (Ifrach
& Johari, 2014) and top-ranked apps are downloaded up to 150
times more than an app with a rank of 200 (Garg & Telang,
2012). It has also been demonstrated that top apps have better
utilities than apps that rank lower on the ranking lists (Carare,
2012). Lee and Raghu (2014) found that higher initial rank
influences sales and therefore the survival of apps on the top
charts of the Apple App Store. It has been argued that the
temporary advantage of rank for game apps stems from
informational cascades that result in a steady stream of new
users who help prolong the app’s product lifecycle (Yi et al.,
2019). Firms are thus incentivized to take competitive actions
to improve an app’s position on the platform’s ranking lists. An
app firm that observes that its app’s rank is increasing (i.e.,
positive past performance) may capitalize on this opportunity to
move ahead of competing apps on the ranking lists by
leveraging an offensive competitive action to boost the app’s
upward momentum. Specifically, this suggests that when the
app’s past performance indicator of rank increases, so does the
likelihood of an app update competitive action.
The competitive dynamics literature has argued that good past
performance can make a firm complacent and decrease
competitive actions (Ferrier, 2001; Smith et al., 2006).
Contradictorily, in the software industry, results show that good
past performance increases competitive actions (Smith et al.,
2006; Young et al., 1996). This suggests that indicators that an
app is doing well (e.g., moving up on ranking lists) will likely
increase competitive actions in the app game market. The logic
for this association stems from research in competitive
dynamics that describes a battle to dethrone the current market
leader through competitive actions that improve challengers’
competitive positions (Ferrier et al., 1999). Researchers have
also found that firms that compete aggressively and quickly to
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
carry out competitive actions are less likely to experience
dethronement (Ferrier et al., 1999), which suggests that
aggressive competitive actions when past performance is good
could help an app sustain its current rank, if not improve its rank
further. There are thus incentives to quickly and rapidly update
when an app is doing well to achieve a better competitive
position and ward off competitors seeking to dethrone the app.
Updating when experiencing success is also a strategy used in
traditional software development, where researchers explain
that once a software product becomes accepted by the market,
firms attempt to capitalize on this advantage by improving the
software’s quality and integrating enhancements (Grady, 1987).
Zahra and Bogner (2000, p. 142) state that “in a dynamic
environment, frequent product upgrades and extensions are
necessary to capitalize on the changes in a firm’s industry and
achieve profitability.” There are large numbers of competitors
on app stores, and app firms must fight for placement on the
ranking lists (Datta & Kajanan, 2013; Garg & Telang, 2012). It
has been empirically demonstrated that updating an app in the
Apple iTunes Store will not only increase the chances of an app
entering the ranking lists but also prolong an app’s success on
them by approximately 1.3 weeks per update (Kajanan et al.,
2012). Therefore, the software development literature also
alludes to the use of app updates when apps are experiencing
success as offensive competitive actions to further improve or
sustain their competitive positions.
The advantages of market leadership in terms of rank on the
ranking lists are clear. This suggests that rank is a key
competitive indicator, and it would thus behoove app firms to
observe and react to rank changes. Specifically, the logic of
competitive dynamics suggests that leveraging an app update
competitive action when an app’s rank is increasing (i.e., past
performance is good) may ultimately provide a boost that could
help the app dethrone its competitors from their market
positions. It is useful to repeat that the logic of competitive
dynamics suggests a longitudinal process in which an indicator
of past performance (e.g., increasing rank) at time t-1 prompts
a competitive action (e.g., an app update) at time t, which
hopefully improves future performance (e.g., rank increases
further) at time t+1. That prior studies have illustrated the
performance benefits of being a market leader (i.e., high rank)
(Carare, 2012; Ifrach & Johari, 2014) showcases the importance
of observing this indicator of past performance and basing app
updating decisions on changes to it. Following the logic of
competitive dynamics, we propose that when an app’s position
on the ranking lists improves (i.e., its past performance is good),
the app firm will release an app update.
H1a: As the rank of an app increases, the likelihood of an app
update competitive action increases.
Another key indicator of past performance is the star rating of
an app, which reflects how the app is performing with its
customer base. Customer feedback on the app store is a real-
time gauge of customer satisfaction (Liu et al., 2014), and
customer satisfaction is a key source of competitive advantage
(Müller, 1991). A firm’s success depends on satisfying it
customers, and firms that cannot do so “are likely to lose market
share to rivals who offer better products and service at lower
prices” (Simon & Gómez, 2014, p. 371). Negative word of
mouth (WOM) also increases the difficulty of obtaining new
customers (Samson, 2006) and negative ratings have been
shown to have a stronger impact on market share than positive
ones (Chevalier & Mayzlin, 2006). App firms that experience
customer satisfaction issues therefore risk losing market share
and can be more easily dethroned by their competitors. Frequent
incremental product upgrades can help firms compete in
hypercompetitive environments by quickly addressing
customers’ needs (Zahra & Bogner, 2000). In fact, Allon et al.
(2022) found that when faced with intense competition, apps
that do not frequently update face a greater quality decay rate,
which suggests that in hypercompetitive markets, updating is
critical to sustaining quality perceptions (e.g., ratings and
reviews). In a hypercompetitive environment, it is thus crucial
to observe an app’s ratings and reviews (i.e., past performance)
and quickly take defensive action by releasing an app update
when customer satisfaction falters.
Online WOM is widely used by customers to inform purchase
decisions (Gu et al., 2012), and it is therefore critical to
manage it well. Customer feedback, in the form of ratings and
reviews, has been found to be an important driver of the
success of games (Cox, 2014; Liu et al., 2014; Yi et al., 2019).
For digital games, maintaining positive customer feedback is
crucial because potential customers can use WOM to form an
initial perception regarding a game’s fit with their preferences
(Chellappa & Shivendu, 2005; Liu et al., 2014). Yi et al.
(2019, p. 9) state that “the high satisfaction level of other
consumers may reduce the uncertainty related to the game’s
quality, which encourages a continuous flow of new users and
higher rankings.” Digital games are considered experience
goods (Chellappa & Shivendu, 2005; Mudambi & Schuff,
2010), and WOM is a critical determinant of the long-term
success of experience goods (De Vany & Walls, 1999;
Dellarocas et al., 2007). Positive user feedback can lead to an
increased demand for apps (e.g., downloads) (Ghose & Han,
2014), and therefore, can help the app survive on the ranking
lists (Lee & Raghu, 2014). Conversely, negative customer
feedback can have a deleterious impact on the ability of an app
to break into the ranking lists and, notably, can reduce the
presence of an app on the ranking lists by approximately four
days (Kajanan et al., 2012). For game apps, it may thus be
advisable to monitor customer feedback for signs of trouble
and take defensive competitive action to avoid being
overtaken by competitors.
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James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
It is important to guard against negative customer feedback
because it is easily spread and can lead to customer loss
(Blodgett et al., 1993). It is possible to respond to negative
WOM; however, failing to adequately respond to it can have a
negative impact on a firm (e.g., decrease repatronage intentions
or increase negative WOM) (Blodgett et al., 1993). Quickly
addressing customer complaints in ways that customers regard
as fair is key to reducing damage to the firm (Blodgett et al.,
1993; Mattila & Mount, 2003). Research has demonstrated that
customer agility can lead to better sales, but there are limits
because overresponding to customer demands can lead to
decreased performance (Zhou et al., 2018). Additionally, there
is a benefit to highly positive consumer sentiment (i.e.,
customers that love rather than like the firm), which indicates
that carefully attending to WOM can have advantages
(Clemons et al., 2006). It is therefore critical to quickly and
adequately respond to negative customer feedback to ensure
future performance, and one possible response in our context is
to release an app update.
Zahra and Bogner (2000, p. 146) recommend that a new
software venture should “upgrade its products by quickly
modifying or extending its existing offerings … [because]
upgrades can enable the venture to maintain customer loyalty.”
App firms can easily respond to customer feedback by releasing
product updates (Lee & Raghu, 2014; Lee & Raghu, 2016), and
developers are willing to incorporate customer feedback into
their software update decisions (Di Sorbo et al., 2016; Ko et al.,
2011; Nayebi et al., 2016). In one study, 51% of respondents
stated they pay attention to user reviews on the app stores and
incorporate user feedback into their update decisions (Al-
Subaihin et al., 2021). The proposition that app firms
strategically update in response to customer feedback is also
supported in Lee and Raghu (2016). More agile versioning (i.e.,
updating) is associated with higher market risk, which is defined
as the variance of the initial reviews of the app (Allon et al.,
2022). This finding suggests that firms will update when their
customer ratings or reviews indicate a risky market position.
Correspondingly, we propose that when an app’s average star
rating5 declines (i.e., its past performance is poor), the app firm
will release an app update.
H1b: As an app’s average star rating decreases, the likelihood
of an app update competitive action increases.
People who download an app are not required to assign it a
star rating or leave a comment. Consequently, the count of
customers who do leave feedback serves as a gauge of
interest (i.e., buzz). Therefore, another key indicator of past
5
We use the average star rating here as our measure of consumer sentiment.
When an individual decides to leave feedback about an app, they are
required to assign a star rating, but leaving written feedback is optional.
Therefore, the average star rating and volume of star ratings are more
1186 MIS Quarterly Vol. 47 No. 3 / September 2023
performance is the buzz generated by the app (i.e., rating
volume). Increased rating volume has been associated with
better future performance of apps. For example, higher
volumes of user comments increase survival on the ranking
lists (Lee & Raghu, 2014) and positively influence the
demand for mobile apps (Ghose & Han, 2014). Moreover,
studies in other contexts demonstrate that the volume of user
feedback can be more important to performance (e.g., sales)
than the product evaluation (e.g., star rating) (Duan et al.,
2008; Gu et al., 2012; Liu, 2006). One explanation offered
for the importance of customer feedback volume is that the
more users comment on a product, the more awareness of
that product is generated (Berger et al., 2010; Duan et al.,
2008; Liu, 2006). The product is being talked about, so even
if the customer feedback is negative, the buzz surrounding
the product can lead to better performance (Han et al., 2020).
The volume of customer feedback can thus be an important
goal for app firms that wish to stand out in an overcrowded
market. These findings suggest that monitoring buzz (i.e.,
past performance) and capitalizing on improvement
opportunities through app updates when customers are
interested in the app may improve future performance.
It is important for companies to obtain buzz because it
signals awareness of and affection for the company or brand
to others (Chevalier & Mayzlin, 2006; Li & Hitt, 2008; Luo
& Zhang, 2013). It has been empirically demonstrated that
buzz can affect firm value and performance (Li & Hitt, 2008;
Luo & Zhang, 2013). Notably, research has illustrated that
“a positive shock in a firm’s own buzz rating and volume …
will help attract more customer interest in the firm” (Luo &
Zhang, 2013, p. 232). Therefore, competitive actions, such
as app updates, that can be strategically deployed to increase
an app’s buzz can be beneficial. Researchers have found that
companies do deploy tactics to help generate buzz (i.e.,
encourage WOM). For example, a firm’s information release
or advertising strategies can be manipulated to increase buzz
(Campbell et al., 2017). Online WOM can also be influenced
by press releases and personalized responses to individual
customers (Hewett et al., 2016). Other suggested tactics
include firms engaging in product redesign to reduce the
influence of negative reviews or offering price discounts to
generate more reviews to minimize the impact of negative
bias (Li & Hitt, 2008). Product redesign, which can be
accomplished through app updates, can thus be used to
manipulate buzz. By adding new features or fixing defects,
app firms can leverage app updates to keep customers
engaged with and talking about the app.
consistent measures. However, we used the sentiment of the written
feedback and the count of the written feedback to test the robustness of the
model in the Appendix, which serves as a companion to this article.
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
The volume and speed of managerial responses to customer
reviews increase the future volume of customer reviews
(Sheng, 2019). In her study of online reviews, Sheng (2019)
found that firms that are more responsive to customers’
reviews generate a larger review volume than less responsive
firms. Moreover, it was revealed that the speed of response
is important to generating larger review volumes (i.e., more
buzz). Chen et al. (2019) also found that managerial
responses increase the volume of subsequent customer
reviews. The managerial response considered in these
studies is a written reply to a customer comment, but an app
update can also be deployed as a response to customer
feedback. An app update can provide fixes that respond to
customer requests or complaints and may also provide new
functionality that can drive user engagement (Fleischmann
et al., 2016). Quick and plentiful firm responses can thus
help generate higher volumes of future reviews (Sheng,
2019). Consequently, updating apps when they are
generating buzz can help app firms capitalize on market
opportunities to generate future buzz, which may improve
their competitive positions (Duan et al., 2008; Gu et al.,
2012; Liu, 2006). Star rating volume is thus a variable that
should be continuously monitored and increases to it should
prompt offensive competitive action. Correspondingly, we
propose that when the volume of an app’s feedback increases
(i.e., its past performance is good), the app firm will release
an app update.
H1c: As an app’s volume of ratings increases, the likelihood
of an app update competitive action increases.
Observable Indicators of an App’s Competitors’
Actions
Li et al. (2010, p. 639) state that “in their pursuit of
competitive advantage, firms make offensive and defensive
competitive moves” and that these actions “position firms in
their competitive environment.” Hypercompetitive
environments are characterized by aggressive competition in
which firms exploit new market opportunities and preempt
competitors’ efforts to improve their competitive position
(Smith et al., 2006). In fact, firms that carry out more
competitive actions experience market share gains and
improved performance (Young et al., 1996) and are better able
to fend off challengers (Ferrier et al., 1999). App firms in the
game app market are thus likely to aggressively fend off
competitors to defend their competitive position.
Some competitors’ actions are highly visible on the app store,
such as when competitors update their apps or new
competitors enter ranking lists. The literature has suggested
that visibility regarding competitors’ actions is crucial to
competitive responses (Chen & Hambrick, 1995; Chen &
Miller, 1994). Visibility has been described as “the amount of
information available about a competitive move,” where
“highly visible moves tend to elicit competitive responses”
(Chen & Hambrick, 1995, p. 458). Chen and Miller (1994)
found that high-visibility and low-difficulty competitive
moves were likely to induce rival responses. Releasing an app
update is not an excessively difficult competitive move.
Consequently, app firms may respond to competitors’ app
updates by releasing their own. Similarly, the appearance of a
new competitor on the ranking lists is highly visible, and it is
not excessively difficult to respond to this threat by releasing
an app update to defend the app’s competitive position.
An app update falls under what Gnyawali et al. (2010, p. 605)
term “product innovation,” which includes “moves or actions
by the focal firm focused on innovation and improvement on
a particular product or service, including inventions,
development, improvements.” Such competitive actions are
perceived as threats and can trigger competitive responses
(Aboulnasr et al., 2008; Chen & MacMillan, 1992; Smith &
Grimm, 1991). Firm innovativeness has been shown to have a
positive effect on firm performance most dramatically under
conditions of high competitive intensity and market
turbulence (Tsai & Yang, 2013), which suggests that there is
a benefit to innovating when competition and customer
preferences change rapidly. Moreover, there is evidence that
innovation-related competitive actions are key to the survival
of software firms (Li et al., 2010). In the desktop software
market, the timing of the release of generational software
versions has been shown to be responsive to competitor
innovation in concentrated markets (Turner et al., 2010).
Specifically, at high levels of market concentration, software
companies are more likely to respond to a major software
version release by releasing their own (Turner et al., 2010).
Much of the competitive dynamics research has focused on
action and response dyads; that is, a firm taking a competitive
action and the response of a competitor to that action (Chen &
Miller, 2012; Hsieh & Hyun, 2016; Zucchini et al., 2019).
Hsieh and Hyun (2016, p. 2189) posit that “it is more
reasonable to view that a firm responds to the aggregate
impact of multiple competitors’ actions.” Similarly, Zucchini
et al. (2019, p. 659) propose that “as firms observe rival
actions accumulating they perceive increased ‘competitive
pressure’ to respond to protect their competitive position.” As
the number of competitors’ actions increase, firms are more
likely to take their own competitive action in response (Hsieh
& Hyun, 2016). Moreover, the more competitive actions taken
by rivals since a firm’s last competitive action can also
increase the magnitude of its next action (Zucchini et al.,
2019). Correspondingly, we propose that as the number of an
app’s competitors that have released an app update increases,
the likelihood of an app update competitive action increases.
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James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
H2a: As the number of an app’s competitors that have
released an app update increases, the likelihood of an app
update competitive action increases.
One of Porter’s (1979) five competitive forces is the threat of
new entrants. High entry barriers and retaliation from
incumbents lessen the threat of new entrants (Porter, 1979).
Market entry can provide an approximation of rivalry
intensity; that is, “the higher the entry rate, the more intense
the rivalry” (Baum & Korn, 1996, p. 257). App firms in the
game app markets face intense competition from new market
entrants. For example, 580 new game apps were submitted to
the Apple App Store in March of 2022 (Statista, 2022b). The
app stores have been described as overcrowded, such that new
apps can get lost before being given a chance to prove their
worth (Siegfried et al., 2015; Yi et al., 2019). Consequently,
new apps that achieve rank are visible, looming threats. New
competitors that encroach upon an app’s position on the
ranking lists visibly threaten the app’s competitive position
and may stimulate a competitive response.
Economic growth is characterized by existing firms
innovating to improve existing products while new firms
offer original innovations to the market in attempts to
displace the incumbents (Acemoglu & Cao, 2015).
Incumbents that do not respond to new competitors risk
falling into a “death spiral” in which they lose customers and
market share (Clemons et al., 1996, p. 66). Firms that do not
continuously innovate and respond slowly to competitive
threats may find it difficult to defend their market positions
(Gatignon et al., 1997). In highly competitive markets, firms
innovate to escape the competition, and competition drives
innovation because technological advancement is necessary
to stay in contention (Qian & Wang, 2017). A first-mover or
market pioneer advantage can stem from, for example,
shaping customer preferences early, gaining a reputation as
a market leader, or technological leadership (Kuester et al.,
2000). However, later market entrants can benefit from
incumbents educating customers about the product category
and from observing customers’ responses to incumbents’
products (Soberman & Gatignon, 2005). Although later
entrants must steal market share from incumbents (Ketchen
et al., 2004), innovative late-market entrants may pose more
significant problems to incumbent firms because they may
have higher market potential (Kuester et al., 2000; Shankar
et al., 1998). Therefore, app firms must innovate and
retaliate to escape new competitors in the hypercompetitive
app stores because barriers to entry are low and competition
6
We examine relative rating and rating volume, which are variables that
compare the focal apps to their competition on characteristics corresponding
to the focal app-only variables tested for H1b and H1c. Because our
1188 MIS Quarterly Vol. 47 No. 3 / September 2023
is intense. Consequently, we propose that as the number of
new competitors the app faces increases, it becomes more
likely that the app firm will release an app update.
H2b: As the number of new competitors increases, the
likelihood of an app update competitive action increases.
Observable Indicators of an App’s Relative
Competitive Position
One of the key determinants of competitive strategy according
to Porter (1985) is the relative competitive position of a firm in
an industry. Relative competitive position can be characterized
in many ways, including relative market share, relative
perceived quality, or relative technological leadership (Oliva et
al., 1988; Varadarajan & Jayachandran, 1999). It has been
argued that assessing relative competitive position is critical to
improving a firm’s position (Oliva et al., 1988). Not
understanding the firm’s relative competitive position can lead
to underresponding, which can result in the firm losing market
position, or overresponding, which can result in wasted
resources (Oliva et al., 1988). Luo and Zhang (2013) argue that
although firms may exercise more control over their own
metrics, it is critical to consider competitors’ metrics to
understand their influence on firm value. An app firm may thus
benefit from comparing its app against competing apps to
determine if there is an opportunity to improve the app’s market
position, or conversely, to correct course if the comparison
suggests the app’s competitive position is threatened.
In arguing hypothesis H1b,6 we illustrated the importance of
maintaining positive consumer sentiment, and quickly
responding to customer complaints. Similar logic would
suggest that if an app’s ratings relative to its competitors fall,
the app’s market position will be threatened and defensive
action should be taken. Gale and Buzzell (1989) introduced
the concept of relative perceived quality, which describes
external quality perceptions (i.e., customers’ views of the
quality) of a product, relative to its competitors. Relative
product quality has been found to affect firm performance
indirectly through its positive effect on relative market
position (Phillips et al., 1983). This suggests that it is
important to correct negative external quality perceptions
before they can damage the product’s competitive position.
Peteraf and Bergen (2003, p. 1031) state that “what drives
consumer choice is not simply whether or not a product can
satisfy a given need, but how well it can do so.” Customers
competitor definition uses the ranking information, it is not statistically
valid to test relative ranking.
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
make product comparisons based on quality; consequently, it
is critical for an app to receive customer ratings on par with or
better than its competitors to maintain and grow its user base
and stay competitive. Relative star rating is thus a variable that
should be continuously monitored and decreases in it should
prompt defensive action. Correspondingly, we propose that
when an app is experiencing decreasing ratings relative to its
competitors (i.e., poor past performance relative to its
competitors), an app update will be released.
H3a: As an app’s relative average star rating decreases, the
likelihood of an app update competitive action increases.
A large number of reviews is an important social cue that
indicates that a product is popular with others (Powell et al.,
2017). Customers sometimes demonstrate a preference for
products that have a large volume of reviews even when the
ratings indicate those products are of poor quality (Powell et
al., 2017). Studies have consistently found that review volume
is important to sales (Babić Rosario et al., 2016; Chevalier &
Mayzlin, 2006; Ho-Dac et al., 2013; Sahoo et al., 2018).
Consumer buzz refers to user-generated comments or reviews
and is an important predictor of firm value (Luo & Zhang,
2013). In fact, even negative buzz can increase both awareness
and purchase intent for some types of products (Han et al.,
2020). Therefore, to be competitive, it is important for app
firms to increase or sustain the buzz surrounding their apps.
Both the firm’s own buzz and its rivals’ buzz can affect firm
value, with the former having a positive effect and the latter a
negative one (Luo & Zhang, 2013). Luo and Zhang (2013, p.
232) noted that “a positive shock in a firm’s own buzz rating
and volume (as well as a negative shock in rival buzz) will
help attract more customer interest in the firm and its
products.” Customers have limited cognitive resources, and
thus, when attention is paid to one product (e.g., app), fewer
resources are available for others (Luo & Zhang, 2013; Yoo
et al., 2019). Research has indicated that responding quickly
and frequently to customer feedback can increase buzz (Chen
et al., 2019; Sheng, 2019), which is desirable because
increased consumer interest can improve an app’s downloads
and position on the ranking lists. The findings of Luo and
Zhang (2013) indicate that this effect may be even more
prominent when the app’s buzz is increasing and its
competitors’ buzz is decreasing because it may be easier to
attract customers’ attention to the buzzworthy app. Relative
rating volume is thus a variable that should be continuously
monitored and opportunities to capitalize on the popularity of
an app should prompt offensive competitive action.
Correspondingly, we propose that an app will update when its
relative rating volume increases (i.e., its past performance is
good relative to its competitors).
H3b: As an app’s relative rating volume increases, the
likelihood of an app update competitive action increases.
In an environment of imperfect competition, there are two
primary marketing strategies: product differentiation and
market segmentation (Smith, 1956). Product differentiation is
an attempt to create or highlight the distinctiveness of the
firm’s product vis-à-vis its competitors, whereas market
segmentation involves playing to the specific needs of subsets
of customers in a market. Smith (1956, p. 5) describes the
difference as “the differentiator seeks to secure a layer of the
market cake, whereas one who employs market segmentation
strives to secure one or more wedge-shaped pieces.”
Competing based on differentiation means that customers
perceive a firm’s product to be unique or believe that it offers
additional benefits that competitors’ products do not, and
differentiation strategies are closely linked to innovation
(Santos-Vijande et al., 2012). There were 18 game
subcategories on the Apple App Store at the time of our data
collection. The game subcategories represent types of games
(e.g., Puzzle), and can be considered app game market
segments. A maximum of two subcategories can be assigned
to an app. App firms that compete in multiple game
subcategories with one or more apps can be considered to have
more diverse portfolios than firms that compete in fewer
subcategories.
An app firm that competes in fewer subcategories than its
competitors will be more reliant on customers in fewer market
segments. When firms compete in multiple markets, basic
concerns include how to leverage position in one market to
improve position in another and how to use one investment to
account for another one being attacked or collapsing (Aaker
& Mascarenhas, 1984; McGrath et al., 1998). Moreover, app
firms that compete in many subcategories are more likely to
engage in multiple-point or multimarket competition
(Chellappa et al., 2010; Gimeno & Woo, 1996; McGrath et
al., 1998) in which they competitively vie for position in
multiple subcategories against the same competitors. Notably,
multimarket competition decreases rivalry intensity (Gimeno
& Woo, 1996; Young et al., 1997). Although we do not
measure multimarket competition directly, there are only 18
subcategories; thus, the more subcategories app firms
compete in, the more likely it is that they will have
overlapping subcategories. Therefore, app firms that compete
in fewer game subcategories than their competitors will be
both more dependent on the focal app and less likely to engage
in multimarket competition.
Competitive strategies have been classified on a continuum
from prospectors to defenders (Miles & Snow, 1986; Slater &
Narver, 1993). Although their performance is similar, the way
that prospectors and defenders operate in their competitive
environments differs. Prospectors seek out new product and
MIS Quarterly Vol. 47 No. 3 / September 2023 1189
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
market opportunities, whereas defenders aggressively protect
their product market (Slater & Narver, 1993). App firms with
games in fewer subcategories are more likely to be defenders
that aggressively protect their apps. Moreover, app firms that
lack portfolio diversity relative to their competition need to
focus their efforts on product differentiation (e.g., adding
features to their apps) to remain competitive. Research has
demonstrated that “firms favor product innovations when the
degree of competition is intense and the innovation costs are
low” and argued that “the rationale behind this result is firms’
desire to escape competition by introducing a distinct product”
(Weiss, 2003, p. 311). Allon et al. (2022) showed that app
firms with smaller product portfolios update more frequently,
which they attribute to the scale economies that can be
attained by firms with larger portfolios coordinating
development. App firms that compete in fewer subcategories
than their competitors may thus release app updates more
frequently to differentiate their apps from competitors’ apps,
thereby intensely and nimbly defending the competitive
positions of their smaller portfolio of apps. Correspondingly,
we propose that as the relative portfolio diversity of an app
firm decreases, the likelihood of an app update being released
will increase.
H3c: As an app’s relative portfolio diversity decreases, the
likelihood of an app update competitive action increases.
Method
Research Setting
Our sample consists of apps from the games category7 of the
Apple App Store. The games category is the largest on the
Apple App Store, with more than 1 million game apps available
2022 (Statista, 2022c). Game app offerings made up more than
13% of the Apple App Store in 2022, with the next closest
category capturing only 10% (business) and all other categories
capturing 9% or less of the market share (Statista, 2022a). The
games category thus provides the largest sample of apps in the
same market. We focus on the game apps that appeared on one
of the 18 subcategory8 ranking lists during our data collection.
Our interest is in examining how observable competitive
indicators shape app update competitive actions, and rank can
be used to define competitors. Therefore, using apps that have
achieved rank at least once during our observation period
provides the desired sample. Our approach is similar to prior
7
https://developer.apple.com/app-store/categories/
8
Apps can be assigned to a maximum of two categories (e.g., “game”) on
the Apple App Store and up to two subcategories (e.g., “arcade,” “puzzle”).
Source: https://developer.apple.com/app-store/categories/
9
We also report results using a different competitor definition as a
robustness check. As an alternative competitor definition to test the
1190 MIS Quarterly Vol. 47 No. 3 / September 2023
literature focusing on a single store or app category or on ranked
apps (e.g., Garg & Telang, 2012; Lee & Raghu, 2014; Liu et al.,
2014; Yin et al., 2014).
To examine the effect of the app’s competitors’ actions and the
app’s relative competitive position, it is necessary to define a set
of competitors of an app. We define an app’s competitors as
those apps that appear within 10 positions (i.e., +/-10) of the
app’s rank on any of the subcategory ranking lists on which the
app appears that day.9 Therefore, the competitors of an app are
those apps that share at least one subcategory in common and
are ranked close (i.e., +/- 10) to the app.
Data
To collect our data, we crawled the top free, top paid, top game,
and each of 18 the subcategory ranking lists for the period of
February 4, 2015, to November 29, 2015. There were 100
ranking positions in both the top free and top paid charts, but
these 200 positions could be filled by mobile apps in any
category. We excluded any non-game apps obtained from the
top free and top paid charts to ensure we had apps that were
similar in nature. The top game chart had 240 positions, and each
subcategory ranking chart also had 240 positions, for a total of
4,560 positions per day available only to apps that listed “game”
as one of their two category choices. Game is a category on the
Apple App Store and the 18 subcategories are the types of games
(e.g., Action, Puzzle, Card). A game app can list up to two
subcategories. A single game can thus appear on multiple charts
(e.g., the top game chart and a subcategory ranking chart).
On each day of the 298-day observation period, we collected the
data required to calculate the variables used in our analyses for
each app appearing at least once during our observation period
on any of the 21 charts. We retrieved additional data from
SensorTower to calculate firm age and obtain the number of
categories in which the 1,155 app firms in our sample had apps.
Our data collection resulted in data for 4,885 game apps. Of
these, 2,293 did not have any updates during our observation
period and were thus excluded from our analysis. We also
excluded 286 apps that had extensive missing values or had both
free and paid versions to control for potential correlation
between the two versions of the same app. The final number of
apps included in our dataset was 2,306. The 2,306 apps updated
an average of 3.5 times during our observation period, and these
2,306 apps represented 80% of the downloads during this period.
robustness of the model, we define competitors as those apps whose median
rank within a subcategory over the data collection period is within five
positions (+/- 5 on the ranking list) of the focal app’s median rank within
that subcategory over the data collection period. These results are provided
in the Appendix, which serves as a companion to this article.
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
Operationalization of Variables
Dependent Variable
The objective of our analysis was to examine how observable
competitive indicators influence app update competitive actions.
Therefore, we defined the dependent variable, Update, as a
binary variable that, for each day, is 1 if the app was updated
(Updatet = 1) on day t and 0 otherwise (Updatet = 0).
Specifically, for each app every day of our data collection period,
we scraped the field “CurrentVersionReleaseDate.”
If CurrentVersionReleaseDatet was not equal to
CurrentVersionReleaseDatet-1, we set Updatet = 1. We
examined this binary decision variable, which considers whether
the app firm updated given the set of independent variables.
Independent Variables
We defined three observable competitive indicators of an app’s
competitive position (i.e., past performance) as independent
variables in our model: rank (Rank), rating (VersionRating), and
rating volume (VersionRatingVolume). Competitors were
defined as any app that appeared 10 spots above or below the
focal app that day on any of the subcategory lists on which the
focal app appeared. As a robustness check, we provide model
results with a second competitor definition in the Appendix. We
defined two observable competitive indicators of the app’s
competitors’ actions as independent variables in our model:
number of new competitors (NewCompetitor) and number of
updates by competitors (UpdatesOfCompetitors). We also
defined three observable competitive indicators of the app’s
relative competitive position as independent variables in our
model: relative rating (RelativeRating), relative rating volume
(RelativeRatingVolume), and relative portfolio diversity
(RelativePortfolioDiversity). The relative measures were
calculated by taking the difference between the app’s variable
(e.g., number of ratings) and the average of its competitors’
variables (e.g., the average of the competitors’ numbers of
ratings). The relative portfolio diversity variable considered the
difference between the number of game app subcategories the
app firm competed in and the average number of its
competitors’ game app subcategories.
We formally define each of the independent variables used to
test our hypotheses in Table 1. Table 2 reports the summary
statistics for all variables. We provide the correlation matrix for
the variables in the Appendix. The correlations between the
variables are reasonably low. We developed three independent
variables to test H1a-H1c. For H1a, we used Rankijt, which is
the natural log of app firm j’s app i’s average subcategory rank
at time t. For H1b, we computed VersionRatingijt as the
average customer star rating since the last version of app
firm j’s app I calculated at time t. For H1c, we defined
VersionRatingVolumeijt, which is the natural log of the count
of the number of customer star ratings since the last version
of app firm j’s app i calculated at time t. Competitive positions
of the current version of the focal app (i.e., past performance)
informed the next app update decision. Therefore, we used only
ratings that customers left for the focal app between the last app
update and the current app update to calculate VersionRatingijt
and VersionRatingVolumeijt.
We developed two independent variables to test H2a and H2b.
For H2a, we defined UpdatesOfCompetitorsijt as the average
number of updates over all competitors of app firm j’s app i at
time t. For H2b, we defined NewCompetitorsijt as the number of
new apps to which the competitor definition applies at time t
that were not previously labeled as a competitor of app firm j’s
app i prior to time t. We developed three independent variables
to test H3a-H3c. To calculate the relative variables, we first
averaged the star ratings and the count of the ratings for the
current releases of all competitors of the focal app at time t. We
also averaged the count of the game subcategories of all
competitors of the focal app at time t. For H3a, we defined the
variable RelativeRatingijt as the difference between app firm j’s
app i’s current version rating and the overall average current
version rating of all its competitors at time t. We defined the
variable RelativeRatingVolumeijt, for H3b as the difference
between app firm j’s app i’s current version rating count and the
overall average current version rating count of all its
competitors at time t. For H3c, we defined the variable
RelativePortfolioDiversityijt as the difference between app firm
j’s subcategory count and the overall average subcategory count
of all its competitors at time t.
Control Variables
We included a set of variables to control for other exogenous
effects that may impact an app firm’s app updates. We
included two possible platform changes. First, we considered
updates to the operating system (iOS), which may force an
update to an app. iOSUpdatet is a dummy variable that equals
1 if the iOS is updated at time t and 0 otherwise. An app may
also need to be updated to be compatible with new hardware
devices (Arora et al., 2010; Choudhary & Zhang, 2015;
Temizkan et al., 2012). Therefore, we included
NumberOfSupportedDevicesijt, which counts the number of
supported hardware devices for each app i at time t to capture
the release of new hardware devices. We controlled for the
age of the app, ProductAgeijt, which we computed as the
natural log of the number of days since app firm j’s app i’s
initial release date at time t. We also included the natural log
of the square of the product age as a control for a potential
nonlinear relationship between product age and app update
release, ProductAge2ijt (Wang et al., 2018).
MIS Quarterly Vol. 47 No. 3 / September 2023 1191
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market

Table 1. Variable Definitions

Variable Definition
Updateijt Dummy variable that is 1 if app firm j’s app i has an update at time t and 0 otherwise.
Rankijt The natural log of app firm j’s app i’s average subcategory rank at time t.
VersionRatingijt The average rating of app firm j’s app i at time t since its last version.
VersionRatingVolumeijt The natural log of the number of ratings of app firm j’s app i at time t since its last version.
UpdatesOfCompetitorsijt Average number of updates over all competitors of app firm j’s app i at time t.
NewCompetitorijt The number of new competitors of app firm j’s app i at time t.
RelativeRatingijt Difference between app firm j’s app i’s average rating and the overall average customer
rating of all its competitors at time t.
RelativeRatingVolumeijt Difference between app firm j’s app i’s number of ratings and the overall average number
of ratings of all its competitors at time t.
RelativePortfolioDiversityijt Difference between app i’s app firm j’s number of subcategories and the average number
of subcategories of all its competitors at time t.
iOSUpdatet Dummy variable that is 1 if the iOS has an update at time t and 0 otherwise.
NumberOfSupportedDevicesijt Number of supported hardware devices for app firm j’s app i at time t.
ProductAgeijt The natural log of the number of days since app firm j’s app i’s initial release date at time t.
FocalFirmAppCategoriesjt Number of app categories of app i’s app firm j at time t.
NumberOfCompetitorsijt The natural log of the number of competitors of app firm j’s app i at time t.
NumberOfCompetitorAppsijt Average number of game apps offered by app i’s competitors’ app firms at time t.
Weekendt Dummy variable that is 1 if it is a weekend at time t and 0 otherwise.
Holidayt Dummy variable that is 1 if it is a U.S. holiday at time t and 0 otherwise.
FreeAppij Dummy variable that is 1 if app firm j’s app i is a free app and 0 otherwise.

Table 2. Summary Statistics

Variable N Average SD Min Max
Update 345,715 0.016 0.126 0 1
Rank 345,715 4.542 0.883 0.693 5.485
VersionRating 345,715 4.171 0.585 1 5
VersionRatingVolume 345,715 4.475 2.140 0 12.206
UpdatesOfCompetitors 345,715 0.011 0.022 0 0.300
NewCompetitor 345,715 1.490 1.352 0 4.127
RelativeRating 345,715 -0.050 0.494 -3.250 2.500
RelativeRatingVolume 345,715 -0.695 1.175 -8.579 3.346
RelativePortfolioDiversity 345,715 0.254 2.565 -5.944 11.316
iOSUpdate 345,715 0.036 0.187 0 1
NumberOfSupportedDevices 345,715 19.140 2.071 3 26
FocalFirmAppCategories 345,715 3.802 2.742 1 18
NumberOfCompetitors 345,715 28.170 8.595 1 47
NumberOfCompetitorApps 345,715 4.592 2.713 0.050 31.500
ProductAge 345,715 6.505 0.911 0 7.882
Weekend 345,715 0.263 0.440 0 1
Holiday 345,715 0.008 0.090 0 1
FreeApp 345,715 0.952 0.213 0 1

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 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
We developed a dummy variable FreeAppijt to indicate
whether an app i was paid or free at time t. We controlled
for the number of app categories in which the focal app
firm has apps through FocalFirmAppCategoriesjt,
controlled for the number of competitors of each app i at
time t through NumberOfCompetitorsijt, and controlled for
the average number of game apps offered by the focal app’s
competitors at time t through NumberOfCompetitorApps ijt.
Finally, we used the dummy variables Weekendt and
Holidayt to control for the timing effect of app updates on
weekends or U.S. holidays.
Model Development
We estimated app firms’ app update competitive actions
using a discrete choice model to examine the influence of the
independent variables on the app update release. Variations
of discrete choice models have been widely used in fields
such as IS and marketing to study user or consumer decision-
making processes (e.g., Berry, 1994; Ghose & Han, 2011;
Murthi & Sarkar, 2003). In our setting, an app firm decided
whether to release an update for app i in each time period t.
We considered app update release competitive actions from
a binary choice set (i.e., whether or not to release an update).
Therefore, we utilized a utility-based multilevel mixed-
effect logit model with binary choices. For app firm j’s app
i, we specified the latent utility it received at time t as a
function of the above-defined variables as follows:
Uijt = β0 + β1Rankijt-1 + β2VersionRatingijt-1 +
β3VersionRatingVolumeijt-1 +
β4NewCompetitorsijt-1 + β5UpdatesOfCompetitorsijt-1 +
β6RelativeRatingijt-1 +
β7RelativeRatingVolumeijt-1 + β8RelativePortfolioDiversity
+ αXijt + ξi + ζj + δi + εijt, (1)
where Xijt is a vector of the control variables and the error
term 𝜀𝑖𝑗𝑡 is from the extreme value distribution. The indirect
utility from not releasing an update at time t is 𝑈𝑖𝑗0𝑡 = 𝜀𝑖𝑗0𝑡 .
Because an app firm may have multiple apps that require
updates, the odds of one of its apps releasing an update could
be correlated with the odds of another of its apps releasing
an update. Therefore, we used a two-level nested logit model
to accommodate the nature of the dataset. A two-level nested
logit model allows for correlation among the update release
10
We estimate the multilevel mixed effect logit model by maximizing
likelihood with adaptive Gaussian quadrature, which works well for
odds of apps from the same app firm, as well as correlation
among the update release odds for the same app over time.
In addition, we considered a mixed-effect model at different
levels to best accommodate time-invariant unobserved
effects from apps and app firms. Such unobserved effects
may include the quality of the apps, market tastes, and/or app
firms’ development experience or capabilities, which could
affect app update release decisions and are unobserved to the
researchers. In Equation (1), ξi and ζj are the app and app
firm-level random effects, while δi is the app-level fixed
effect that allows for correlation with the independent
variables (Jabr et al., 2014).10 All independent variables and
control variables were time-lagged to control for potential
endogeneity among independent variables and the outcome
variable. Our model specification provides more flexibility
than a traditional logit model because it accounts for
correlation among alternatives and accommodates latent
multilevel effects for apps and app firms. To assess the
importance of adopting a nested logit model over a
traditional logit model, we conducted likelihood ratio (LR)
tests to compare the models (Gu et al., 2012). Our result
suggests that a nested logit model significantly improves the
model over a traditional logit model with a p-value smaller
than 0.0001 in all the LR tests. To test for potential
multicollinearity among independent variables, we
computed the tolerance and variance inflation factors (VIFs)
for all the models. The VIF values for all variables in our
models are below two, which suggests no multicollinearity
problems in our results (O’Brien, 2007).
Model Results
Table 3 presents the results for the main model. We
examined the influence of three types of observable
competitive indicators on app update competitive actions.
First, we examined three observable indicators of an app’s
competitive position: ranking (H1a), rating (H1b), and rating
volume (H1c). We found support for all three hypotheses,
confirming that app update competitive actions are taken in
response to changes in an app’s competitive position (i.e.,
the app’s past performance). Specifically, app update
competitive actions are taken when an app’s ranking
increases, which supports H1a. Research has found that
obtaining a higher position on the ranking lists can increase
the financial benefits reaped from the app (Carare, 2012; Garg
& Telang, 2012; Ifrach & Johari, 2014).
approximating the log-likelihood for a panel dataset (Grilli & Rampichini,
2007; Rabe-Hesketh et al., 2005).
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James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market

Table 3. Estimation Results for the App Update Release

Variable Logit† Nested logit
Rank -0.172*** (0.028) -0.143*** (0.028)
VersionRating -0.200*** (0.035) -0.198*** (0.034)
VersionRatingVolume 0.117*** (0.015) 0.123*** (0.010)
NewCompetitor 0.074*** (0.016) 0.078*** (0.014)
UpdatesOfCompetitors 1.090* (0.595) 1.001* (0.579)
RelativeRating -0.036 (0.056) -0.063 (0.053)
RelativeRatingVolume 0.107*** (0.024) 0.072*** (0.024)
RelativePortfolioDiversity -0.027*** (0.009) -0.040*** (0.015)
iOSUpdate 0.201*** (0.061) 0.201*** (0.060)
NumberOfSupportedDevices -0.012 (0.009) -0.009 (0.009)
FocalFirmAppCategories -0.025** (0.010) -0.043*** (0.012)
NumberOfCompetitors 0.005* (0.003) 0.004 (0.003)
NumberOfCompetitorApps -0.022*** (0.008) -0.018** (0.008)
ProductAge 0.189 (0.115) 0.168 (0.120)
ProductAge2 -0.048*** (0.011) -0.044*** (0.011)
Weekend -1.377*** (0.058) -1.377*** (0.049)
Holiday -0.193 (0.153) -0.193 (0.149)
FreeApp 0.123 (0.131) 0.080 (0.118)
Subcategory effect Yes Yes
App-level fixed effect No Yes
App-level random effect Yes Yes
App firm-level random effect No Yes
Two-level nested No Yes
N 345,715 345,715
Log-likelihood -26912.280 -26830.085
Note: Standard deviations are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01. †Standard deviations are robust.

Our results indicate that app firms may be capitalizing on the
opportunity to maximize position on the ranking lists by
releasing an app update to boost downloads when an app’s rank
increases (i.e., good past performance) to improve future
performance (e.g., more downloads or higher rankings). This
result is not strictly intuitive because research has linked app
updating to a decrease in past performance—specifically, a
decline in the number of downloads, using a sample from a
European app store (Comino et al., 2016, 2019). We posited that
app firms would be more likely to release updates as rank
increases because it is known that higher-rank positions carry
financial advantage (Carare, 2012; Garg & Telang, 2012; Ifrach
& Johari, 2014), which combined with the short product
lifecycles characteristic of game apps (Lui et al., 2014; Yi et al.,
2019), may make it opportune to jockey for competitive
position while the app is doing well instead of waiting until it is
experiencing signs of trouble. Indeed, our results indicate that
when app firms see an opportunity to improve their app’s future
performance, they take it.
We also found support for H2, which indicates that as customer
ratings decline (i.e., past performance is poor), an app update
competitive action becomes more likely. App firms have the
novel opportunity to monitor real-time customer feedback and
quickly release app updates in response to customer concerns
(Al-Subaihin et al., 2021; Lee & Raghu, 2014; Lee & Raghu,
2016). Negative WOM is a threat to the success and longevity
of an app because it can spread quickly on the internet (Pfeffer
et al., 2014; Ravichandran et al., 2015) and lead to the loss of
customers and market share (Blodgett et al., 1993; Chevalier &
Mayzlin, 2006). It is thus critical for app firms to quickly
respond to falling customer ratings to reverse the trend and
improve future performance. Our results indicate that app firms
are indeed responsive to this competitive threat. Finally, we
found support for H3, which reveals that app firms take app
update competitive actions in response to increasing volumes of
customer feedback. This can be interpreted as an attempt by app
firms to boost the buzz surrounding their apps. It is important to
keep people talking about an app to increase awareness of it
(Berger et al., 2010; Duan et al., 2008; Liu, 2006; Luo & Zhang,
2013). Providing enhancements through app updates is one way
to stimulate buzz and increase user engagement (Apple, 2020;
Comino et al., 2019). Our results indicate that app firms
capitalize on the opportunity to boost buzz by releasing app
updates when the volume of customer feedback increases.

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 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
Second, we examined two observable indicators of app
competitor actions: competitors’ updates (H2a) and new
competitors (H2b). We found support for H2a, which
indicates that app update competitive actions are taken when
competitive pressures from an app’s competitors’ app
updates build. Firms innovate to improve products, and such
competitive actions are common among technology firms,
are perceived to be competitive threats, and can trigger
competitive responses (Aboulnasr et al., 2008; Chen &
MacMillan, 1992; Gnyawali et al., 2010; Smith & Grimm,
1991; Turner et al., 2010). Our results indicate that app firms
take app update competitive actions in response to
competitors’ app update releases in an active attempt to
defend against the threat of their competitors’ product
innovations. We also found that app updates are released
when the number of new competitors increases, which
supports H2b. New competitors encroaching on an app’s
ranking is highly visible, and highly visible competitor
actions are more likely to elicit competitive responses (Chen
& Hambrick, 1995). In hypercompetitive environments,
firms need to continuously innovate and quickly respond to
competitive threats in order to defend their market positions
(Gatignon et al., 1997; Qian & Wang, 2017). Our results
suggest that app firms do respond to the threat of new
competitors by releasing app updates.
Third, we examine three observable indicators of an app’s
relative competitive position: relative rating (H3a), relative
rating volume (H3b), and relative portfolio diversity (H3c).
We did not find support for H3a, which may indicate that
although a decline in an app’s own customer ratings will
prompt an app update, a declining relative rating is not a
large enough threat to prompt a competitive action. Studies
have found that negative WOM decreases future sales
(Chevalier & Mayzlin, 2006; Sun, 2012), but results have
been inconsistent (Babić Rosario et al., 2016). In fact, WOM
volume has a greater influence on sales than WOM valence
(Babić Rosario et al., 2016), leading researchers to suggest
that even negative buzz may be beneficial (Han et al., 2020).
Therefore, one explanation for our findings may be that for
app firms, any WOM is preferable to no WOM—even if the
buzz is negative.
We find that app update competitive actions are taken when
the buzz surrounding an app increases, relative to its
competitors, supporting H3b. Increased buzz may signal
awareness of and affection for an app (Chevalier & Mayzlin,
2006; Han et al., 2020; Li & Hitt, 2008; Luo & Zhang, 2013).
Moreover, an app experiencing increasing buzz when its
rivals’ buzz is decreasing can attract more interest in the app
(Luo & Zhang, 2013). Our results indicate that app firms
capitalize on the opportunity to further boost their own app’s
buzz by releasing an app update when their rivals are
experiencing weakening rating volumes compared to their
own. We also found that app firms that compete in fewer
subcategories than their competitors are more likely to update
their apps. One interpretation of this result is that some app
firms have purposefully decided to compete by developing
deeper expertise in fewer types of games in order to target
particular market segments, whereas their competitors’
resources may be stretched because of their need to manage
greater product diversity. An alternative explanation is that
app firms that compete in fewer subcategories may feel
increased competitive pressure to defend their less diverse
portfolio, whereas app firms with greater portfolio diversity
may feel less pressure because a failure in one subcategory
might be counteracted by a success in another. In other
words, app firms that concentrate on fewer game app
subcategories may be defenders that take competitive actions
to aggressively protect their product (Slater & Narver, 1993).
Our findings are summarized in Table 4.
Multiple robustness checks are provided in the Appendix,
including using alternative measures for Rank to account for
the days on which an app may not be listed on any of the
ranking lists, using review sentiment and the review volume
as alternative measures for ratings and rating volume, using
an alternative competitor definition, incorporating
instrumental variables for Rank to account for potential
endogeneity, and using lagged dependent variables to
account for possible delayed decision-making regarding app
update releases by app firms. Our major findings hold with
these robustness checks.
Additional Analyses: Extensiveness of Update
and App Firm Age
To further examine competition in the hypercompetitive
game app market, we provide results of two additional
analyses in Tables 5 and 6. First, in Table 5, we show which
observable competitive indicators prompt the release of
either major or minor app updates. Second, in Table 6, we
examine how app update competitive actions in response to
observable competitive indicators differ among app firms
with varying lengths of time in business (i.e., age). These
additional analyses provide insight into the competitive
dynamics of the game app market and enhance our findings
regarding how app update competitive actions are influenced
by observable competitive indicators.
MIS Quarterly Vol. 47 No. 3 / September 2023 1195
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market

Table 4. Summary of Results

Hypothesis Supported
H1a: As the rank of an app increases, the likelihood of an app update competitive action increases. (-)‡
Yes
H1b: As an app’s average star rating decreases, the likelihood of an app update competitive action (-)
increases. Yes
H1c: As an app’s volume of ratings increases, the likelihood of an app update competitive action (+)
increases. Yes
H2a: As the number of an app’s competitors that have released an app update increases, the likelihood (+)
of an app update competitive action increases. Yes
H2b: As the number of new competitors increases, the likelihood of an app update competitive action (+)
increases. Yes
H3a: As an app’s relative average star rating decreases, the likelihood of an app update competitive
action increases. No
H3b: As an app’s relative rating volume increases, the likelihood of an app update competitive action (+)
increases. Yes
H3c: As an app’s relative portfolio diversity decreases, the likelihood of an app update competitive action (-)
increases. Yes
Note: ‡A smaller number for rank means that the app is more competitive (e.g., an app that is second on the ranking list is more competitive
than one that is 140th). Therefore, the result for H1 is interpreted as when the rank gets smaller (i.e., better), the app is more likely to update.

Software developers typically follow a semantic versioning
strategy,11 where each release is identified by a dotted decimal
version number (e.g., 1.3.6). The first value in the dotted
decimal format represents a major update and denotes major
structural changes to the software or significant functionality
changes (Comino et al., 2019; Jansen & Brinkkemper, 2006).
Changes in the latter values of the version number represent
minor updates and denote minor feature additions and bug
fixes that are intended to improve the quality of the app or
provide small enhancements (Comino et al., 2019). The
version number assigned to the app update provides an
indication of its extensiveness. To obtain the results in
Table 5, we definef an alternative dependent variable,
UpdateExtensiveness, which took 1 if there was a major
update, 2 if there is a minor update and 0 otherwise.
The results in Table 5 show that there are differences in the
observable competitive indicators that prompt a major versus
minor app update release. Notably, the results reveal that app
firms respond to decreasing rank with a major update. This
indicates that app firms take serious action (i.e., release a
major update) when their apps’ positions on the ranking lists
are threatened. The response to flagging customer ratings is to
release both major and minor updates, which suggests that app
firms quickly respond with everything in their arsenal to
reduce negative WOM. Similarly, both major and minor
updates are used to contend with the appearance of new
competitors. These results indicate that app firms respond to
serious competitive threats with major updates.
Minor updates are also used to thwart serious competitive
threats (i.e., when customer ratings are declining or when
faced with new competitors), but to a lesser extent because
they are not employed when apps’ ranks are threatened.
However, minor updates are used as a response to app updates
released by the app’s rivals. This result could indicate that app
firms feel the need to respond to competitors’ updates but that
the act of responding (i.e., being seen to respond) may be more
important than the content of the response. App firms that are
competing across fewer game subcategories than their rivals
are also more likely to release minor updates. One
interpretation of the extensiveness results may be that app
firms differentiate between situations in which an action
simply requires a response for the sake of appearance and
those where serious modifications are necessary to defend the
app’s competitive position.

11
https://semver.org/ and https://praxent.com/blog/what-do-software-
version-numbers-mean-a-guide-to-understanding-software-version-
conventions

1196 MIS Quarterly Vol. 47 No. 3 / September 2023

 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market

Table 5. Estimation Results for the Extensiveness of the App Update

Variable Logit‡ Multinomial nested logit
Major update Minor update Major update Minor update
Rank 0.154** (0.812) -0.051* (0.029) 0.163 ** (0.075) -0.044 (0.028)
VersionRating -0.415*** (0.103) -0.300*** (0.034) -0.418*** (0.108) -0.296*** (0.033)
VersionRatingVolume 0.236*** (0.044) 0.225*** (0.015) 0.281*** (0.038) 0.232*** (0.011)
NewCompetitor 0.225*** (0.047) 0.047*** (0.016) 0.239*** (0.044) 0.052*** (0.014)
UpdatesOfCompetitors 2.335 (2.327) 1.302** (0.549) 1.918 (2.087) 1.255** (0.547)
RelativeRating -0.148 (0.144) -0.033 (0.058) -0.205 (0.141) -0.050 (0.052)
RelativeRatingVolume 0.048 (0.061) 0.059*** (0.025) 0.004 (0.063) 0.036 (0.022)
RelativePortfolioDiversity 0.010 (0.026) -0.037*** (0.009) 0.003 (0.030) -0.044*** (0.015)
Controls included Yes Yes Yes
Subcategory effect Yes Yes Yes
App-level fixed effect No No Yes
App-level random effect Yes Yes Yes
App firm-level random effect No No Yes
Two-level nested No No Yes
N 343,911 345,715 345,715
Log-likelihood -3145.635 -29517.881 -32550.938
Note: The Logit column reports two logit model estimations using MajorUpdate and MinorUpdate as the dependent variables. MajorUpdate is
1 when there is a major update released for app i at time t and 0 otherwise. MinorUpdate is 1 when there is a minor update released for app i
at time t and 0 otherwise. The Multinomial Nested Logit column reports the estimation results using a two-level nested multinomial logit model
which accounts for app- and app developer-level nests. ‡Standard deviations are robust. Standard deviations are in parentheses. * p < 0.1; **
p < 0.05; *** p < 0.01.

Table 6. Estimation Results with Subsamples by App Firm Age

Variable (1) (2) (3)
Rank -0.154*** (0.035) -0.130*** (0.042) -0.110* (0.063)
VersionRating -0.207*** (0.035) -0.185*** (0.048) -0.211*** (0.070)
VersionRatingVolume 0.117*** (0.048) 0.121*** (0.014) 0.131*** (0.021)
NewCompetitor 0.077*** (0.020) 0.069*** (0.020) 0.057** (0.028)
UpdatesOfCompetitors 1.691** (0.812) 0.195 (0.826) 1.115 (1.177)
RelativeRating -0.105 (0.072) -0.051 (0.078) -0.001 (0.106)
RelativeRatingVolume 0.097*** (0.035) 0.058* (0.032) 0.039 (0.043)
RelativePortfolioDiversity -0.035** (0.018) -0.083*** (0.025) -0.077** (0.034)
Controls included Yes Yes Yes
Subcategory effect Yes Yes Yes
App-level fixed effect Yes Yes Yes
App-level random effect Yes Yes Yes
App firm-level random effect Yes Yes Yes
Two-level nested Yes Yes Yes
N 175,857 169,713 77,555
Log-likelihood -12993.226 -13821.946 -6726.3903
Note: All estimations are based on the nested logit models as in the main analysis. Column (1) reports the estimation results using a subsample
with app firms that are older than the median age of the whole sample, i.e., app firms older than 1,537 days or 4.2 years. Column (2) reports
the estimation results using a subsample with app firms that are younger than the median age, i.e., app firms younger than 1,537 days. Column
(3) reports the estimation results using a subsample with app firms’ ages that are in the first quartile of the whole sample, i.e., app firms younger
than 1,019 days or 2.8 years. Standard deviations are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01.

MIS Quarterly Vol. 47 No. 3 / September 2023 1197

James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
The results in Table 6 show the differences in app update
competitive action deployments between older vs. younger
app firms. In the first column are the oldest app firms (> 4.2
years in business; 4.2 years is the median app firm age in the
dataset), in the second column are firms that have been in
business for less than 4.2 years of age, and in the third column
are those that have been in business for less than 2.8 years (i.e.,
the youngest quartile). The results show the evolution of the
app firms’ app update competitive actions. The oldest app
firms respond to the greatest number of observable
competitive indicators. The younger half of the app firms
respond to observable competitive indicators of an app’s
competitive position but are not as sensitive to competitors’
actions or an app’s relative competitive position. This pattern
is even more pronounced among the youngest app firms. One
interpretation of these results is that older app firms may be
defending the competitive positions of more mature apps to a
greater extent than younger app firms, which may be more
focused on offensive actions to gain position.
Discussion
Implications for Theory and Research
App stores feature unique competitive environments. The
barriers to entry are low—i.e., extensive resources are not
required to create apps and app stores are easily and equally
accessible to any app firm (Boudreau, 2012; Lee & Raghu,
2014). These characteristics enable app firms to quickly
respond to competitive opportunities and threats by releasing
app updates (Lee & Raghu, 2014). However, the same
characteristics also enable an intensely competitive
environment characterized by rapid innovation and many
firms vying for temporary advantages (e.g., more downloads
and users). Our study draws from competitive dynamics
research to examine competition in the hypercompetitive
game app market. Specifically, we focus on one specific
competitive action—the app update—that app firms use to vie
for competitive position. We show how observable indicators
that signal the app’s competitive position (i.e., past
performance), the app’s competitors’ actions, and the app’s
relative competitive position influence app update
competitive actions. We use an archival dataset of app store
data that provides market conditions prior to each app update
competitive action to study our model.
We make several contributions to the literature on competitive
dynamics. Prior studies using a competitive dynamics lens have
focused on the packaged software industry (e.g., Turner et al.,
2010; Young et al., 1996). Although it is considered a
hypercompetitive market, it differs in important ways from the
app markets in ecosystems. A key difference is that the platform
1198 MIS Quarterly Vol. 47 No. 3 / September 2023
provider curates store data in a central and easily accessible
location (Grover & Kohli, 2012), which increases the visibility
of data that can be used to determine competitive position and
to inform competitive action decisions. We found that app firms
use app update competitive actions to vie for temporary
advantage and that they respond not only to indicators of their
own competitive positions but also to their competitors’ actions
and their relative competitive positions. Our results suggest that
ecosystem data transparency is leveraged to inform decisions
about competitive actions. Specifically, curated data on past
performance, relative past performance, and competitors’
actions is used to inform app firms’ strategic app update
decisions in hopes of improving the future performance of their
apps. Our study thus adds insights to the body of competitive
dynamics research by illustrating how data drives competition
in a hypercompetitive market.
Few studies have considered software updating to be a
competitive move (Turner et al., 2010; Zahra & Bogner, 2000),
but as release cycles have become shorter and app stores have
made the delivery of app updates easier (Adams & McIntosh,
2016), it has become increasingly possible to use app updating
as a competitive action to improve or sustain temporary
competitive advantage. Studies have shown that innovation-
related competitive actions increase software firm survival (Li
et al., 2010). However, few studies in the competitive dynamics
literature have studied the software industry context (Turner et
al., 2010; Young et al., 1996) and even fewer have studied the
drivers of the update competitive action (Turner et al., 2010).
Competitive dynamics research has “broadly attempted to
explain both the causes and consequences of action and reaction
with particular emphasis on performance consequences” (Smith
et al., 2006, p. 315). We focus on the drivers of the app update
competitive action rather than the performance consequences,
which have been more widely studied. We thus contribute to the
competitive dynamics literature by showing what observable
competitive indicators drive app update competitive actions;
that is, we look at a robust set of antecedents of a novel
competitive action.
Moreover, we provide insight into competition in a novel
context, an app store, which differs in key ways from the
packaged software contexts that have been the focus of prior
competition studies (Turner et al., 2010; Young et al., 1996).
We show that app firms are responsive to observable
indicators of competitive position and capitalize on the data
visibility provided by the platform to help inform their
strategic decisions to best position their apps in an intensely
competitive environment. Moreover, we show that there is
variation in the type of app update that is used as a competitive
action to counter different competitive indicators. We show
that app firms respond with major updates to serious threats to
the app’s competitive position. Our results suggest that minor
updates are used in situations where the act of responding to
 James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
rivals’ competitive actions may be more important than the
content of the response. We also show that older firms are
responsive to more observable competitive indicators than
younger firms which suggests that mature app firms may be
defending profitable market positions. We thus examine app
update competitive actions at a granular level to tease out
differences in how app firms deploy them to improve their
app’s competitive position and ward off competitors.
Chen et al. (2010) showed that in markets focused on
temporary advantage, strong past performance motivates
competitive moves, which differs from findings in the
competitive dynamics literature in mature industries that have
shown that poor performance motivates moves (Smith et al.,
2006). Notably, a study in the software industry also found
that good past performance increased competitive action
(Young et al., 1996). One explanation provided by Chen et al.
(2010, p. 1542) for the conflicting findings is that “while high
performers avoid competitive confrontation in the established
market (where entrenched rivals have somewhat sustainable
advantages and clear visibility of rivalrous moves), the
ambiguity of new markets provides a shield to engage in
moves.” Our results demonstrate that app firms take
competitive actions when their past performance is strong
(e.g., their rank or buzz increases). These findings also show
that in a market focused on temporary advantage, strong past
performance can stimulate competitive action. However, we
provide a broader picture and show that app makers are also
responsive to threats such as declining star ratings, new
competitors encroaching on their rankings, and competitors’
updates. Our findings provide an extensive view of
competition in a novel hypercompetitive market. Although
our results largely conform to the theory of competitive
dynamics, we provide nuanced results that paint a more
holistic picture of competition on app stores than is often
possible in studies of traditional industries. Our study thus
enriches the understanding of how firms in hypercompetitive
environments vie for temporary advantage in the face of
intense competition and rapid innovation.
Implications for Society and Practice
Research has indicated that software firms may adjust
internally driven software updating schedules in response to
external conditions, particularly in highly dynamic
environments (Al-Subaihin et al., 2021; Cao & Ramesh, 2007;
Nayebi et al., 2016; Turner et al., 2010). Our results lend
credence to this notion, and we suggest that app firms should
monitor the competitive environment to inform their app
updating decisions. Obtaining a high position on ranking lists
is critical to the future success of an app (Carare, 2012; Garg
& Telang, 2012), and using app updates to capitalize on strong
performance (e.g., good rankings) is an offensive tactic that
our results suggest app firms should use. Our results also show
that app firms capitalize on buzz by releasing app updates to
boost user interest. Additionally, we show that app firms are
responsive to competitive threats such as negative WOM, the
emergence of new competitors, and competitors’ app updates.
Using an app update as a response to competitive
opportunities or threats leverages an ordinary process to
improve or sustain temporary competitive advantage in a
hypercompetitive market in which small advantages matter.
We find that younger app firms respond when the competitive
positions of their apps are threatened, but older app firms are
more likely to respond to competitors’ actions or changes in
relative competitive position. Researchers have suggested that
managers of less competitive firms are less aware of the
competitive actions of their rivals (Chen et al., 2010). Our
findings suggest that app firms with more experience are more
responsive to what is happening in the competitive
environment. It may behoove younger app firms to invest in
processes that collect and analyze market data on the
competition to improve and better defend their apps’
competitive positions. For example, Apptopia offers an
analytics product that tracks competitors’ moves. Investing in
such products or developing such competencies internally may
help app firms better compete in hypercompetitive app markets.
Limitations and Directions for Future
Research
We examined how observable competitive indicators shape
app update competitive actions on one popular app store. By
focusing on apps of a similar nature offered by a single store,
we were able to isolate the granular effects of the competitive
indicators. However, this choice does limit the
generalizability of our results. Research has shown that
hedonic and utilitarian apps experience similar survival
patterns (Lee & Raghu, 2014) but the type of app moderates
the relationship between the ratings and downloads of paid
versions of apps when a free version is offered (Liu et al.,
2014). Similarly, it is possible that there are unique
competitive dynamics in different categories of apps offered
by the same app store. That is, there may be very granular,
context-specific market (i.e., category) effects that future
research could tease out.
Distinctive differences have been found between the two
major app stores (Comino et al., 2016, 2019; Ghose & Han,
2014; Roma et al., 2016), which suggests that care should be
taken in generalizing results across them. The app stores are
run by different platform leaders that have different
preferences and policies for managing them, which may affect
app firms’ decision-making processes. For example, platform
leaders can change store policy or the design of the store,
MIS Quarterly Vol. 47 No. 3 / September 2023 1199
James et al. / Competing for Temporary Advantage in a Hypercompetitive Mobile App Market
which could impact the ability of app firms to respond quickly
or could change the amount of store data that is visible or
easily accessible.
Our study examines real-world behavior using archival data
across a large sample of apps. Our approach allowed us to see
how observable competitive indicators prompt app updating
competitive actions and to observe which type of app update
app firms employ for specific competitive opportunities or
threats. Competitive dynamics studies are often quantitative
and use archival data (Chen & Miller, 2012). However, this
approach limits the nuance one can expect to find because the
process is examined from the outside. Future studies could use
mixed method approaches that could potentially capture app
firm managers’ perceptions to complement empirical analyses
of archival data, which could add robustness to explanations
of competitive dynamics in the app market. Our study
provides insight into which observable competitive indicators
prompt app firms to use app updates as competitive actions.
Although we provide initial insight into competition in the
context of an app store, there is much more to be learned.
Competitive dynamics research has much to offer and should
be leveraged to better understand competition in high-
technology, hypercompetitive environments (e.g., Chen &
Miller, 2012; D’Aveni et al., 2010).
Conclusion
We examine how observable competitive indicators shape app
update competitive actions. We provide evidence that app
firms in the hypercompetitive game app market take app
update competitive actions in response to competitive
opportunities and threats. Specifically, we found that app
firms are more likely to update their apps when their rank is
increasing, customer ratings are decreasing, or rating volume
is increasing. These findings demonstrate that app firms use
app updates to both capitalize on opportunities (e.g., buzz) and
to counteract threats (e.g., negative WOM) to their apps’
competitive positions. We also found evidence that app firms
respond to competitors’ actions (e.g., competitors’ updates or
new competitors) by releasing app updates. Moreover, app
firms take app update competitive actions when their app’s
rating volume increases, relative to competitors, and when
they are competing across fewer game subcategories than their
competitors. We provide insight into which observable
competitive indicators prompt major versus minor update
releases and show how app firms with different years of
experience employ app update competitive actions. Our
findings provide insight into the dynamics of competition in
the app markets and enrich our understanding of how app
firms vie for temporary advantage on app stores in the face of
intense competition and rapid innovation.
1200 MIS Quarterly Vol. 47 No. 3 / September 2023
Acknowledgements
Research reported in this publication was supported by the National
Center for Advancing Translational Sciences of the National Institutes
of Health under award number UL1TR003096 and the University of
Alabama at Birmingham. The content is solely the responsibility of the
authors and does not necessarily represent the official views of the
National Institutes of Health.
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About the Authors
Tabitha L. James is the R. B. Pamplin Professor in the Pamplin
College of Business at Virginia Tech. She holds a Ph.D. from the
University of Mississippi in management information systems. Her
research interests include behavioral information privacy and
security, psychological impacts of technology use, and analytics
focused on the development of metaheuristics for combinatorial
optimization problems. Her research has been published in leading
information systems and operations research outlets such as MIS
Quarterly, Information Systems Research, Journal of Management
Information Systems, Journal of the Association for Information
Systems, Information Systems Journal, European Journal of
Information Systems, Information & Management, European
Journal of Operational Research, IEEE Transactions on
Evolutionary Computation, and IEEE Intelligent Systems. She is a
visiting professor at IESEG School of Management, France. She
has served as an AE for ICIS and ECIS, as well as a mini-track chair
and junior faculty consortium co-chair for AMCIS. She serves as
an associate editor at the European Journal of Information Systems
and Decision Sciences Journal and is also on the editorial review
board of the Journal of the Association for Information Systems.
Zhilei Qiao is an assistant professor in the Collat School of
Business at the University of Alabama at Birmingham. He received
his Ph.D. in business information technology from Virginia Tech.
His research interests include social media analytics, product
innovation and text mining. He has published and presented papers
in refereed information systems conferences such as the Hawaii
International Conference on System Sciences (HICSS), the
Academy of Management (AOM) Annual Meeting, Americas
Conference on Information Systems (AMCIS), the China Summer
Workshop on Information Management (CSWIM), and the
Business Analytics Congress (ICIS Workshop / SIGDSA). He was
a runner-up for the Best Research Paper award of the 4th Business
Analytics Congress in 2015. His research has been published in the
Journal of Management Information Systems and Journal of
Computational and Graphical Statistics. He is also a member of
the Association for Information Systems (AIS), Decision Sciences
Institute (DSI) and Institute for Operations Research and the
Management Sciences (INFORMS).
Wenqi Shen Wenqi Shen is an assistant professor in the Pamplin
College of Business at Virginia Tech. She received her Ph.D. in
management information systems from Purdue University. Her
research interests include online virtual community, social media
and social dynamics, user generated content, the economics of
information technologies, and firm information security. Her
research has been published in leading information systems
journals such as MIS Quarterly, Information Systems Journal,
Journal of the Association for Information Systems, Expert Systems
with Applications, etc. She previously had an appointment at Miami
University and worked in the area of payment data security. She
serves as an associate editor for Information Technology and
Management and is on the editorial review board for Decision
Sciences. She has served as an associate editor for ICIS and PACIS
and has been on the program committee for CIST and CSWIM.
Alan Wang is the Arthur Andersen & Co. Alumni Professor of
Information for Management in the Pamplin College of Business at
Virginia Tech. He received his Ph.D. in management information
systems from the University of Arizona. His research interests
include social media analytics, business intelligence, knowledge
discovery, security informatics, and quality management. He has
published more than 30 refereed articles in various prestigious
journals including Production and Operations Management,
Journal of the Association for Information Systems, Decision
Support Systems, Information Systems Frontiers, Journal of
Business Ethics, Communications of the ACM, IEEE Transactions
of Systems, Man and Cybernetics (Part A), IEEE Computer,
Journal of the American Society for Information Science and
Technology, and Expert Systems with Applications. He serves on
the board of editors of Electronic Commerce Research and
Applications and Security Informatics.
Weiguo Fan is the Henry B. Tippie Endowed Chair Professor in
Business Analytics at the University of Iowa. He received his Ph.D.
in business administration from the Ross School of Business,
University of Michigan, Ann Arbor. His research interests focus on
the design and development of novel information technologies—
AI, information retrieval, data mining, text/web mining, business
intelligence, and analytics techniques—to support better business
information management and decision-making. He has published
more than 300 refereed journal and conference papers. His research
has appeared in journals such as MIS Quarterly, Information
Systems Research, Journal of Management Information Systems,
Production and Operations Management, Tourism Management,
IEEE Transactions on Knowledge and Data Engineering,
Information Systems, Communications of the ACM, Information
and Management, Journal of the American Society on Information
Science and Technology, Information Processing and
Management, Decision Support Systems, ACM Transactions on
Internet Technology, Pattern Recognition, IEEE Intelligent
Systems, Information Sciences, Journal of Informetrics, etc. He is
serving as a guest associate editor for MIS Quarterly and as an
associate editor for Journal of the Association for Information
Systems, Information & Management, INFORMS Journal on Data
Science, and Information Technology & Management.
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Appendix A
Correlation Matrix

Table A1. Correlation Matrix

Variables (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Rank 1.00
VersionRating -0.02 1.00
VersionRatingVolume -0.29 0.34 1.00
NewCompetitor 0.13 -0.02 -0.05 1.00
UpdatesOfCompetitors -0.16 0.02 0.08 -0.06 1.00
RelativeRating 0.10 0.49 0.24 -0.04 -0.04 1.00
RelativeRatingVolume -0.06 0.26 0.29 -0.02 0.03 0.32 1.00
RelativePortfolioDiversity 0.00 -0.03 0.09 -0.04 0.00 0.02 0.06 1.00
iOSUpdate 0.00 0.00 0.02 -0.03 0.07 0.00 0.00 0.00 1.00
NumberOfSupportedDevices 0.00 -0.06 -0.09 0.21 -0.01 -0.04 0.00 -0.09 0.01 1.00
FocalFirmAppCategories -0.01 -0.04 0.01 0.03 -0.01 -0.06 -0.02 0.31 0.00 -0.09
NumberOfCompetitors -0.24 0.03 0.21 0.05 0.06 -0.03 -0.01 0.01 0.00 0.00
NumberOfCompetitorApps 0.10 -0.02 0.03 0.09 -0.08 -0.01 -0.05 -0.01 -0.01 0.05
ProductAge -0.15 -0.12 -0.18 0.23 0.03 -0.18 0.29 -0.08 0.00 0.22
ProductAge2 -0.16 -0.13 -0.19 0.23 0.04 -0.21 0.28 -0.09 0.00 0.22
Weekend 0.00 0.00 -0.01 0.01 -0.02 0.00 0.00 0.00 -0.12 0.00
Holiday 0.00 0.00 -0.02 0.03 -0.02 0.00 0.00 0.00 -0.02 0.00
FreeApp -0.05 -0.01 -0.06 -0.02 0.01 -0.03 -0.23 -0.07 0.00 0.01

Variables (11) (12) (13) (14) (15) (16) (17) (18)

FocalFirmAppCategories 1.00
NumberOfCompetitors 0.02 1.00
NumberOfCompetitorApps 0.01 0.10 1.00
ProductAge 0.05 0.10 -0.04 1.00
ProductAge2 0.05 0.11 -0.04 0.99 1.00
Weekend 0.00 0.00 0.00 0.00 0.00 1.00
Holiday 0.00 0.01 0.00 0.00 0.00 -0.05 1.00
FreeApp -0.08 0.02 -0.02 -0.15 -0.16 0.00 0.00 1.00

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Appendix B
Additional Analysis

Extensiveness of the Competitors’ Updates

In our main model, we analyzed the influence of app updates released by an app’s competitors on its decision to release an app update. We
found that as more of an app’s competitors released app updates, the likelihood that an app would release an app update increased. To examine
this result more robustly, we separated the app update releases of an app’s competitors into two categories: major update and minor update.
Specifically, we derive two variables, CompetitorMajorUpdate and CompetitorMinorUpdate, to measure the extensiveness of competitors’
app update releases. Software developers assign a numeric code to their software releases that indicates the extensiveness of the update. An
app’s version number follows a dotted decimal format (e.g., 1.2.15), where a change in the first value of the version number indicates a major
update.12 Therefore, we defined an update as major when there is a change in the first section of a version number (e.g., 1.x.x to 2.x.x), and
we consider all other changes to be minor updates (Comino et al., 2019). To construct the two update variables, we first determined if an
update was major or not and set a dummy variable MajorUpdate if the first value in its version number changed with the app update release.
We then computed CompetitorMajorUpdateijt as the average number of major update releases among app i’s competitors at time t, and
CompetitorMinorUpdateijt to be the average number of minor update releases among app i’s competitors at time t. We show the estimation
results for the model in Table B1.

Table B1. Estimation Results with Extensiveness of Competitors’ Update

Variable Nested logit
Rank -0.143*** (0.278)
VersionRating -0.198*** (0.034)
VersionRatingVolume 0.123*** (0.010)
NewCompetitor 0.078*** (0.014)
CompetitorMajorUpdate 0.839 (2.447)
CompetitorMinorUpdate 1.125* (0.600)
RelativeRating -0.063 (0.053)
RelativeRatingVolume 0.072*** (0.024)
RelativePortfolioDiversity -0.040*** (0.015)
Controls included Yes
Subcategory effect Yes
App-level fixed effect Yes
App-level random effect Yes
App firm-level random effect Yes
Two-level nested Yes
N 345,715
Log-likelihood -26829.82
Note: Standard deviations are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01.

The findings indicate that it is the count of the minor update releases made by competitors that is significantly associated with the app’s
update release response. This logically corresponds to the findings in Table 5 of the main manuscript where the extensiveness of the app’s
update release competitive action was used as the dependent variable. The results in Table 5 indicate that app firms were responding to apps’
competitors’ actions and relative competitive position by releasing minor updates, whereas major updates were used to stimulate the app’s
own popularity, rectify its own negatively trending customer feedback, or fuel the buzz surrounding the app. Table B1 illustrates that as the
number of competitors’ minor updates increases, the likelihood that the app updates increases. However, the relationship between
competitors’ major updates and the app’s app update competitive action is not significant. One interpretation of these results is that major
updates are used to respond to customer feedback, whereas app firms appear to use minor updates as a way to respond to competitive threats.

12
https://semver.org/

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Appendix C
Robustness Checks

Alternative Measures for Rank

We conducted additional analyses to check the robustness of our main findings. First, to accommodate the occurrences of when an app drops
out of the subcategory ranking charts, we developed two variables to account for the time an app was not ranked on any chart.
DaysInTopChart is the natural log of the number of days the current version of an app appears on any subcategory ranking charts. Downloads
is the natural log of the weekly number of downloads of the app, which we obtained from Apptopia (https://apptopia.com/). 13 Whereas
DaysInTopChart measures how long the current version of an app stays in one of the ranking charts, Downloads provides a direct measure
of the performance of an app on the market. We estimate the main model by replacing Rank with one of these two variables and the results
are reported in Table C1. The results are consistent with the findings in our main model. The signs for both of the coefficients (i.e.,
DaysInTopChart and Downloads) are positive and significant. This indicates that when an app is performing well (i.e., is listed on a ranking
chart or gaining more downloads), app makers are more likely to update it, which supports our finding in H1a.

Table C1. Estimation Results with Alternative Measures for Rank

Variable Nested logit Nested logit
DaysInTopChart 0.131*** (0.024)
Downloads 0.083*** (0.018)
VersionRating -0.185*** (0.034) -0.195*** (0.034)
VersionRatingVolume 0.094*** (0.013) 0.122*** (0.011)
NewCompetitor 0.065*** (0.014) 0.080*** (0.014)
UpdatesOfCompetitors 1.304*** (0.571) 1.124** (0.571)
RelativeRating -0.084 (0.055) -0.094* (0.052)
RelativeRatingVolume 0.097*** (0.025) 0.080*** (0.024)
RelativePortfolioDiversity -0.059*** (0.016) -0.040*** (0.015)
Controls included Yes Yes
Subcategory effect Yes Yes
App-level fixed effect Yes Yes
App-level random effect Yes Yes
App firm-level random effect Yes Yes
Two-level nested Yes Yes
N‡ 361,483 360,247
Log-likelihood -27665.727 -27607.314
Note: ‡ The number of observations is slightly higher than the number in the main model since we are able to capture more observations than the main
model accounting for the time the app is falling off from all the top lists. Standard deviations are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01.

Review Sentiment and Review Volume

Another concern in interpreting our main results is that the ratings of the apps are generally positive, i.e., the mean of VersionRating is 4.171 out of 5,
which is commonly observed in many online contexts (e.g., Chevalier & Mayzlin, 2006). To check the robustness of our results, we developed
alternative measures to examine customer feedback. In our main model, the star rating and the star rating volume are used. We use these two variables
in our main model because, if a customer leaves feedback, they must assign a star rating, whereas leaving written feedback is optional. However, the
content of the written feedback and the amount of written feedback are also possible forms of customer feedback. Therefore, as a robustness check, we
replaced the VersionRating and VersionRatingVolume variables in the model with review sentiment and review volume (i.e., VersionReviewSentiment
and VersionReviewVolume). To construct these two alternative variables, we collected all the written reviews for each app during the data collection
period. The VersionReviewSentiment score measures the cumulative sentiment of the reviews received for the current version of the app. We used the
SentiStrength algorithm (Thelwall et al., 2012) to estimate the strength of positive and negative sentiment of each review, and then generate a score
between -4 and +4 with -4 being the most negative and +4 the most positive. VersionReviewSentimentijt is the sum of the scores for all the reviews of
the current version of app i up to time t. VersionReviewVolumeijt is the natural log of the number of reviews of app i at time t. We reestimated all the
models using these two variables and our main findings are consistent using these alternative measures (see results in Table C2).

13
We also tested the model using biweekly and monthly numbers of downloads and the results are consistent.

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Table C2. Estimation Results with Review Sentiment and Review Volume
Variable (1)‡ (2)
Rank -0.173*** (0.028) -0.158*** (0.028)
VersionReviewSentiment -0.107*** (0.024) 0.106*** (0.023)
VersionReviewVolume 0.170*** (0.015) 0.164*** (0.012)
NewCompetitor 0.077*** (0.016) 0.082*** (0.014)
UpdatesOfCompetitors 1.035* (0.594) 0.965* (0.579)
RelativeRating -0.091* (0.055) -0.112** (0.051)
RelativeRatingVolume 0.077*** (0.025) 0.053** (0.024)
RelativePortfolioDiversity -0.026*** (0.009) -0.036** (0.015)
Controls included Yes Yes
Subcategory effect Yes Yes
App-level fixed effect No Yes
App-level random effect Yes Yes
App firm-level random effect No Yes
Two-level nested No Yes
N 345,715 345,715
Log-likelihood -26873.236 -26803.507
Note: ‡ Standard deviations are robust. Standard deviations are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01.

Competitor Definition

In our main model, we defined a competitor of an app to be those apps that appear within 10 positions (i.e., +/-10) of the app’s rank on any
of the subcategory ranking lists on which the app appears that day. Although our competitor definition can reasonably identify the set of
competitors whose performance is comparable to the focal app and are in the same subcategory at time t, our results could be subject to the
selection of competitor apps resulting from the applied criteria. Therefore, we tested an alternative definition for app competitors to verify
that the main findings still hold. Rather than selecting competitors dynamically, as was done with our original competitor definition, we used
a relatively static approach to select competitors in our alternative definition. We first identified each app’s median rank in each subcategory
it belonged to over the data collection period. Then, we defined an app’s competitors as those apps in the same subcategories whose median
rank over the data collection was within five positions (+/- 5) of the focal app’s median rank. In this definition, we identified those apps
whose overall performance was comparable to the focal app’s overall performance, which provided a relatively static set of competitors
compared to our previous definition. We report the estimation results in Table C3. Our major findings are consistent using this alternative
competitor definition.

Table C3. Estimation Results with Alternative Competitor Definition

Variable Nested logit
Rank -0.143*** (0.027)
VersionRating -0.197*** (0.034)
VersionRatingVolume 0.120*** (0.011)
UpdatesOfCompetitors 0.665 (0.526)
NewCompetitor 0.067*** (0.015)
RelativeRating -0.072 (0.053)
RelativeRatingVolume 0.088*** (0.024)
RelativePortfolioDiversity -0.038** (0.015)
Controls included Yes
Subcategory effect Yes
App-level fixed effect Yes
App-level random effect Yes
App firm-level random effect Yes
Two-level nested Yes
N 345,318
Log-likelihood -26801.539
Note: Standard deviations are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01.

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Instrumental Variables

One potential concern about our main analysis is that an app’s Rank could be endogenous to the update decision. Although app firms cannot
determine the rank of an app, it could be potentially correlated with unobserved app and/or app firm characteristics that together drive an app
firm’s update decision. Our main model controlled for app and app firm heterogeneity and unobserved time-invariant effects at different
levels. However, such endogeneity may still affect the estimated results. To handle the potential endogeneity issues, we constructed a set of
instrumental variables (IVs) for Rank. We utilized the lagged terms of an app’s rank as a set of IVs for the current period rank. The intuition
is that the lagged period rank should be correlated with the current period rank but should not be correlated with the current period’s
unobserved shocks, which may affect the update release decision (Wang et al., 2018). Specifically, the more distant the lagged rank is, the
more likely it is to be uncorrelated with the current period’s unobserved shock of an app such as promotional activities. However, it is less
likely to be correlated with the current period’s rank at the same time. Since our model is a binary choice model, we adopted a control
function-based estimation approach to incorporate IVs (Papke & Wooldridge, 2008). We tested three consecutive periods as IVs and the
results are consistent with the majority of our findings. We report the results with these consecutive periods’ ranks as IVs in Table C4.

Lagged Dependent Variable

One may argue that the app update competitive action may not be made daily and there could be a time lag between the observable market
variables and an app firm’s app update. To test this potential delay in responding to the observed store data, we constructed a set of lagged
dependent variables on the app update. Specifically, we developed a set of day-lagged dependent variables on Update up to a week after the
observable market data became available. That is, we separately test the impact of our key variables on app update releases made two days, three
days, four days, and so on, up to a week from the current time period. We report the results in Table C5. Our main findings are consistent with
the majority of these lagged update models. Interestingly, many of the effects of the observable market variables disappear beyond a seven-day
time interval,14 especially the observable market variables of an app’s competitiors’ actions, which suggests that app update release decisions
were made in a timely manner. App firms must respond quickly to market movements to be able to compete in this fast-paced market.

Table C4. Estimation Results with IVs for Rank

Variable With 1-day With 2-day lagged With 3-day With all 3 lagged
lagged IV IV lagged IV IVs
Rank -0.079*** -0.079*** -0.082*** -0.082***
(0.009) (0.010) (0.010) (0.010)
VersionRating -0.037*** -0.037*** -0.042*** -0.043***
(0.014) (0.015) (0.014) (0.015)
VersionRatingVolume 0.007*** 0.007*** 0.007*** 0.007***
(0.004) (0.004) (0.004) (0.004)
NewCompetitor -0.037*** -0.038*** -0.037*** -0.038***
(0.005) (0.006) (0.014) (0.006)
UpdatesOfCompetitors 1.065*** 0.739*** 0.649*** 0.709***
(0.246) (0.251) (0.251) (0.255)
RelativeRating -0.004 -0.007 -0.001 -0.002
(0.020) (0.021) (0.021) (0.021)
RelativeRatingVolume 0.053*** 0.053*** 0.053*** 0.053***
(0.008) (0.008) (0.009) (0.009)
RelativePortfolioDiversity -0.013*** -0.012*** -0.013*** -0.013***
(0.003) (0.003) (0.003) (0.003)
Controls included Yes Yes Yes Yes
Subcategory effect Yes Yes Yes Yes
N‡ 344,124 330,038 328,047 317,235
Log-likelihood -385614.74 -333330.42 -299813.21 -405770.06
Note: ‡ The number of observations drops due to the longer lagged period the dependent variable used. Standard deviations are robust and
are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01.

14
We also tested lagged models using 14-day and 30-day time intervals and most of the effects were no longer significant in these longer lagged models, which
consistent with our main findings suggests that app firms typically respond to short-term market feedback.

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Table C5. Estimation Results with Lagged Dependent Variable

Variable 2-day 3-day 4-day 5-day 6-day 7-day
lagged lagged lagged lagged lagged lagged
Rank -0.116*** -0.139*** -0.161*** -0.179*** -0.187*** -0.200***
(0.027) (0.026) (0.026) (0.025) (0.024) (0.023)
VersionRating -0.214*** -0.175*** -0.143*** -0.133*** -0.119*** -0.120***
(0.033) (0.034) (0.033) (0.033) (0.032) (0.032)
VersionRatingVolume 0.152*** 0.123*** 0.088*** 0.067*** 0.044*** 0.035***
(0.013) (0.012) (0.011) (0.010) (0.010) (0.010)
NewCompetitor 0.056*** 0.046*** 0.055*** 0.042*** 0.013 0.003
(0.016) (0.015) (0.014) (0.014) (0.014) (0.014)
UpdatesOfCompetitors -1.955*** -0.512 1.707*** 2.765*** 1.966*** -0.512
(0.625) (0.657) (0.607) (0.568) (0.554) (0.623)
RelativeRating -0.084 -0.086 -0.049 -0.020 0.014 0.009
(0.053) (0.053) (0.051) (0.050) (0.049) (0.049)
RelativeRatingVolume 0.073*** 0.083*** 0.093*** 0.100*** 0.106*** 0.110***
(0.024) (0.022) (0.021) (0.021) (0.020) (0.020)
RelativePortfolioDiversity -0.027*** -0.029*** -0.026*** -0.026*** -0.031*** -0.030***
(0.009) (0.008) (0.008) (0.008) (0.008) (0.008)
Controls included Yes Yes Yes Yes Yes Yes
Subcategory effect Yes Yes Yes Yes Yes Yes
N‡ 342,563 341,009 339,437 337,878 336,548 335,154
Log-likelihood -27995.295 -27744.046 -27885.941 -27739.217 -27482.16 -27369.162
Note: ‡ The number of observations drops due to the longer lagged period the dependent variable used. Standard deviations are robust and
are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01.

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Appendix D
Influence of Updates on Future Performance
Although our study focuses on the drivers of app update competitive actions, competitive dynamics describes a process in which the (1)
observed market variables of past performance indicate threat or opportunity at time t-1, (2) which stimulates a competitive action (e.g.,
update) at time t, (3) which, if successful, results in improved future performance at time t+1. An update at time t can increase future
performance (e.g., downloads or survival in the top charts) at time t+1 (Comino et al., 2019; Lee & Raghu, 2014). To show that this holds
true in our data, we follow Comino et al. (2019) and demonstrated that an update at time t will improve future performance at time t+1.
Specifically, we show that updates increase the number of active users in the second column of Table D1, which illustrates that updates can
drive user engagement. We also show that updates increase app revenue in the third column of Table D1, which illustrates that updates can
increase the financial performance of the app. We included our other variables (e.g., rating, rating volume) as controls for similarity to prior
studies of app performance (Lee & Raghu, 2014; Yi et al., 2019). All the independent variables were lagged so that the results indicate that
the more updates in the previous week (i.e., at time t) an app has, the better performance it will achieve in the following week (i.e., at time
t+1).

Table D1. Estimation Results for the Impact of Update on Weekly Performance (Active Users and App Revenue)
Variable Weekly Active Users† Weekly App Revenue†
Update 0.042*** (0.005) 0.126*** (0.018)
VersionRating 0.027* (0.014) 0.065** (0.027)
VersionRatingVolume 0.067*** (0.008) 0.034*** (0.011)
NewCompetitor -0.023*** (0.006) 0.007 (0.010)
UpdatesOfCompetitors 0.187*** (0.043) 0.074 (0.096)
RelativeRating -0.086 (0.056) 0.012 (0.092)
RelativeRatingVolume -0.223*** (0.035) -0.266*** (0.059)
RelativePortfolioDiversity -0.022 (0.014) -0.046** (0.022)
iOSUpdate -0.005* (0.003) 0.017* (0.010)
NumberOfSupportedDevices -0.009 (0.006) -0.017* (0.010)
FocalFirmAppCategories 0.008 (0.025) -0.091 (0.064)
NumberOfCompetitors 0.023*** (0.002) 0.031*** (0.004)
NumberOfCompetitorApps 0.005 (0.005) 0.014* (0.008)
ProductAge 0.709*** (0.102) 0.894*** (0.199)
ProductAge2 -0.130*** (0.013) -0.171*** (0.022)
Holiday 0.013*** (0.004) 0.046*** (0.017)
FreeApp 1.483*** (0.340) -0.174 (0.543)
Subcategory effect Yes Yes
App-level fixed effect Yes Yes
App-level random effect Yes Yes
App firm-level random effect Yes Yes
Two-level nested Yes Yes
N 63,314 63,314
Log-likelihood -36568.311 -107483.300
Note: Standard deviations are in parentheses. * p < 0.1; ** p < 0.05; *** p < 0.01. †The dependent variables have been log-transformed.
Standard deviations are robust.

1212 MIS Quarterly Vol. 47 No. 3 / September 2023

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