Open platforms provide an important avenue for firms to engage with external developers using open innovation strategies to create and commercialize their new innovations. Firms have successfully enabled external innovation by “inverting the firm” through permissionless innovation, often through APIs.
By providing predictable rules, third parties can and will create their own innovations that increase the value of the overall platform. However, a key dilemma is how much openness will bring the best results for the platform and its owner. Openness can also create competition, dissipate value, and risk platform forking. This chapter summarizes two decades of research documenting the decisions made in opening platforms, discussing how it aligns with broader themes in open innovation and how firms can avoid being too open or too closed in their platform design.
