ABSTRACT:
This research examines how startup complementors’ product security influences their funding from external investors in platform ecosystems. The longitudinal analysis of the Hadoop ecosystem shows that the release of product security features is positively associated with startup funding. The effect is stronger when public media pays more attention to the platform ecosystem’s security issues and for complementors with a central position in the platform ecosystem’s technological proximity network. We further find that the effect depends on the strength and interpretability of the product security signals. Specifically, the effect is driven by product-embedded security efforts rather than by partnership-based initiatives, and is more pronounced among platform-native complementors. These findings advance our understanding of how product security functions as a strategic signal in ecosystems characterized by interdependent risks and networked competition. We offer practical implications for complementors and platforms seeking to translate security investments into competitive advantage and strengthen security incentives.
Key words and phrases: Platform ecosystems, product security, startup funding, security risk, technological proximity network, information cues, cybersecurity, platform complementors