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The Role of APIs in the Economy
Seth Benzell, Guillermo Lagarda, Marshall Van Allstyne
Boston University and MIT
July 12, 2016
Seth Benzell, Guillermo Lagarda, Marshall Van Allstyne (Boston University and MIT)The Role of APIs in the Economy July 12, 2016 1 / 16
Introduction
We construct a novel data set combining API proxy statistics withfirm financial outcomes
Firms adopting API strategies are concentrated in Retail
We find that firms that adopt APIs are significantly more profitable inyears after adoption
We find weaker suggestion that the intensity of API use correlateswith net income
In future work we seek to establish causality and the contribution ofAPIs to changes in the nature of the firm and macroeconomic trendslike SBTC
Seth Benzell, Guillermo Lagarda, Marshall Van Allstyne (Boston University and MIT)The Role of APIs in the Economy July 12, 2016 2 / 16
Context
Application programming interface
Ease access to data, internal and external
Increase programmer productivity, information security, lowermaintenance costs, modularity/re-usability
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Context
We work with API management firms
Some have specific strategy in mind, others simply ’go digital’ andput info out there
Clearly APIs necessary for platform/ecosystem approach
Lots of API success stories
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Web API Growth (Source: ProgrammableWeb.com)
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Data
Currently we have data corresponding to roughly 10 percent of theAPI management industry
We are working towards:
Collecting another about 40 percent of industry
Integrating OSIRIS
Finding employment by job title data
Firm survey
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Sample Firms Using API Management
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API data - Quarterly
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Financial Characteristics of API Adopting Firms
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Preliminary Data Analysis
Three Current Approaches to Ascertaining Impact on Net Income
Firm FEs
Nearest Neighbor
General Difference in Difference
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TreatmentEffectEstimationOutcomeVariable:NetIncome
TreatmentVariable:AdoptionofAPI(Binary,adjustedintime)
Baseline Leverage Baseline LeverageATE 162.46** 186.22* 267.78** 222.59**
(12.89) (17.13) (6.85) (7.39)ATE(OpenPlatform) 52.35+ 52.29*
(6.89) (7.13)CapitalExp. -0.0864 -0.0229+ -0.0484 -0.0200+
(6.32) (6.79) (6.32) (6.79)Leverage -0.0461+ -0.0461+
(7.54) (7.54)Constant 22.49** 32.28** 17.49** 16.28**
(9.01) (19.21) (11.93) (23.75)Std.Errorsstatisticsinparentheses
+p<0.10,*p<0.05,**p<0.01
Regression(IPW) PropensityMatch
NearestNeighbor
Regression(IPW)
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Log Net Income Grouped by Adoption Date
5
6
7
8
9
10
11
Mar-10 May-11 Jul-12 Sep-13 Nov-14 Jan-16
2013Q1-Q3
2013Q4-2014Q1
2014Q2-2014Q4
2015
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Future Goals
Future Directions for Research
With time series employment data, very interesting SBTC paper.Allows us to study programmer productivity as accumulating asset.
With more information about firm ecosystem policies, structural IOpaper estimating elasticities around platform strategy
With a better instrument (or perhaps only more data), a strongbusiness oriented paper about consequences of API strategy adoption– Advice?
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