Abstract
Small entrepreneurial firms or niche players vastly benefit from participation in ecosystems from marketing capabilities and reputation to the shared technological assets and market opportunities. Yet, while aligning to the ecosystem rules, each member must obtain and maintain their own distinctiveness. We examine two common ways by which niche players compete and survive in a digital ecosystem by seeking status and building a distinct position. First, we compare status seeking in a single ecosystem versus multiple ecosystems. Second, we compare status seeking in a single versus multiple niches, i.e. sub-markets of an ecosystem. We theorize that pursuit of status in a single niche of product categories and in a single ecosystem together diminishes niche players’ performance over time. Similarly, pursuing status in multiple ecosystems and multiple niches, at the same time, adversely impacts the performance over time. Analyzing a panel data of app developers in iOS and Android smartphone ecosystems, we find supportive findings for above arguments, showing that niche players face a tradeoff regarding different patterns of specialization (i.e., status recognition). They should either focus their effort and investment to obtain status recognition in a focal niche by producing innovative products only in that niche, and exploit it across multiple ecosystems, or seek status in a single ecosystem while exploiting status therein across multiple product niches. Our paper contributes to the nascent stream of research that investigates issued faced by ecosystem members, rather than focusing on ecosystem owner´s strategies.