The differential impact of types of app innovation on customer evaluation

Digital innovation literature seldom considers the effects of innovation from app developers’ perspective. Even when it does, the findings on the value of app innovation are mixed. Based on technological innovation and early-mover advantages literature, we delineate types of app innovation and their impacts on customer evaluations. Our empirical results indicate that adding new business functions to provide new categories of product or service offerings increases customer evaluations, whereas, adding new supporting service functionalities (SSFs) decreases customer evaluations. For followers that “imitate” innovations, the effect of adding SSFs on customer evaluations is negatively contingent on the quality of early-mover apps.