In:
Management Science, Institute for Operations Research and the Management Sciences (INFORMS), Vol. 52, No. 12 ( 2006-12), p. 1838-1848
Abstract:
The literature on network effects has popularized a hypothesis that competition between incompatible technologies results in the “winner-take-all” outcome. For the survival of the firm in this sort of competition, the installed base has been emphasized. We argue that the validity of this hypothesis depends on how customers interact with one another (e.g., if they exchange advice or files). In some interaction networks, customers influenced by their acquaintances may adopt a lagging technology even when a lead technology has built a large installed base. The presence of such a local bias facilitates the persistence of incompatibilities. When local bias cannot be sustained in other interaction networks, one technology corners the market. Our study suggests that overemphasizing the installed base, while ignoring network structure, could mislead practitioners.
Type of Medium:
Online Resource
ISSN:
0025-1909
,
1526-5501
DOI:
10.1287/mnsc.1060.0571
Language:
English
Publisher:
Institute for Operations Research and the Management Sciences (INFORMS)
Publication Date:
2006
detail.hit.zdb_id:
206345-1
detail.hit.zdb_id:
2023019-9
SSG:
3,2
