An investigation into sources of network externalities in the packaged PC software market

Shurmer, Mark

doi:10.1016/0167-6245(93)90012-6

Cited by 69 publications

(29 citation statements)

References 9 publications

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“…In software more generally, Shurmer (1993) uses survey data and nds network e ects in word processing and spreadsheet software; Liebowitz and Margolis (2001) however argue that product quality largely explains success.…”

mentioning

confidence: 99%

Coordination and Lock-In: Competition with Switching Costs and Network Effects

2006

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PRELIMINARY DRAFT: PLEASE SEND COMMENTSKEYWORDS: switching costs, network e ects, lock-in, network externalities, co-ordination, indirect network e ects JEL CLASSIFICATIONS: L130 market structure, rm strategy and market performance: oligopoly and other imperfect markets; monopolistic competition; contestable markets L150 information and product quality; standardization and compatibility L120 market structure, rm strategy and market performance: monopoly L140 transactional relationships: contracts and reputation: networks D430 market structure and pricing: oligopoly and other forms of market imperfection D420 market structure and pricing: monopoly. ACKNOWLEDGMENTS: We're grateful to many friends and colleagues for numerous helpful suggestions and comments over several substantial rewrites of this paper since our rst 1997 draft. Special thanks are due to Alan Beggs, Simon AbstractSwitching costs and network e ects bind customers to vendors if products are incompatible, locking customers or even markets in to early choices. Lock-in hinders customers from changing suppliers in response to (predictable or unpredictable) changes in e ciency, and gives vendors lucrative ex post market power|over the same buyer in the case of switching costs (or brand loyalty), or over others with network e ects.Firms compete ex ante for this ex post power, using penetration pricing, introductory o ers, and price wars. Such \competition for the market" or \life-cycle competition" can adequately replace ordinary compatible competition, and can even be ercer than compatible competition by weakening di erentiation. More often, however, incompatible competition not only involves direct e ciency losses but also softens competition and magni es incumbency advantages. With network e ects, established rms have little incentive to o er better deals when buyers' and complementors' expectations hinge on non-e ciency factors (especially history such as past market shares), and although competition between incompatible networks is initially unstable and sensitive to competitive o ers and random events, it later \tips" to monopoly, after which entry is hard, often even too hard given incompatibility. And while switching costs can encourage small-scale entry, they discourage sellers from raiding one another's existing customers, and so also discourage more aggressive entry.Because of these competitive e ects, even ine cient incompatible competition is often more pro table than compatible competition, especially for dominant rms with installed-base or expectational advantages. Thus rms probably seek incompatibility too often. We therefore favor thoughtfully pro-compatibility public policy.

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confidence: 99%

Coordination and Lock-In: Competition with Switching Costs and Network Effects

2006

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“…A decisionmaker typically accounts for other existing network users and the likely number of future users on the network, to estimate utility from network technology investments, for example. Shurmer [60] reported that the network benefits accruing to a software package may be derived from different sources than the base product, like add-ons and training courses, etc. Asvanund et al [1] recognized countervailing network effects in P2P music-sharing networks.…”

Section: Modeling Approaches For Network Effects Analysismentioning

confidence: 99%

Network effects and embedded options: decision-making under uncertainty for network technology investments

Kauffman

Kumar

2008

Inf Technol Manage

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The analysis of network effects in technologybased networks continues to be of significant managerial importance in e-commerce and traditional IS operations. Competitive strategy, economics and IS researchers share this interest, and have been exploring technology adoption, development and product launch contexts where understanding the issues is critical. This article examines settings involving countervailing and complementary network effects, which act as drivers of business value at several levels of analysis: the industry or market level, the firm or process level, the individual or product level, and the technology level. It leverages real options analysis for managerial decision-making under uncertainty across these contexts. We also identify a set of real options-compatibility, sponsorship and ownership option-which are unique to these settings, and which provide a template for managerial thinking and analysis when it is possible to delay an investment decision. We employ a hybrid jumpdiffusion process to model countervailing and complementary network effects from the perspective of a user or a firm joining a network. We also do this from the perspective of a network developer. Our analysis shows that when countervailing and complementary network effects occur in the same network technology context, they give rise to real option value effects that may be used to control or modify the valuation trajectory of a network technology. The option value of waiting in these contexts jumps when the related business environment experiences shocks. Further, we find that the functional relationship between network value and the option value is not linear, and that taking into account a risk premium may not always result in a risk-neural investment. We also provide a managerial decision-making template through the different kinds of deferral options that we identify for this IT analysis context.

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“…Vários estudos Perugini & Bagozzi, 2001;Fekadu & Kraft, 2001) já comprovaram a influência das pressões normativas sob a intenção de compra e que tal relação é ainda mais forte quando se refere a aspectos ligados à aceitação e uso de produtos ou serviços com inovações (Shurmer, 1993;Westland, 1992;Redmond, 1991;Shankar & Bayus, 2004 Davis (1989). Seu objetivo inicial era o de apresentar um instrumento para prever a probabilidade de uma nova tecnologia ser adotada dentro de um grupo ou uma organização.…”

Section: Modelos De Aceitação De Inovações Tecnológicas (Tam E Tra)unclassified

O Impacto Da Abordagem De Vendas Na Aceitação De Produtos Com Inovações Tecnológicas

Grohmann¹,

Battistella²,

Velter³

2013

JISTEM

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With the intention to verify the influence of sales approaches in the process of acceptance and use of products with technological innovations, a survey using the Technology Acceptance Model (TAM) and the Theory of Reasoned Action (TRA) was made. Through structural equation modeling, it was identified the relationships among the three sales approaches (competition focus, product focus and customer focus) and the constructs of the model (perceived usefulness, perceived ease, attitude to use, intention to use, current use and normative pressure). The results confirmed six of the twelve hypotheses: a strategy focused on competition interferes with the relationship between utility and attitude of use (H1b) and the relationship between normative pressure and purchase intention (H6); strategy with focus on product interferes with relations between utility usage and attitude (H2a), facility and purchase intent (H3B), fun attitude and usage (H5a) and attitude and purchase intention (H7). It is concluded, therefore, that the relationship between acceptance and sales strategies, and purchase new products is moderate and that the most efficient strategy in this case is focused on the product.

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An investigation into sources of network externalities in the packaged PC software market

Cited by 69 publications

References 9 publications

Coordination and Lock-In: Competition with Switching Costs and Network Effects

Coordination and Lock-In: Competition with Switching Costs and Network Effects

Network effects and embedded options: decision-making under uncertainty for network technology investments

O Impacto Da Abordagem De Vendas Na Aceitação De Produtos Com Inovações Tecnológicas

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