Reconsideration of the winner-take-all hypothesis: Complex networks and local bias

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.
Publisher
Informs
Issue Date
2006-12
Language
ENG
Keywords

SMALL-WORLD NETWORKS; INNOVATION DIFFUSION; EXTERNALITIES; COMPATIBILITY; DYNAMICS; SEARCH

Citation

MANAGEMENT SCIENCE, v.52, no.12, pp.1838 - 1848

ISSN
0025-1909
DOI
10.1287/mnsc.1060.0571
URI
http://hdl.handle.net/10203/4393
Appears in Collection
MT-Journal Papers(저널논문)
Files in This Item
2007-001.pdf(217.48 kB)Download
  • Hit : 413
  • Download : 491
  • Cited 0 times in thomson ci
This item is cited by other documents in WoS
⊙ Detail Information in WoSⓡClick to seewebofscience_button
⊙ Cited 24 items in WoSClick to see citing articles inrecords_button

qr_code

  • mendeley

    citeulike


rss_1.0 rss_2.0 atom_1.0