Hunting for the Treasure at the End of theRainbow: Standardizing corporate IT Infrastructure
Computer Supported Cooperative Work
Coordinating Channels Under Price and Nonprice Competition
Marketing Science
Opening the "Black Box" of Network Externalities in Network Adoption
Information Systems Research
Group Buying on the Web: A Comparison of Price-Discovery Mechanisms
Management Science
Adoption of Information Technology Under Network Effects
Information Systems Research
A hedonic study of network effects in the market for word processing software
Decision Support Systems - Special issue: Economics and information systems
Information Systems Research
Information Systems Research
Hi-index | 0.00 |
When companies purchase information technology (IT) products for their employees, departments, or divisions, whether to standardize on one product or to allow the users to make their own choices is an important decision for IT managers to make. By consolidating demand and committing to buy from a single seller, standardization ensures product compatibility within the corporation and has a potential to induce intense price competition among sellers, but this potential is subject to whether competing products are compatible and the relative competitive advantages of the sellers. This paper studies when it is optimal for an employer to commit to exclusive purchase from a single seller to enforce standardization and sellers' incentives to invest in mutual compatibility. Our results suggest that the employer is more likely to make such a commitment when the competing products are compatible, less vertically differentiated, and/or more horizontally differentiated. We also find that the sellers agree to cooperate and invest in mutual compatibility only when the gap between their competitive advantages is moderate, but the availability of third party converters that enable partial compatibility can induce more collaboration among the sellers.