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Article
Publication date: 13 November 2019

Yonghua Cen and Li Li

Given a product or service, the number of its installed user base has a significant positive effect on the existing users’ loyalty and new users’ conversion. This effect…

Abstract

Purpose

Given a product or service, the number of its installed user base has a significant positive effect on the existing users’ loyalty and new users’ conversion. This effect is conceptualized as network externalities in economics. Network externalities are supposed to be particularly striking in nowadays online business-to-business (B2B) platforms, but yet the mystery behind their effects on user loyalty to online B2B platforms remains to be delicately unraveled. The purpose of this paper is to discover the factors driving users’ loyalty, especially buyers’ loyalty, to online B2B platforms, by highlighting the impacts of network externalities on loyalty and other mediating factors.

Design/methodology/approach

A conceptual model of buyer loyalty under network externalities is elaborated. The reliability and validity of the instruments of the latent model constructs are assessed by confirmatory factor analysis, and the hypothesized causal relationships among the constructs are tested by structural equation modeling, on 710 valid buyer samples collected from a famous online B2B platform in China.

Findings

The analysis demonstrates that: perceived value, user satisfaction and switching costs are the major predictors of buyer loyalty to online B2B platforms characterized by network externalities; network externalities positively account for buyer loyalty by contributing to perceived value, user satisfaction and switching costs; and direct network externality (measured by perceived network size and perceived external prestige) has a significant effect on indirect network externality (measured by perceived compatibility and perceived complementarity).

Originality/value

The findings allow the authors to conclude meaningful managerial implications for online B2B service providers to build up loyal user bases through improving users’ perceptions of network externalities, switching costs and value.

Details

Journal of Enterprise Information Management, vol. 33 no. 2
Type: Research Article
ISSN: 1741-0398

Keywords

Article
Publication date: 29 May 2007

Fujun Lai, Jian Wang, Chang‐Tseh Hsieh and Jeng‐Chung (Victor) Chen

This paper seeks to investigate and provide empirical evidence of the interrelationships among network externalities, e‐business adoption and information asymmetry.

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Abstract

Purpose

This paper seeks to investigate and provide empirical evidence of the interrelationships among network externalities, e‐business adoption and information asymmetry.

Design/methodology/approach

A conceptual model was proposed and tested using 307 completed interview cases selected from a database of 2,075 Chinese international trading companies published by the Beijing Municipal Bureau of Commerce for this study.

Findings

The results indicated that network externalities significantly influenced e‐business adoption and information asymmetry, and e‐business adoption influenced information asymmetry through information sharing and collection. A split sample analysis showed that cultural contexts significantly moderated the interrelationships among network externalities, e‐business adoption, and information asymmetry.

Research limitations/implications

Data for this study were collected only from mainland China, therefore, non‐Chinese companies (foreign‐owned) operating in China may have been influenced by Chinese cultures and some of them have been localizing their operations in China. The influences of network externalities on business performance and decision making remain unclear. In addition, data were collected from self‐reported questionnaires, and thus may be subject to self‐reporting bias. Future studies should use more objective measurements to reduce the potential for self‐reporting bias.

Practical implications

This study contributes significantly to the literature by providing empirical evidence on interrelationships among network externalities, e‐business adoption, and information asymmetry. The findings in this study also provide valuable insights for managers to better understand the influence of network externalities on e‐business adoption.

Originality/value

This study contributes significantly to the literature by providing empirical evidence of the interrelationships among network externalities, e‐business adoption, and information asymmetry. The findings also provide managers with valuable insight into better understanding of the nature of these interrelationships.

Details

Industrial Management & Data Systems, vol. 107 no. 5
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 13 February 2017

Dongling Huang, Dmitri G. Markovitch and Yuanping Ying

This paper aims to identify the effects of social learning and network externalities by conditioning on product quality and early sales momentum. This approach is…

Abstract

Purpose

This paper aims to identify the effects of social learning and network externalities by conditioning on product quality and early sales momentum. This approach is demonstrated using film sales data.

Design/methodology/approach

This study used econometric modeling approach.

Findings

It was found that both social learning and network externalities have significant and comparable impacts on film choice. We show that the relative effects of network externalities and social learning in the film market are robust to different momentum and quality definitions and to alternative estimation methods.

Originality/value

Scholars have long argued that social learning plays a key role in new product diffusion. In some product categories, consumer choice may also be influenced by network externalities, meaning that purchasing popular products may provide the consumer utility above and beyond that derived from product usage directly. We propose a novel identification approach to help quantify the relative magnitude of these two effects on new product sales.

Details

European Journal of Marketing, vol. 51 no. 1
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 8 February 2022

Haowen Fan and Yulin Zhang

This work aims to examine the quality disclosure strategy of sharing economy platforms with network externality, considering consumer risk aversion.

Abstract

Purpose

This work aims to examine the quality disclosure strategy of sharing economy platforms with network externality, considering consumer risk aversion.

Design/methodology/approach

The game theory, sensitive analysis and numerical study are used herein. The equilibria are derived from the game theory. The quality disclosure strategy is analyzed by profit comparison. To further understand the characteristics of the optimal disclosure strategy, sensitive analysis and numerical studies are conducted to detail the analytical results.

Findings

Regardless of market structure, the quality disclosure decision problem is a trade-off between information effect and cost effect. Consumer risk aversion is a factor that can incentivize low-quality platforms to disclose quality. Both consumer risk aversion and network externality influence the quality disclosure strategy through information effect. Interestingly, for different competition intensities, consumer risk aversion and network externality could lead to positive or negative information effects of removing uncertainty. The authors show that under certain conditions, consumer risk aversion and network externality could induce more quality concealment.

Research limitations/implications

The quality is set exogenous herein, and the integrated process of quality investment and information disclosure is an interesting direction for future research.

Practical implications

This work provides managerial insights for sharing economy platforms regarding how to wisely consider consumer risk aversion and network externality when sharing quality information.

Originality/value

This work identifies two effects that determine quality disclosure strategy and specifies the role of each factor on quality disclosure.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 3 April 2018

Hana Kim, Daeho Lee and Jun-Seok Hwang

Even though network externality plays an important role in users’ motivations to use services or products, the implications of this are not clear because previous studies…

Abstract

Purpose

Even though network externality plays an important role in users’ motivations to use services or products, the implications of this are not clear because previous studies did not distinguish between the number of peers and the number of total users. Thus, the purpose of this paper is to demonstrate that there is a difference between the two network externalities, i.e., the number of peers and the total number of users. To accomplish this, the perception of quality of life is considered to have an impact on the effects of the two different network externalities.

Design/methodology/approach

Data were collected from a survey that covered 508 online game players in South Korea, and the two hypotheses of “player experience of need satisfaction” from self-determination theory as well as user gratification theory (UGT) were assessed using structural equation modeling.

Findings

The results indicate that people consider the total number of users and the number of peers differently. In addition, the effects of the total number of users and the number of peers vary according to respondents’ perceived life quality in four dimensions: loneliness, happiness, satisfaction with life (SWL), and escapism. In particular, people’s offline tendencies are reflected online in terms of loneliness, whereas online life compensates for a lack of enjoyment offline.

Originality/value

The authors verify that UGT can affect the network externality by considering perceived quality of life (loneliness, SWL, happiness, and escapism) as a moderating effect.

Details

Information Technology & People, vol. 31 no. 2
Type: Research Article
ISSN: 0959-3845

Keywords

Article
Publication date: 22 March 2022

Peng Xing, Meixia Wang and Junzhu Yao

The paper aims to investigate the optimal service quality and pricing for a mobile application (App) service supply chain (SSC) and analyze the impact of network

Abstract

Purpose

The paper aims to investigate the optimal service quality and pricing for a mobile application (App) service supply chain (SSC) and analyze the impact of network externality on App SSC members' utilities. After that, the corresponding management inspirations and suggestions are put forward.

Design/methodology/approach

The paper developed a SSC consisted of an App service supplier and an App service operator. Our models aim to maximize the SSC members' utilities. By utilizing the game theory, equilibrium solutions are obtained. Numerical examples are used to manifest the impact of parameters on decisions by Matlab. Some management enlightenment could be obtained by comparison analysis.

Findings

Cooperating with an App service operator that asks for a lower revenue sharing ratio will enable the App service supplier to have sufficient funds to provide high-quality update service. With the increase of network externality, adopting a high-quality service strategy can bring higher utility to the App service operator and users. Pouring attention into consumer welfare moderately will improve the App service supplier's utility. Scenario CRS can achieve a win–win goal for App SSC members and consumers.

Originality/value

The innovations of this paper are as follows: Firstly, the authors investigate the optimal service quality and pricing for the App SSC, which has been discussed little in previous literature. Secondly, the authors discuss how network externality and enterprises' attention to consumer welfare affect the optimal decisions and utilities of App service supply chain members. Thirdly, this paper considers four different circumstances and determines the optimal operation scenario for App SSC through comparative analysis.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 12 February 2018

Guowei Dou, Xudong Lin and Xiaoping Xu

Considering the resource constraint, this paper aims to study how to make value-added service (VAS) investment strategy considering the negative intra-group network

Abstract

Purpose

Considering the resource constraint, this paper aims to study how to make value-added service (VAS) investment strategy considering the negative intra-group network externality on the seller side from the perspective of a two-sided platform.

Design/methodology/approach

The authors use the dynamic game theory, optimization, sensitive analysis and numerical study in this research. The authors model their research question from the perspective of the dynamic game theory, and through optimizing the platform’s profit function, the equilibrium results in terms of VAS investing and pricing strategies are derived. To explore the characteristics of the optimal strategies, sensitive analysis is used, and numerical studies are conducted to further illustrate the analytical results.

Findings

It is found that the intra-group network externality is not necessarily the determinant for VAS investment strategy, and its overall negative impact can be overtaken by the investment in certain conditions. The optimal VAS investment level decreases in the negative intra-group network externality. Though the VAS investment is on the seller side, it has either positive or negative impact on the pricing for buyers. Moreover, for a stronger intra-group network externality among sellers, the two-sided prices could either increase or decrease.

Research limitations/implications

The authors implicate how the intra-group network externality reduces the investment benefit and impacts the other side users. The limitation of considering the intra-group network externalities on only one side needs further extension.

Practical implications

The authors provide insights for platform operators in how to use recourse to improve users’ utility and how to price the two sides when competition exists on the seller side.

Originality/value

This study specifies the role of negative intra-group network externality in determining the investment and pricing strategy of a two-sided platform in addition to the positive inter-group network externality.

Article
Publication date: 6 July 2015

Tao Zhou

– The purpose of this paper is to examine the effect of network externality on users’ continuance of mobile social network sites (SNS).

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Abstract

Purpose

The purpose of this paper is to examine the effect of network externality on users’ continuance of mobile social network sites (SNS).

Design/methodology/approach

Based on the 230 valid responses collected from a survey, structural equation modeling was employed to examine the research model.

Findings

The results indicated that network externality, which includes referent network size and perceived complementarity, has a significant effect on perceived usefulness and flow. Privacy concern affects perceived usefulness, flow and privacy risk. These three factors determine continued use.

Originality/value

Previous research has focussed on the effects of motivations such as perceived value on user adoption of SNS. The effect of network externality on user continuance has seldom been examined. This research tries to fill the gap.

Details

Program, vol. 49 no. 3
Type: Research Article
ISSN: 0033-0337

Keywords

Article
Publication date: 10 April 2007

Sung Yong Chun and Minhi Hahn

The purpose of this paper is to investigate different effects of three network externality factors, i.e. local network size, network strength, and total network size, on…

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Abstract

Purpose

The purpose of this paper is to investigate different effects of three network externality factors, i.e. local network size, network strength, and total network size, on online messenger, online community, chat room and e‐mail services.

Design/methodology/approach

In the paper hypotheses are tested with a regression model using a survey data collected from 107 MBA students at a business school in South Korea.

Findings

The paper finds that the three network externality factors have different effects on the users' future usage intention for the four Internet services. Local network size is significant for online messenger services, local network size and network strength are significant for online community services, and total network size is significant for chat room services. For email services, none of the network externality factors are significant.

Research limitations/implications

The paper shows that a total network size is an important network externality factor affecting the success of a network. However, users' satisfaction with network services and two additional network externality factors, local network size and network strength, are also important determinants. To generalize the finding, investigations into other network services in other environments and into some offline networks are necessary.

Originality/value

The paper shows that depending on types of networks, managers can focus on different important network externality factors in managing their networks.

Details

Internet Research, vol. 17 no. 2
Type: Research Article
ISSN: 1066-2243

Keywords

Article
Publication date: 19 March 2020

Vicky Ching Gu and Ken Black

Despite the extensive adoption of radio-frequency identification (RFID) technology across many industry supply chains, the extent of adoption in healthcare is far behind…

Abstract

Purpose

Despite the extensive adoption of radio-frequency identification (RFID) technology across many industry supply chains, the extent of adoption in healthcare is far behind the earlier expectation. The purpose of this study is to better understand the current RFID adoption in healthcare by looking beyond the existing body of work using both the task-technology fit (TTF) framework and network externalities theories.

Design/methodology/approach

A survey is employed in this study, and the structural equation modeling (SEM) technique is used to test the hypotheses of the proposed model.

Findings

The findings are twofold. First, both TTF and network externalities exert a positive impact on the RFID adoption in the healthcare sector; and second, no synergistic effect can be found between these two for further increasing the adoption. This is different from what the extant research found on other technology adoptions across various supply chains.

Originality/value

This paper provides contributions to both researchers and practitioners. For researchers, this study enriches the body of knowledge of RFID adoption by being the first to apply the network externalities and TTF theories to predict the adoption of RFID in healthcare. For healthcare practitioners, to make the RFID adoption easier and more effective, any initial applications of RFID tools should be centered on those for which there is a more natural application. Further, for those who propose an RFID adoption should start with a product that has a sizable adoption community; this may help persuade senior management to make the adoption decision.

Details

International Journal of Productivity and Performance Management, vol. 70 no. 1
Type: Research Article
ISSN: 1741-0401

Keywords

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