ESMT No. 09–008 A Framework for Monitoring Relational Quality in B2B Technology PartnershipsAuthors: Francis Bidault, ESMT, Manfred Lüth, University of Nice, Olaf Plötner, ESMT Abstract: The purpose of this paper is to propose a framework for the monitoring of new technology introduction in a B2B environment. We focus on B2B environments, i.e. on projects where a new technological solution is implemented (and often jointly developed) with a client being either a company or an organization. In such a situation, where a supplier and its client agree to implement a new technology, both are exposed to a risk. The management of these risks can be handled through a couple of approaches: control or trust. The management literature has put a lot of attention on these two modes that play an important role because they drive the quality of the relationship between partners. We will explore their respective roles and build a methodology to monitor them along the life of a buyer-supplier relationship aiming at implementing new technology. Keywords: technology partnerships, trust, relational quality JEL Classification: M19
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ESMT No. 09–007 Enjoy! Assertive Language and Consumer Compliance in (Non)Hedonic ContextsAuthors: Ann Kronrod, Tel-Aviv University, Amir Grinstein, Ben-Gurion University of the Negev, Luc Wathieu, ESMT Abstract: This paper is concerned with the tension between consumer persuasion and freedom of choice. We study how assertive language (as in the slogan Just do it!) affects consumer compliance in hedonic vs. utilitarian contexts. Previous literature consistently claimed that forceful language would cause reactance and decreased compliance. However, we find in four studies that assertive persuasion is effective in contexts involving hedonic goods and hedonically framed utilitarian goods. Our hypotheses emerge from sociolinguistic research and confirm the relevance of linguistic research in consumer behavior. Keywords: assertive message, consumer compliance, hedonic consumption, utilitarian consumption, forceful language, persuasion, freedom of choice, reactance JEL Classification: D18, M37
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ESMT No. 09–006 ISO 9000: New Form of Protectionism or Common Language in International Trade?Authors: Joseph A. Clougherty, University of Illinois at Urbana-Champaign and Michał Grajek, ESMT Abstract: International standards have the potential to both promote and hinder international trade. Yet empirical scholarship on the standards-trade relationship has been held up due to some methodological challenges: measurement problems, varied effects, and endogeneity concerns. We are able to surmount these challenges while considering the impact of one particular standard on the country-pair trade flows between 91 nations over the 1995-2005 period. To deal with these challenges, we measure the degree of standardization via the penetration of ISO 9000 in individual nations, allow ISO diffusion to manifest via multiple (quality-signaling, information/compliance-cost, and common-language) effects, and use instrumental variable and panel data techniques to overcome endogeneity concerns. We find strong evidence in support of ISO 9000 involving a common-language effect that enhances country-pair trade; yet, the evidence is more mixed with regard to the quality-signaling and information/compliance-cost effects. While we find ISO-rich nations (most notably European) to clearly benefit from the worldwide diffusion of standardization, ISO 9000 represents a de facto trade barrier for nations (e.g., the US and Mexico) lagging behind in terms of adoption. Keywords: international trade, standards, technical trade barriers, ISO 9000, networks JEL Classification: F13, L15, C51
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ESMT No. 09–005 Demography vs. Context: A Cross-Country Survey of the Willingness to Rely on Trust in Business PartnershipsAuthors: Francis Bidault, ESMT, José R. de la Torre, Florida International University and Stelios H. Zanakis, Florida International University Abstract: We explore the determinants of the willingness to rely on trust in a business partnership where both partners are at risk. By focusing on the willingness to rely on trust (WTRT) we reduce the methodological challenge of perception-based approaches where trust is measured as an expectation on the partner’s behavior. Executives in several countries were presented with a proposal for a business partnership and were asked about the level of safeguards they would require in the agreement, their main concerns as to future conditions, and to what extent their views would be affected by several behaviors and/or events. Twelve hypotheses are tested using path analysis and multiple/hierarchical regressions. Whereas our findings confirm prior results on differences in the propensity to trust between nationalities, they suggest that several organizational, functional and contextual variables mediate their impact in determining WTRT in inter-organizational ventures. Among these are the partners’ cultural proximity, their concerns about business risk, and two organizational demographics regarding the size of the organization. In addition, we found that sensitivity to external information on partner's benevolence and the respondent’s education and industry affected WTRT significantly. Keywords: inter-organizational trust, willingness to rely on trust, trustworthiness, contractual safeguards, international joint ventures, business partnerships, international business JEL Classification: M16
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ESMT No. 09–004 Regulation and Investment in Network Industries: Evidence from European TelecomsAuthors: Michał Grajek, ESMT and Lars-Hendrik Röller, ESMT Abstract: We provide evidence of an inherent trade-off between access regulation and investment incentives in telecommunications by using a comprehensive data set covering 70+ fixed-line operators in 20 countries over 10 years. Our econometric model accommodates: different investment incentives for incumbents and entrants; a strategic interaction of entrants’ and incumbents’ investments; and endogenous regulation. We find access regulation to negatively affect both total industry and individual carrier investment. Thus promoting market entry by means of regulated access undermines incentives to invest in facilities-based competition. Moreover, we find evidence of a regulatory commitment problem: higher incumbents’ investments encourage provision of regulated access. Keywords: telecommunications, access regulation, unbundling, investment JEL Classification: C51, L59, L96
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ESMT No. 09–003 Access Regulation and Investment in the Next Generation Networks: A Ranking of Regulatory RegimesAuthors: Rainer Nitsche, ESMT and Lars Wiethaus, ESMT Abstract: This paper analyses how different types of access regulation to next generation networks affect investments and consumer welfare. The model consists of an investment stage with uncertain returns and subsequent quantity competition. The access price is a function of investment costs and the regulatory regime. A regime with fully distributed costs or a regulatory holiday induces highest investments, followed by risk-sharing and long-run-incremental cost regulation. Risk-sharing creates most consumer welfare, followed by regimes with fully distributed costs, long-run-incremental costs and regulatory holiday, respectively. Risk-sharing benefits consumers as it combines relatively high ex-ante investment incentives with strong ex-post competitive intensity. Keywords: regulation, competition, telecommunications, broadband, strategic investment JEL Classification: L51, L96, L10, K23
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ESMT No. 09–002 The Effect of Adversity on Process Innovations and Managerial IncentivesAuthors: Benoit Dostie, HEC Montréal and Rajshri Jayaraman, ESMT Abstract: This paper asks whether adversity spurs the introduction of process innovations and increases the use of managerial incentives by firms. Using a large panel data set of workplaces in Canada, our identification strategy relies on exogenous variation in adversity arising from increased border security along the 49th parallel following 9/11. Our longitudinal difference-in-differences estimates indicate that firms responded to adversity by introducing new or improved processes, but did not change their use of managerial incentives. These results suggest that the threat of bankruptcy may provide impetus for improving efficiency.
Keywords: process innovation, managerial incentives, efficiency, natural experiment JEL Classification: L20, O31, M52, J33
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ESMT No. 09–001 An Empirical Approach to Understanding Privacy ConcernsAuthors: Luc Wathieu, ESMT and Allan Friedman, John F. Kennedy School, Harvard University Abstract: This paper shows that privacy concerns in commercial contexts are not solely driven by a desire to control the transmission of personal information or to avoid intrusive direct marketing campaigns. When they express privacy concerns, consumers anticipate indirect economic consequences of data use, such as price discrimination. Our general hypothesis is that consumers are capable of expressing differentiated levels of concerns in the presence of changes that suggest indirect consequences of information transmission. We suggest that there is a homo economicus behind privacy concerns, not simply a primal fear. This hypothesis is tested in a large-scale experiment evoking the context of affinity-based direct marketing of insurances, which relies on data transmitted by alumni associations. Because opt-in and opt-out choices offered by firms to consumers usually capture non-situational preferences about data transmission, their ability to enact privacy concerns is questioned by our findings.
Keywords: privacy, opt-in/opt-out, insurance JEL Classification: D8, M38
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ESMT No. 08–011 Cosmopolitanism, Assignment Duration, and Expatriate Adjustment: The Trade-Off between Well-Being and PerformanceAuthors: Amir Grinstein, Guilford Glazer School of Business and Management, Ben Gurion University of the Negev and Luc Wathieu, ESMT Abstract: This paper questions the notion that expatriates should adjust to their host country, by showing that adjustment and its consequences are affected by cosmopolitanism and expected assignment duration. A study of 260 expatriates in the U.S. reveals that cosmopolitans expecting shorter (longer) assignments adjust more (less) to both work and non-work aspects of their host country, and that this is associated with increased well-being. In contrast, for non-cosmopolitans, more well-being occurs when longer (shorter) expected assignments are accompanied by increased (decreased) work and non-work adjustment. Further, from the findings emerges a clash between two aspects of successful expatriation - well-being and professional success: while non-work adjustment is not always associated with well-being, work adjustment is positively related to assignment performance across conditions and subjects.
Keywords: expatriates, international assignment, cosmopolitanism, crossculture adjustment, multinational corporations, preference persistence, assignment duration, survey method JEL Classification: D23
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ESMT No. 08–010 Trust and Creativity: Identifying the Role of Trust in Creativity-Oriented Joint-DevelopmentsAuthors: Francis Bidault, ESMT and Alessio Castello, Georgia Tech France - Abstract: In this article we report on the design, prototyping and results of a research effort aimed at identifying if and how trust affects the creativity of a partnership between two economic agents. The methodology combines an experiment and two questionnaires. The purpose of the research is to increase our understanding of trust and its impact on the outcome of cooperation, and to derive some guidance for economic actors, namely R&D managers and executives who want to build trustful innovation oriented relationships with their business partners. Specifically, we investigate the effect of trust on partners’ creativity and willingness to invest financially in a joint development. Our results show that more trustful partners invest higher amounts in the alliance, while there seems to be an optimum amount of mutual trust between partners to maximize their joint creativity; if the level of mutual trust is below or above this threshold; their joint creativity seems to decrease.
Keywords: trust, partnerships, joint-innovation, co-development, creativity
Full text downloadable pdf-file (135.4 KB) |
ESMT No. 08–009 Career EntrepreneurshipAuthor: Konstantin Korotov, ESMT and Svetlana Khapova, Vrije Universiteit Amsterdam - Abstract: This paper introduces a fresh phenomenon, that of “career entrepreneurship,” which we argue is becoming increasingly adopted by individuals in order for them to succeed in the contemporary, global world of work. At its core, career entrepreneurship involves breaking widely accepted assumptions about careers in terms of age, level of education, gender, life stage, cultural or socio-economic background, etc. This behavior also involves the pursuit of opportunities in one’s career beyond the resources perceived to be directly controlled by or accessible to other career actors. The paper begins by examining how this concept relates to other career and related behavioral phenomena. Next, it examines the career investments career entrepreneurs make in order to succeed. Among these are doing what others do not dare to do, using unusual connections, going for new fields and operating in transitional environments. The paper concludes by offering a set of research propositions which can guide further development of the concept. They include the relationships between career entrepreneurship and (a) career success, (b) life-stages, and (c) contexts.
Keywords: career entrepreneurship, career success, career investments, three ways of knowing
Full text downloadable pdf-file (474.7 KB)
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ESMT No. 08–008 (R1)Profiting from Technological Capabilities: Technology Commercialization Strategy in a Dynamic Context
Author: Simon Wakeman, ESMT - Abstract: This paper analyzes the technology commercialization strategy of an innovating firm when the incumbent firms possess specialized commercialization capabilities. The predominant framework says that if the innovation is protected by a tight appropriability regime the optimal strategy is to license the innovation to an incumbent firm. Using a game-theoretic model of the technology commercialization process, this paper shows that if the innovating firm has specialized technological capabilities and the ability to learn from its experience in the commercialization process, its optimal strategy may – under certain conditions – be to commercialize alone or to pursue a hybrid whereby it licenses the innovation but retains the rights to participate in the commercialization process. The paper then uses the conditions derived from the model to explain the pattern of technology commercialization arrangements pursued by biotech firms attempting to commercialize 1590 identifiable products in the pharmaceutical industry between 1978 and 2008. The results show that a firm is significantly more likely to use the hybrid strategy when there are more firms competing to license the innovation, when there is a higher probability of commercializing a subsequent product in the same product field in future, and when it is in a stronger financial position.
Keywords: technology commercialization, biotech, applied game theory, biotechnology, capabilites, innovation, entrepreneurship
Full text downloadable pdf-file (252.0 KB)
ESMT No. 08–008 (original version)Technology Commercialization Strategy in a Dynamic Context: Complementary Assets, Hybrid Contracts, and Experiential Learning Author: Simon Wakeman, ESMT Full text downloadable pdf-file (423.7 KB) |
ESMT No. 08–007 Organizational Redesign, Information Technologies and Workplace ProductivityAuthors: Benoit Dostie and Rajshri Jayaraman, ESMT - Abstract: Using a large longitudinal, nationally representative workplace-level dataset, we explore the productivity gains associated with computer use and organizational redesign. The empirical strategy involves the estimation of a production function, augmented to account for technology use and organizational design, correcting for unobserved heterogeneity. We find large returns associated with computer use. We also find that computer use and organizational redesign may be complements or substitutes in production, and that the productivity gains associated with organizational redesign are industry-specific.
Keywords: organizational capital, it, computers, workplace productivity, matched employer-employee data
JEL Classification: D20, L20, M54, O33
Full text downloadable pdf-file (711 KB)
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ESMT No. 08–006*Resource and Revenue Management in Nonprofit OperationsAuthors: Francis de Véricourt, ESMT and Miguel Sousa Lobo, Duke University - Abstract: Nonprofit firms sometimes engage in for-profit activities for the purpose of generating revenue to subsidize their mission activities. The organization is then confronted with a consumption vs. investment tradeoff, where investment corresponds to providing capacity for revenue customers, and consumption corresponds to serving mission customers. Exemplary of this approach are the Aravind Eye Hospitals in India, where profitable paying hospitals are used to subsidize care at free hospitals. We model this problem as a multi-period stochastic dynamic program. In each period, the organization must decide how much of the current assets should be invested in revenue-customer service capacity, and at what price the service should be sold. We provide sufficient conditions under which the optimal capacity and pricing decisions are of threshold type. Similar results are derived when the selling price is fixed but the banking of assets from one period to the next is allowed. We compare the performance of the optimal threshold policy with heuristics that may be more appealing to managers of nonprofit organizations, and assess the value of banking and of dynamic pricing through numerical experiments.
Keywords: capacity allocation, revenue management, dynamic pricing, nonprofit
*Published: (2009). Operations Research: Articles in Advance, 1–15. Full text downloadable pdf-file (686.5 KB) |
ESMT No. 08–005Nurse-To-Patient Ratios in Hospital Staffing: A Queueing PerspectiveAuthors: Francis de Véricourt, ESMT and Otis B. Jennings, Duke University - Abstract: The immediate motivation of this paper is California Bill AB 394, legislation which mandates fixed nurse-to-patient staffing ratios as a means to address the current crisis in the quality of health care delivery. Modeling medical units as closed queueing systems, we seek to determine whether or not ratio policies are effective at managing nurse workload. Our many-server asymptotic results suggest that ratio policies cannot provide consistently high service quality across medical units of different sizes. As a remedy, we recommend policies that deviate from the restrictive linear nature of ratio policies, employing the "square root rule" commonly used to staff large service systems. Under some quality of care assumptions, our policies exhibit a type of "super" pooling effect, in which, for large systems, the requisite workforce is significantly smaller than the nominal patient load.
Keywords: queueing system, health care, public policy, nursing, staffing, manyserver limit theorems
Full text downloadable pdf-file (452.1 KB) |
ESMT No. 08–004Critical MassAuthors: Michał Grajek, ESMT and Tobias Kretschmer, Ludwig-Maximillian-Universität München
- Abstract: This paper develops a structural model of demand for a network good to provide a rigorous definition of critical mass. Using simulations, we demonstrate that our model of critical mass can be operationalized easily and can generate theoretically grounded insights about critical mass phenomena identified in empirical settings. We then propose a number of extensions to illustrate the flexibility of our model.
Keywords: critical mass, network effects, diffusion of innovations, compatibility
JEL Classification: C53, L14, M37
Full text downloadable pdf-file (1.3 MB) |
ESMT No. 08–003The Rhythm of the Deal: Negotiation as a DanceAuthors: Erik H. Schlie, ESMT, and Mark A. Young, Rational Games, Inc. - Abstract: In all the literature on the theory and practice of negotiation, the governing
metaphor remains consistently one of war or fighting. This is true not only for tactical schools of power-based negotiation, but even for more constructive, interest-based approaches. Our language is infused with talk of tactics, flanks, concessions, gaining ground and winning. This article explores the possible consequences of abandoning this picture in favor of the far too little explored metaphor of the dance. We will see that both the content and the process of negotiation can change dramatically once when we think of bargaining as an aesthetic activity which provides intrinsic joy as well as extrinsic benefits. In such a dance, there is plenty of room for competition as well as cooperation, as movements can be spirited and confrontational as well as smooth and harmonious. We identify many forms of dance in negotiation, and explore three: the dance of positioning, where passions and presentations interact proudly; the dance of empathy, when the partners come to better understand each other; and then the dance of concessions, where the deal is struck and the music comes to an end. Finally, we will try to show how the dance can be employed pedagogically, in teaching and training negotiation and mediation. In particular, the Brazilian dance of capoeira illustrates holistically and experientially how movement and rhythm can be interpreted both as fight and as a dance and how we can come to see a process as both aesthetic and purposeful at the same time. First feeling, then thinking and finally speaking, we can use this medium to explore the dynamics of confrontation and cooperation in a negotiation setting.
Keywords: negotiation, dance, concessions, bargaining
Full text downloadable pdf-file (885.5 KB)
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ESMT No. 08–002Legacy Effects in Radical Innovation: A Study of European Internet BankingAuthors: Erik H. Schlie, ESMT, Jaideep C. Prabhu, Tanaka Business School, Imperial College London, and Rajesh K. Chandy, Carlson School of Management, University of Minnesota - Abstract: How do firms cope with the challenges of disruptive change in their industry? Numerous studies have highlighted that success with any prior technology creates a negative legacy effect for the next radical technological shift. We question the verly pessimistic view of such legacy effects and ask how quickly firms embrace echnological breakthroughs by radically innovating and who wins in the longer term? In this paper, we argue that legacy is a multi-faceted construct whose diverse aspects could simultaneously have different effects on innovation speed and market performance. We identify three main types of legacy related to echnology, organizational, and country-level influences. Previous research tends to focus on technological or market effects in isolation, whereas we seek to study the effects of both firm and country legacy simultaneously on speed to radical innovation and market performance over time. Based on a conceptual framework we develop six hypotheses concerning the legacy effects on initial speed radical innovation and subsequent market performance. We chose the European retail banking industry and the focal innovation of transactional Internet banking as a suitable empirical context to employ quantitative hypothesis testing. Detailed and longitudinal (1996-2001) data were collected for a sample of 123 banks from six European countries: United Kingdom, Germany, France, Sweden, Finland, and Denmark. We specified a model and used threestage least squares (3SLS) as a method to estimate simultaneous regression equations due to endogeneity of a key variable. We show that the prevailing negative view of legacies is likely to be overstated.
Keywords: innovation, legacy, internet banking, europe
JEL Classification: M31
Full text downloadable pdf-file (2.9 MB) |
ESMT No. 08–001Upsetting Events and Career Investments in the Russian ContextAuthors: Konstantin Korotov, ESMT and Svetlana Khapova, Vrije Universiteit Amsterdam - Abstract: In this paper we examine the role of disruptive or upsetting events in people’s professional lives and explore how they influence individuals’ investments in their careers. Based on previous research we have assumed that due to considerable societal and economic changes in Russia and the reported negative consequences felt by many individuals, the context of that country is a fruitful arena for an investigation of the role of upsetting events on individuals’ careers. At the same time, despite the negative events and a disruption of many traditional career-supporting structures, a significant number of Russians managed to reinvent their careers and achieve tremendous objective and subjective success in their careers in a relatively short time period.
This paper examines stories about career investments of 140 successful entrepreneurs from Russia. A significant portion of these people explicitly reported influence of upsetting events on their own career investments. Based on the exploration of career stories, the paper introduced a typology of the upsetting events in the Russian context. The events were generally classified into those that represented “macro” and “micro” upsetting events. Macro events refer to changes in socio-economic, and political systems. Micro events refer to the events that only concern the individual him- or herself, or may include events at work or at home. Our analysis of the career investments of the Russian entrepreneurs using the intelligent career concept shows that when faced with the upsetting events individuals tend to (a) reconsider their existing events, (b) divest from their old ways of knowing, and (c) invest in relatively new ways of knowing.
Our study calls a particular attention to the role of career divestments, or discontinuing certain ways of investing in order free resources for a different investment expected to be more fruitful in terms or returns. Attention to divestment may be warranted due to the increased unpredictability of working lives of today’s career actors.
This study contributes to responding to a call for a better understanding of the role of upsetting events on people’s careers and the society at large. We also bring further our understanding of human adjustment to the sometimes upsetting changes in their surroundings through working life, thus enhancing our understanding of the role of careers in socio-economic systems. Last but not least, the study also contributes to a better understanding of careers in modern Russia. With the increasing role of Russia on the international political and economic arena, understanding people through looking at their working lives is a good start for multiple potential research endeavors in the fields of career research and beyond.
Keywords: Careers, intelligent career investments, career divestment, upsetting events, Russia.
Full text downloadable pdf-file (408.3 KB) |
ESMT No. 07–005*Ambiguity Aversion And The Power Of Established BrandsAuthors: A. V. Muthukrishnan, Hong Kong University of Science and Technology, and Luc Wathieu, ESMT
Abstract: This paper investigates situations where a sizable sub-set of consumers prefer an inferior (dominated) offer made by an established brand to a superior (dominating) offer made by a less-established brand. Established brands are those for which consumers hold more confident beliefs concerning overall quality. Through a series of eight experiments, we test the hypothesis that the preference for a dominated established brand is linked to ambiguity aversion, a seemingly unrelated pattern of choice behavior between monetary gambles. We first show a correlation between ambiguity aversion and the preference for dominated established brands. We then demonstrate that the preference for established brands is enhanced when ambiguity aversion is made more salient in unrelated preceding choices. To further study the ambiguity-reducing properties of established brands, the last experiments assign brand names to monetary gambles, and it appears that (a priori unrelated) established brand names increase the likelihood of choosing ambiguous gambles. Overall, this research argues that brand equity for longstanding brands derives (at least in part) from consumers’ tendency to avoid ambiguity.
Keywords: branding; brand choice; consumer behavior; decision making under uncertainty
JEL Classification: C91, D10, D80, M31
* Forthcoming in Management Science.
Full text downloadable pdf-file (325 KB) |
ESMT No. 07–004*Accelerated Development of Organizational TalentAuthor: Konstantin Korotov, ESMT
Abstract: This working paper explores the challenges of accelerated development of organizational talent. The meaning of the word "accelerated" is that such development takes place at a pace that is significantly higher than that of "traditional" development that allows an individual to learn the intricacies of the current job, observe incumbents in a higher level position (usually, one level up), practice elements of the boss' job when being delegated tasks, undergoing formal training, or benefiting from the knowledge accumulated by others and codified in the knowledge management systems. Accelerated development means, contrary to the usual, more traditional developmental path, bypassing traditionally expected career steps, stretched over a longer period of time learning opportunities, and/or age-related developmental progression. Accelerated development is a necessity for organizations facing unprecedented growth, lack of qualified individuals in the internal or external labor markets, and significant pressures from other organizations that are ready to "poach" talented executives and employees and offer them even higher levels of responsibility and remuneration. Organizations also respond with accelerated development initiatives to the individuals engaged in career entrepreneurship, i.e., those who make alternative career investments in order to enjoy quicker returns in terms of career growth and progression.
This paper discusses the challenges of accelerated development programs, such as not only learning the competencies required in the new position, but also developing a new identity. The paper discusses the process of going through an accelerated development program and identifies its important elements: pre-entry experience, initial surprise of getting into the accelerated program's environment and learning to use it, engaging in identity exploration through examining past and present identities, staging identity experiments, and, finally, stepping out of the program into the real world.
Keywords: organizational behavior, human resource management, executive education, identity, accelerated development.
* Published in Smart Talent Management: Building Knowledge Assets for Competitive Advantage, eds. V. Vaiman and C. M. Vance, 139–157. Cheltenham: Edward Elgar.
Full text downloadable pdf-file (203.5 KB)
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ESMT No. 07–003*Usage and Diffusion of Cellular Telephony, 1998-2004Authors: Michał Grajek, ESMT and Tobias Kretschmer, Ludwig-Maximillian-Universität München
- Abstract: We study the dynamics of usage intensity of second-generation cellular telephony over the diffusion curve. Specifically, we address two questions: First, can we draw conclusions about the underlying drivers of technology diffusion by studying usage intensity? Second, what is the effect of high penetration of previous generations and competing networks on network usage intensity? Using an operator-level panel covering 41 countries with quarterly data over 6 years, we find that heterogeneity among adopters dominates network effects and that different technological generations are complements in terms of usage, but substitutes in terms of subscription.
Keywords: cellular telephony, diffusion, usage intensity, network effects, consumer heterogeneity, fixed-mobile substitutability
JEL Classification: L1, L52, O38
* Published in (2009). International Journal of Industrial Organization, 27(2): 238–249. Full text downloadable pdf-file (330.5 KB) |
ESMT No. 07–002* Estimating Level Effects in Diffusion of a New Technology: Barcode Scanning at the Checkout Counter Authors: Jonathan Beck, Humboldt Universität zu Berlin, Michał Grajek, ESMT, and Christian Wey, Technische Universität Berlin
- Abstract: Cross-country or cross-industry studies of technology diffusion typically estimate how independent factors affect diffusion speed or timing, often based on a two-stage approach. In many applications, however, countries (industries) differ most in the saturation level of diffusion. In a novel, single-stage econometric approach to a standard diffusion model, we therefore estimate how the saturation level co-varies with independent factors. In our application to diffusion of an important retail information technology, we focus on the competitive effect of hypermarkets (superstores). We also find standard scale, income and labor substitution effects.
Keywords: diffusion; information technology; retail competition
JEL Classification: L5, L81, O33
* Forthcoming: Applied Economics. Full text downloadable pdf-file (300 KB) |
ESMT No. 07–001*Estimating Network Effects and Compatibility in Mobile Telecommunications Author: Michał Grajek, ESMT- Abstract: I develop a structural demand model for mobile telephone service, which facilitates the identification of network effects and compatibility between networks. Network effects are measured by the dependence of consumer willingness to pay on the installed base of subscribers. Compatibility is measured by the relative extent of cross- and own-network effects. I then estimate the model using quarterly panel data from the Polish mobile telephone industry from 1996-2001 and find strong network effects and—despite full interconnection of the mobile telephone networks—low compatibility. I also show that ignoring network effects leads to an overestimation of elasticity of demand.
Keywords: structural econometric model, network effects, compatibility, mobile telecommunications
JEL Classification: C51, D12, L96
* Forthcoming: Information Economics and Policy. Full text downloadable pdf-file (509 KB)
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