Customer-capturing strategies: The way to replace existing technology characterized by network effects

Network effects are the basis of competitive advantage in digital economies. Although some researchers have indicated that technologies characterized by network effects are difficult to replace, real-world situations have not confirmed this argument. Challengers still defeat market leaders in market...

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Bibliographic Details
Published in:Technovation 2006-12, Vol.26 (12), p.1384-1389
Main Authors: Teng, Ching-I, Tseng, Fan-Chen, Chiang, David M.
Format: Article
Language:English
Subjects:
Competitive advantage
Customer-capturing strategies
Customers
Electronic commerce
Network effects
Studies
Technology
Technology replacement
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Summary:Network effects are the basis of competitive advantage in digital economies. Although some researchers have indicated that technologies characterized by network effects are difficult to replace, real-world situations have not confirmed this argument. Challengers still defeat market leaders in markets with network effects. The analytical results presented here include the following: (1) a proposed new concept, resilience, can describe the resistive strength of a network to challenger customer-capturing strategies, (2) three types of networks can be identified based on their resilience values, and (3) high-resilience networks possessing technology are difficult to replace.
ISSN:0166-4972
1879-2383
DOI:10.1016/j.technovation.2005.08.005