We investigate the impact of the intergenerational nature of services, via backward compatibility , on the adoption of multigenerational platforms. We consider a mobile Internet platform that has evolved over several generations and for which users download complementary services from third-party providers. These services are often intergenerational: newer platform generations are backward compatible with respect to services released under earlier generation platforms. In this paper, we propose a model to identify the main drivers of consumers' choice of platform generation, accounting for (i) the migration from older to newer platform generations, (ii) the indirect network effect on platform adoption due to same-generation services, and (iii) the effect on platform adoption due to the consumption of intergenerational services via backward compatibility. Using data on mobile Internet platform adoption and services consumption for the time period of 2001Ð2007 from a major wireless carrier in an Asian country, we estimate the three effects noted above. We show that both the migration from older to newer platform generations and the indirect network effects are significant. The surprising finding is that intergenerational services that connect subsequent generations of platforms essentially engender backward compatibility with two opposing effects. Whereas an intergenerational service may accelerate the migration to the subsequent platform generations, it may also, perhaps unintentionally, provide a fresh lease on life for earlier generation platforms due to the continued use of earlier generation services on newer platform generations.
Conspicuous consumption affects anyone who cares about social status; it has intrigued sociologists and economists for more than 100 years. The idea that conspicuous consumption can increase social status, as a form of social capital, has been broadly accepted, yet researchers have not been able to test this effect empirically. In this work, we provide empirical evidence by analyzing the digital footprints of purchases and social interactions in different virtual worlds. We use a multimethod approach, such that we both analyze transactional data and conduct a randomized field experiment. Virtual worlds, as artificial laboratories, offer the opportunity to analyze the social capital of their inhabitants, subsequent to their purchase of virtual prestige goods, which provides a means to empirically test hypotheses that would be nearly impossible to test in real-world settings. Our results are consistent with the notion that conspicuous consumption represents an investment in social capital.
Open source software (OSS) communities live and die with the continuous contributions of programmers who often participate without direct remuneration. An intriguing question is whether such sustained participation in OSS projects yields economic benefits to the participants. Moreover, as participants engage in OSS projects, they take on different roles and activities in the community. This raises additional questions of whether different forms of participation in OSS communities are associated with different economic rewards and, if so, in which contexts. In this paper, we draw upon theories of signaling and job matching to hypothesize that participants who possess "proof" of their skills in OSS projects are financially rewarded for their activities in the labor market. More specifically, we distinguish between participation in OSS communities that is associated with a signaling value for unobserved productivity characteristics and an additional value that accrues to participants whose OSS roles and activities match those in their paid employment. Following a cohort of OSS programmers over a six-year period, we empirically examine the wages and OSS performance of participants in three of the foremost OSS projects operating within the Apache Software Foundation. Controlling for individual characteristics and other wage-related factors, our findings reveal that credentials earned through a merit-based ranking system are associated with as much as an 18% increase in wages. Moreover, we find that participants who have OSS project management responsibilities receive additional financial rewards if their professional job is in IT management. These findings suggest that rank within an OSS meritocracy is a credible and precise signal of participants' productive capacity and that participants' roles and activities in an OSS community have additional financial value when aligned with their paid employment.
The enhanced abilities of online retailers to learn about their customers’ shopping behaviors have increased fears of dynamic pricing, a practice in which a seller sets prices based on the estimated buyer’s willingness-to-pay. However, among online retailers, a deviation from a one-price-for-all policy is the exception. When price discrimination is observed, it is often in the context of customer outrage about unfair pricing. One setting where pricing varies is the name-your-own-price (NYOP) mechanism. In contrast to a typical retail setting, in NYOP markets, it is the buyer who places an initial offer. This offer is accepted if it is above some threshold price set by the seller. If the initial offer is rejected, the buyer can update her offer in subsequent rounds. By design, the final purchase price is opaque to the public; the price paid depends on the individual buyer’s willingness-to-pay and offer strategy. Further, most forms of NYOP employ a fixed threshold price policy. In this paper, we compare a fixed threshold price setting with an adaptive threshold price setting. A seller who considers an adaptive threshold price has to weigh potentially greater profits against customer objections about the perceived fairness of such a policy. We first derive the optimal strategy for the seller. We analyze the effectiveness of an adaptive threshold price vis-à-vis a fixed threshold price on seller profit and customer satisfaction. Further, we evaluate the moderating effect of revealing the threshold price policy (adaptive versus fixed) to buyers. We test our model in a series of laboratory experiments and in a large field experiment at a prominent NYOP seller involving real purchases. Our results show that revealing the usage of an adaptive mechanism yields higher profits and more transactions than not revealing this information. In the field experiment, we find that applying a revealed adaptive threshold price can increase profits by over 20 percent without lowering customer satisfaction.
The advent of the Internet has made the transmission of personally identifiable information more common and often unintended by the user. As personal information becomes more accessible, individuals worry that businesses misuse the information that is collected while they are online. Organizations have tried to mitigate this concern in two ways: (1) by offering privacy policies regarding the handling and use of personal information and (2) by offering benefits such as financial gains or convenience. In this paper, we interpret these actions in the context of the information-processing theory of motivation. Information-processing theories, also known as expectancy theories in the context of motivated behavior, are built on the premise that people process information about behavior--outcome relationships. By doing so, they are forming expectations and making decisions about what behavior to choose. Using an experimental setting, we empirically validate predictions that the means to mitigate privacy concerns are associated with positive valences resulting in an increase in motivational score. In a conjoint analysis exercise, 268 participants from the United States and Singapore face trade-off situations, where an organization may only offer incomplete privacy protection or some benefits. While privacy protections (against secondary use, improper access, and error) are associated with positive valences, we also find that financial gains and convenience can significantly increase individuals' motivational score of registering with a Web site. We find that benefits--monetary reward and future convenience--significantly affect individuals' preferences over Web sites with differing privacy policies. We also quantify the value of Web site privacy protection. Among U.S. subjects protection against errors, improper access, and secondary use of personal information is worth $30.49--$44.62. Finally, our approach also allows us to identify three distinct segments of Internet...
Successful companies find it exceedingly difficult to change their business strategy radically in response to impending changes in their competitive environment. Here, the authors analyze how Rosenbluth International, one of the largest travel agencies, was able to accomplish that. Threatened with disintemediation during the period of drastic restructuring of travel brokerage, the company strategically revised its value proposition. It has divested itself of its leisure travel segment and offered a range of its services on a fee basis to its customers, rather than rely on commissions by the suppliers of travel services, as it had done previously. This strategic change was enabled by information systems, several of them highly innovative, which Rosenbluth had used strategically in its prior business initiatives. The paper analyzes the management of strategic transition at Rosenbluth International in the light of general theory of organizational resistance to change.