1,720,963 research outputs found
Rethinking Competitive Positioning: Customer Value, Flexibility, and Generalist Advantage
No full textThis paper contributes to prior research on firm positioning by bringing in demand-side factors. In
particular, we develop a formal model to show how an important, yet ofen overlooked demand-side
contingency –customers switching costs- can afect the competitive advantage of generalists over
specialists. In this regard, we suggest that generalists have an advantage in comparison to specialists
since they provide ex-ante flexibility to customers to switch between multiple firm oferings without
changing service provider. Such flexibility is particularly valued in the settings where customer
switching costs are high. We hypothesize that generalists lose this advantage, and grow less in
comparison to specialists, once customer switching costs fall. We test our hypothesis using a sample of
Latin American mobile communications carriers from 2003 to 2015. In particular, we draw on an
exogenous policy change (mobile number portability) that suddenly decreases customer switching
costs. Using a diferences-in-diferences methodology allows us to estimate the causal efects of
competitive positioning on firm performance in diferent demand settings. Our results reveal that
generalists grow less in comparison to specialists afer the policy change
Market frictions and competitive positions: lessons from the mobile telecommunications market
No full textThis study explores how multi-segment and single-segment competitive positions within an industry are affected by changes in market frictions. A multi-segment position can create value for customers in the form of flexibility to change between service configurations without the need to switch providers. Customers can start with the basic version of a service, then switch to a more advanced version as their preferences evolve. Such a value creation mechanism is effective only in the presence of high costs of switching from one provider to another. Thus, when switching costs fall, multi-segment firms will experience a larger penalty than single-segment ones.
Out of the trap: customer switching costs, conversion funnel, and industry profitability
No full textDo lower switching costs reduce industry profitability? While established strategy frameworks predict a drop in prices and profitability following reductions in switching costs, we provide a counterexample in which firms’ business model interacts in unexpected ways with switching costs. Across many industries, firms employ a conversion funnel business model to attract customers with affordable products, generate lock-in, and later encourage them to convert to more advanced and profitable products. We argue that a sudden reduction in switching costs disrupts this conversion funnel, which eventually can increase industrywide prices and profitability. We develop a stylized model to formalize our ideas and provide evidence in support of the predictions, using a difference-in-differences methodology with staggered treatment for a large, global sample of mobile telecommunications operators
Out of the trap: Conversion funnel business model, customer switching costs, and industry profitability
No full textResearch Summary: Across many industries, firms employ a conversion funnel business model to attract customers with basic and affordable products, generate lock-in, and then sell them more advanced and expensive products. We argue that this business model, coupled with high customer switching costs, results in a market outcome characterized by aggressive pricing and reduced profits. A sudden reduction in customer switching costs disrupts the conversion funnel and can eventually increase industrywide prices and profitability, an outcome that contradicts conventional wisdom in strategy research. We develop a stylized model to formalize our ideas and provide supportive evidence using a difference-in-differences methodology with staggered treatment for a large, global sample of mobile telecommunications operators. Managerial Summary: Industry changes that lower customer frictions can surprisingly be beneficial for companies. Building on the telecommunications industry, we document how a reduction in customer switching costs following mobile number portability increases the profitability of mobile operators. We explain this finding based on a change in companies' business model. When switching costs are high, companies adopt a funnel business model designed to convert customers from basic to advanced products. While advantageous for a single company, when strategic interactions are accounted for, the diffusion of this business model has a depressive effect on average market prices and profitability. A reduction in customer switching costs breaks the funnel and decouples product pricing decisions that, counterintuitively, can lead to higher industrywide prices and greater profitability
How Does Firm Scope Depend on Customer Switching Costs? Evidence from Mobile Telecommunications Markets
No full text10.1287/mnsc.2020.3913Management Scienc
Multihoming and single-homing complementors' responses to intensified between-platform competition: Evidence from the YouTube–Twitch rivalry
No full text
Going Beyond Counting First Authors in Author Co-citation Analysis
Full text linkThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
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