Modeling indirect network effects in new product growth

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Project objective

This research aims to carry new product diffusion models in new directions to accommodate for the simultaneous study of the growth in hardware sales and software availability (indirect network effects ). The focal question is: what is the role of the availability of software/content (e.g. DVD movies) in the growth of hardware (e.g. DVD Player) sales? This study contributes to the literature in three ways:(a) specification of an innovative diffusion model which accounts for indirect network effects;(b) theory development on the role of indirect network effects in new product growth, more specifically:(1 ) on the variation of indirect network effects over the product life cycle;(2) on the chicken-and-egg problem of which comes first software availability or hardware sales; (c) elaborate empirical testing of the phenomenon using new data on several consumer electronics; The study method is archival analysis. This is a method of assembling, critically examining and summarizing records of the past. We will collect data from private archives, public research reports, government reports, magazines and newspapers. So far, we have collected data on seven hardware/ software markets in consumer electronics. The model we develop is a multivariate regime-switching model, which is new to marketing and management science. The issue we address in this consistent research program is considered a pressing question by leading authors and research institutes in the field.

Original text from CORDIS.

Participants

• ERASMUS RESEARCH INSTITUTE OF MANAGEMENT · ROTTERDAMCoordinatorCity levelNetherlands

Links

• View on CORDIS