Can vendors influence switching costs and compatibility in an environment with open standards?

Pei-yu Chen, Chris Forman

Research output: Contribution to journalArticle

60 Citations (Scopus)

Abstract

This paper examines the potential social costs of standardization, including possible vendor reactions to standards and their impacts on the adoption of new technology and long-term market structure. Specifically, we study how vendors might react to standards in the market for routers and switches, two of the most important pieces of networking hardware for the information systems infrastructure of modern firms. Using data from over 22,000 establishments surveyed by Harte Hanks Market Intelligence, we provide evi dence that vendors are able to maintain high switching costs in the market for routers and switches despite the presence of open standards in the industry. Several vendor actions are discussed in this paper, including manipulating horizontal compatibility between comparable rival products and vertical compatibility between complementary products, maintaining a broader product line, creating product suites, and targeting specific market segments. Our results further suggest that the presence of switching costs can lead to inefficient adoption of new information technology and that vendors may be able to influence the speed of new information technology adoption.

Original languageEnglish (US)
Pages (from-to)541-562
Number of pages22
JournalMIS Quarterly: Management Information Systems
Volume30
Issue numberSPEC. ISS.
StatePublished - 2006
Externally publishedYes

Fingerprint

Routers
Information technology
market
costs
new technology
Switches
Costs
Standardization
Computer hardware
information technology
Information systems
social costs
hardware
networking
information system
Vendors
Compatibility
Open standards
Switching costs
Industry

Keywords

  • Compatibility
  • Open standards
  • Routers
  • Switches
  • Switching costs

ASJC Scopus subject areas

  • Information Systems
  • Management Information Systems
  • Library and Information Sciences
  • Management of Technology and Innovation
  • Strategy and Management

Cite this

Can vendors influence switching costs and compatibility in an environment with open standards? / Chen, Pei-yu; Forman, Chris.

In: MIS Quarterly: Management Information Systems, Vol. 30, No. SPEC. ISS., 2006, p. 541-562.

Research output: Contribution to journalArticle

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