Search

Piracy is commonly believed to be detrimental to legal suppliers, so strong enforcement against piracy is expected. However, in practice, some companies do not deter piracy actively which seems counterintuitive. To explore the rationale behind the uncommon phenomenon, this paper explores the piracy issue from the entry deterrence perspective. In particular, we study an incumbent’s entry deterrence strategy using piracy when facing a potential entrant who offers similar products in the market. The incumbent decides whether to deter the piracy, and the entrant chooses whether to enter the market by anticipating the competition in the potential market and the entry cost. By analyzing the strategies of both the incumbent and the entrant, we find that deterring piracy is not always a good strategy since piracy could be used as a deterring strategy on the entrant, which explains the practices in many companies. Specifically, we find that when the entry cost is moderate, the incumbent accommodates piracy when the entrant is more of a threat, and piracy serves as a partner of the incumbent to prevent the entry of a powerful entrant. This conclusion also holds when considering the entry deterrence cost, network effect and the entrant is a high end substitute.

Digital goods, such as software, are significant elements of the contemporary digital economy. The authors propose a model that characterizes dynamic profit-maximizing competitive pricing strategies of digital goods with network effects. In a two-period game theory model, an incumbent firm has a quality advantage in period 1, but the potential disrupter has a quality advantage in period 2. They analyze pricing strategies and characterize conditions under which the potential disrupter becomes an actual disrupter. They discuss implications for user adoption of digital goods and opportunities for future research.

The article analyses the main features of the intellectual activity results market through the lens of the product boundaries definition. Frequently the pirated copy is not considered as a substitute for original products in legal cases. However, unlicensed computer programs should be included in the product market boundaries regardless of its legal status if the consumer considers them as substitutes. The difference between these types of products (original and pirated) are hidden not in transformation but in transaction characteristics. It is also important to take into consideration the possible complementarity between pirated and original products expressed in the information and network effects. In order to assess the buyers’ choice it is necessary to adjust the methods evaluating product market boundaries prescribed by «The Procedure of market competition analysis» of the Russia’s Federal Antimonopoly Service.

In highly competitive technology markets, such as the market in which Enterprise Resource Management (ERP) service providers do business, it has become of fundamental importance to understand the factors that create competitive advantages. This paper presents the support from the theoretical frameworks offered by the Resource-based View (RBV) and the Market-based View (MBV) to attempt to explain the competitive advantage held by Totvs Curitiba, a franchise of Totvs, which in turn is a Brazilian company that is a market leader in ERP service provision. In methodological terms, this is a Case Study for which data was collected during interviews and by observation and review of secondary documentary sources. The results suggest that the franchise’s market-leading position was built on a relationship, which is identifiable in the results of this study, between the strategies adopted, resources controlled and competences developed.

We model a market, such as an online software market, in which an intermediary connects sellers and buyers by displaying sellers' products. With two vertically-differentiated products, an intermediary can place either: (1) one product, not necessarily the better one, on the first page, and the other hidden on the second page; or (2) both products on the first page. We show that it can be optimal for the intermediary to obfuscate a product---possibly the better one---since this weakens price competition and allows the sellers to extract a greater surplus from buyers; however, it is not socially optimal. The choice of which one to obfuscate depends on the distribution of search costs.

This paper studies the impact of software piracy in a two-sided-market setting. Software platforms attract developers and users to maximize their profits. The equilibrium price structure is affected by piracy: license fees to developers are higher with more software protection but the impact on user prices is ambiguous. A conflict between platforms and software developers over software protection may arise: whereas one side benefits from better protection, the other party loses out. Under platform compatibility, this conflict is no longer present.

This paper presents a development forecast for the Russian information and communications sector. Two scenarios-inert and innovative investment—are explored for each period. According to the results of our study, in the period from 2010 to 2030, the output of the Russian information and communications sector will increase by a factor of 3.52–4 under the investment scenario and by a factor of 2–2.5 under the inert scenario. This is due to the limited private and public resources that could be invested in the sector on a large scale, as well as to the absence of basic innovation in the area of information and communication technologies, which could have a significant economic impact and provide a basis for a new technological order. It is concluded that the information and communications sector is running out of its market expansion potential.

This study specifically focuses on the software market and tries to identify the sources that intensify equity investments through merger and acquisition (M&A) paths. Increasing the firm size and accessing new growth opportunities is particularly significant in the software industry. Consistent with this view, this work focuses on the cross-border strategies that could be used to manage value creation processes. The results found are based on the fact that diversification of the geographic market (acquiring cross-border technology) is relevant to the positive answers given by the stock markets. Moreover, the age of the target firm strongly influences M&A decisions and the younger the target firm is, the higher the possibility of creating value, but this variable increases uncertainty in the evaluation of the target firm, decreasing the purchase offers. The complementary nature between the acquiring and the target firm and the size of the investing firm influence market return and appear to be linked. These results provide empirical evidence on the use of financial measures to determine the goodness of an acquisition but, above all, they provide a new reading of the evaluation of the complementary nature between the buyer and the target firm.

We adopted a game-theoretic approach to studying competition in the software market that is dependent on the network effect, i.e., where the success of the software product is mainly affected by the size of its installed base. The primary goals of our research were: to provide insights into competition between a new entrant with a significant presence in foreign countries and a home-grown incumbent, and to offer evidence in support to the theory of competition in the software market. Our analysis of word-processing software competition in South Korea between 1997 and 2003 suggested that there are several factors that caused the new entrant [Microsoft in this case], to overtake the native incumbent as the market leader. The findings are integrated into a discussion of the managerial implications.

This article examines the entry into and survival in the U.S. software market by a sample of firms based in India, Ireland, and Israel, with a focus on the pre-entry technological capabilities, international linkages, and home-based experience of these firms as determinants. Using a novel measure of foreign activity, namely, the registration of software trademarks in the United States, this study applies the date of the first trademark application filed with the U.S. Patent and Trademark Office as a proxy for a firm's U.S. entry. Trademark renewals and new trademark applications trace the sample firms' survival. The analysis shows that international linkages have a positive relationship with entry and survival, whereas firm technological capabilities and age are not associated with entry, though technological capabilities affect the likelihood of survival. Copyright © 2010 Strategic Management Society.

Allowing for innovation dynamics in the software market, this paper studies the conditions under which standardization in the hardware market arises and persists over time. In the model, software firms repeatedly invest in quality upgrades, compete in the product market, and make exit as well as entry decisions. The results show that, in general, excess inertia does not occur. A platform becomes the standard in a market only if it is better than the competing platforms. Furthermore, low overall rates of innovation always lead to variety; conversely, the higher the speed of innovation, the more likely standardization is.

Offering a free trial is a common strategy of software vendors, which has been studied by many researchers focusing on the impact of positive network effects. However, the software is not perfectly security, security vulnerabilities may be exploited and incur negative security externalities among software users. In this paper, we examine the free trial strategy in an environment where both positive network effects and security risk exist. The findings indicate that the negative security externality affects the vendor’s decision significantly. Software vendor should offer a free trial when low or moderate negative security externalities and high positive network effects are both satisfied.

This paper is an empirical study of the value of four file compatibility standards for transferring data in the personal computer software market. The results are that only the LOTUS file compatibility standard is significant in explaining price variations and it is significant in both the spreadsheet and database management system markets. This supports the hypothesis that the personal computer software market exhibits complementary network externalities. Copyright 1995 by MIT Press.

As the freemium business models is becoming a prominent success in the online software market, companies are challenged with the question of how to design freemium pricing schemata. This study investigates 17 freemium companies to help understand which features should be made available for free and which shouldn’t. It is observed that the free-premium transition is typically marked by a significant increase in the privileges, access to value-creating gap-filling features.

The subject of technology succession and new technology adoption in a generalized sense has been addressed by numerous authors for over one hundred years. Models which accommodate macro-level events as well as micro-level actions are needed to gain insight to future market outcomes. In the ICT industry, macro-level factors affecting technology adoption include global events and shocks, economic factors, and global regulatory trends. Micro-level elements involve individual agent actions and interactions, such as the behaviors of buyers and suppliers in reaction to each other, and to macro events. Projecting technology adoption and software market composition and growth requires evaluating a special set of technology characteristics, buyer behaviors, and supplier issues and responses which make this effort particularly challenging.

The supposition that issues about quality are inherent to the conquest and maintenance of firm competitiveness motivated this study. Many factors lead to the assumption that the usage of quality practices would feature a meaningful contribution in international business – and this concept could be applied to the software market. This research evaluates the influence of production processes metrics in the Brazilian software industry export performance. For the analysis, 488 companies of the Brazilian software industry were selected from SEPIN/MCT database. The aim of this study was to evaluate the correlation between technological capability, i.e. the number of software certificates obtained by the companies, and its export behavior. The level of software certification does not seem to be significantly related to export performance. The paper discusses this finding and other results related to the competitiveness and perspectives for the Brazilian software industry.

Based on the theory of Complexity Adaptive System (CAS) and methods of experimental economics, using Multi-Agent-Based Simulation, we build a model of the network externality product market with the platform Netlogo3.1.2, analyze the macroscopic consumers’ behavior, find out the important aspects that influence the spreading of products and the proper strategies of enterprises during this process and make a prediction of the China’s instant messenger software market.

Incompatibility in market with network effects reduces consumers’ ability to “mix and match” components offered by different sellers, but can also spur changes in product attributes that might beneÞt consumers. In this paper, we estimate the effects of incompatibility on consumers in a classic hardware/software market: ATM cards and machines. We Þnd that while ATM fees ceteris paribus reduce the network beneÞt from other banks’ ATMs, a surge in ATM deployment accompanies the shift to surcharging. This is valuable to consumers and often completely offsets the harm from higher fees. The results suggest that policy discussions of incompatibility must consider not only its direct effect on consumers, but also its effect on product attributes.

This paper analyses entry and survival in the US software market by using a sample of 875 software and IT service firms located in three emerging economies - India, Ireland and Israel. The empirical analysis addresses the role of pre-entry technological capabilities and international alliances in affecting the firm decision to enter foreign markets and its survival probability. We use software trademarks registered at the US Patent and Trademark Office (USPTO) as a proxy for entry and survival in the US software market. Our empirical analysis shows that there exist significant differences between factors affecting entry and survival in foreign markets. In particular, our evidence supports the view that, while entry may be the result of factors, like fad, that are difficult to predict, survival is explained by strategic choices and firm capabilities. Finally, the role of international alliances is confirmed to be crucial in the firm internationalization process.

As described, standardization models focus rather on modeling the individual’s decision-making and the efficiency of centralized and decentralized coordination mechanisms than on dynamic processes in markets.

Despite high vulnerability and rapid technological development, the software market of Bangladesh is emerging with high potential. Absence of explicit business and technology strategy is affecting the growth and development of software market in Bangladesh. Some strategic success factors that are identified as useful are management of technical people, access to multiple sources of technology, development of technological resources, emphasis on customized software, orientation to customers needs and continuous involvement of entrepreneurs. The strategic success factors needed for software market development are developing appropriate marketing channel, building and maintaining credibility, building market differentiation, linking with large customers and speed to market entry.

In recent years, the worldwide software market has expanded rapidly, creating economies of scale that never existed before. Software-development costs, however, are rising steadily with no limit in sight. Just as substantial quantities of manufactured goods have been produced in developing countries to take advantage of lower labor cost, some firms have started joint software development with partners in developing countries to utilize the same advantage. Cooperation of this type will become increasingly important in the future due to economic incentives. This article examines the key economic, managerial, and technical factors affecting decisions concerning such joint software developments. Different models and practices for joint software development are suggested and discussed.