Rajiv K. Sinha

Innovativeness in industrial organizations: A two-stage model of adoption

Abstract Micro-models of adoption of innovations have provided contradictory results regarding the impact of organizational characteristics upon “innovativeness.” We suggest that these differences can be reconciled by explicitly incorporating the notion that firms differ in terms of their Opportunities for Adoption. We propose a modeling approach to capture the probability of adoption as a function of opportunities for adoption, innovativeness and past adoptions. The model is tested on a sample of 8,000 firms in the context of the adoption of personal computers. The results are compared with those obtained from a conventional logit model. Split-sample validation attests to the robustness of the results from the two-stage model.

A model of market entry in an emerging technology market

The timing of market entry is a critical decision, involving the need to balance the risk of premature entry with the problems of missed opportunities as a result of late entry. Drawing from several theoretical perspectives, we propose a model for explaining the reasons for early or delayed entry into an emerging technology market. A novel feature of our study is the use of a hazard modeling framework to analyze longitudinal data pertaining to over 3500 entrants and nonentrants during the emergence of the automated teller machine market. This approach alleviates the sample selection problems associated with prior entry research. With caution in generalizing the results to other settings, we find compelling evidence in support of the model, extending our knowledge of the dynamics surrounding entry into certain technology markets.

The performance consequences of subfield entry

The emergence of technical subfields is a common phenomenon in dynamic as well as relatively stable industries. The proper strategic response to the emergence of a subfield, that is, the decision on whether to enter or not to enter, is a key determinant of future firm performance. We propose that this entry decision is not a simple one. The effects of subfield entry may be influenced by strategic factors related to the subfield as well as to the greater industry environment. In this study, we apply a population ecology framework to the study of subfield birth and evolution and use this perspective to develop and test several propositions related to the effects of subfield entry on performance. The data pertain to the evolution of the automatic teller machine subfield over the first 9 years of its existence for a population of over 3500 banks. Our results support the population ecology framework, generally emphasizing the positive performance consequences of early subfield entry.

Product Line Extension in Consumer Software Markets in the Presence of Free Alternatives

Hypercompetitive consumer software markets pit incumbents against free alternatives and pirates. Although the extant literature has studied firm level strategic responses to consumer heterogeneity and piracy, there is a lack of understanding of consumer reactions to digital goods choice sets that include firm product extensions such as the introduction of premium or free alternatives. With context-dependent preferences as the theoretical basis, this study systematically examines the impact of piracy controls and product line extensions on welfare in a consumer software market context (i.e., willingness to pay (WTP) and changes in consumer and producer surplus). In two controlled experiments using double-bound-dichotomous-choice WTP elicitation, we investigate how piracy controls and product line extensions impact two different platforms of the same software (PC Adobe applications and mobile Adobe applications) in terms of propensity to pirate and WTP. We show that introducing a premium or free vertical extension has different impacts on consumers’ WTP for the focal product depending on whether it is a low-cost or high-cost market even when controlling for individual differences, such as price fairness perceptions, product feature value, brand perceptions, etc. By contrast, piracy controls reduce piracy rates but have a limited impact on consumer WTP for the focal product in both contexts. By calculating the overall welfare of the market, we show that there is alignment in consumer and producer interests at current and estimated optimal price levels in both high-cost and low-cost markets. However, the introduction of a free product extension leads to a higher surplus in the high-cost market, whereas the introduction of the premium product extension leads to a higher surplus in the low-cost market.