Improving new technology venture performance under direct and indirect network externality conditions
Podoynitsyna, Ksenia Song, Michael van der Bij, Hans Weggeman, Mathieu
Podoynitsyna, Ksenia
Song, Michael
van der Bij, Hans
Weggeman, Mathieu
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Publication Type
Journal article with impact factor
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Supervisor
Publication Year
2013
Journal
Journal of Business Venturing
Book
Publication Volume
28
Publication Issue
2
Publication Begin page
195
Publication End page
210
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Abstract
This study compares the effectiveness of five responses to external uncertainty in markets with network externalities: avoidance, imitation, control, cooperation, and real options reasoning as a form of strategic flexibility. Our analysis of 385 new technology ventures shows that direct and indirect network externalities have opposite effects on the effectiveness of these strategies. Moreover, under network externalities, attempts to make ventures less dependent upon environmental instabilities perform differently compared to attempts to control the environment. Finally, we show that real options reasoning does not always perform better under conditions of higher uncertainty, such as uncertainty due to direct network externalities.
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Keywords
Direct and indirect network externality effects, Flexibility, Real options, Uncertainty management strategies, New technology ventures