Does Quality Win? Network Effects versus Quality in High-Tech Markets

Journal of Marketing Research, Forthcoming

56 Pages Posted: 17 Apr 2008 Last revised: 1 Sep 2008

See all articles by Gerard J. Tellis

Gerard J. Tellis

University of Southern California - Marshall School of Business, Department of Marketing

Eden Yin

University of Cambridge - Judge Business School

Rakesh Niraj

Case Western Reserve University

Date Written: 2008

Abstract

Researchers disagree about the critical drivers of success in and efficiency of high-tech markets. On the one hand, a few researchers assert that high-tech markets are efficient with best quality brands dominating. On the other hand, many authors suspect that network effects lead to perverse markets in which the dominant brands do not have the best quality. We develop scenarios about the relative importance of these effects and the efficiency of markets. Empirical analysis of historical data on 19 categories shows that while both quality and network effects affect market share flows, markets are generally efficient. In particular, market share leadership changes often, switches in share leadership closely follow switches in quality leadership, and the best quality brands, not the first to enter, dominate the market. Network effects enhance the positive effect of quality.

Keywords: Network Effects, Tipping, Path Dependence, Quality, High-Tech Products

Suggested Citation

Tellis, Gerard J. and Yin, Eden and Niraj, Rakesh Kumar, Does Quality Win? Network Effects versus Quality in High-Tech Markets (2008). Journal of Marketing Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1121009

Gerard J. Tellis (Contact Author)

University of Southern California - Marshall School of Business, Department of Marketing ( email )

Hoffman Hall 701
Los Angeles, CA 90089-0443
United States
213-740-5031 (Phone)
213-740-7828 (Fax)

HOME PAGE: http://gtellis.net

Eden Yin

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Rakesh Kumar Niraj

Case Western Reserve University ( email )

10900 Euclid Avenue
PBL 235
Cleveland, OH OHIO 44106-7235
United States

HOME PAGE: http://weatherhead.case.edu/faculty/Rakesh-Niraj/

Register to save articles to
your library

Register

Paper statistics

Downloads
255
Abstract Views
6,615
rank
118,203
PlumX Metrics