Buying Modular Systems in Technology-Intensive Markets

Journal of Marketing Research, Vol. 40, pp. 335-350, August 2003

Posted: 12 Jan 2005

See all articles by S. Stremersch

S. Stremersch

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Allen M. Weiss

University of Southern California - Marketing Department

Benedict G. C. Dellaert

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM)

Ruud T. Frambach

VU University Amsterdam

Abstract

Technology-intensive markets consist of products that are often interdependent and operate together as a modular system. Although prior research addressed standardization and network externalities in such markets extensively, it has not addressed the buying of modular systems. The authors identify two focal decision dimensions of the buyer, namely the decision whether or not to outsource the system's integration and the decision of how much to concentrate the purchase of the system components to one or more suppliers. They develop a comprehensive production cost and transaction cost framework to explain companies' position on these two decisions. They find that especially leakage and presence of the buyer's know-how, together with the technological volatility it faces drive a buyer's preference for outsourcing system integration and purchase concentration of the system components. An empirical test in the market for telecom systems shows support for the theory developed.

Keywords: modular systems, high-tech marketing, buying behavior

JEL Classification: M31

Suggested Citation

Stremersch, Stefan and Weiss, Allen M. and Dellaert, Benedict G. C. and Frambach, Ruud T., Buying Modular Systems in Technology-Intensive Markets. Journal of Marketing Research, Vol. 40, pp. 335-350, August 2003, Available at SSRN: https://ssrn.com/abstract=647630

Stefan Stremersch (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 408 8719 (Phone)
+31 10 408 9160 (Fax)

Allen M. Weiss

University of Southern California - Marketing Department ( email )

Hoffman Hall 616
Los Angeles, CA 90089-1427
United States

Benedict G. C. Dellaert

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Ruud T. Frambach

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

HOME PAGE: http://www.feweb.vu.nl/nl/afdelingen-en-instituten/marketing/staff/t-frambach/index.asp

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