Technology advancement strategy on patronage decisions: the role of switching costs in high-technology markets

Jae H. Pae and Jung Suk Hyun

Omega, 2006, vol. 34, issue 1, 19-27

Abstract: Among the many factors that encourage return patronage of incumbent technologies, one that has received scholarly attention in other contexts is switching costs. The existing literature, however, has yet to provide a detailed explication of the underlying processes involved to link switching costs and technology patronage. Furthermore, no examination has been conducted of the degree to which the factor plays a role in the success or failure of corporate technology advancement strategies designed to encourage technology patronage. In this context, we propose a systematic framework to explore the nature of the links between technology advancement strategies and consumer technology patronage via switching costs. Based on consumer survey data from South Korea, we find empirical support for the link between technology advancement strategies and consumers' technology commitment and patronage. Specifically, switching costs are found to be positively associated with technology commitment and patronage. Further, compatibility strategy is associated with the costs involved in switching away from incumbent technology because of an abundant or varied supply of complementary goods. The results also show that preannouncement is a key communication strategy to achieve favorable expectations and to retain the commitment and patronage of current technology users.

Keywords: Switching; costs; Technology; patronage; Technology; compatibility; Upgradability; Preannouncement (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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