COMPLEMENTORS’ DECISIONS ON PARTNERSHIP RETENTION IN MARKETS WITH NETWORK EXTERNALITIES

Abstract

Complementors are likely to review and assess the dynamics of technology platforms in their quest for raising future revenues while attempting to minimize switching costs in their partnership retention decisions. This study aims to investigate the factors that complementors employ in assessing their current partnerships in markets with network externalities. Survey data was collected from the chief-level executives of complementors in software industries. The results show that network size of partner’s technologies and complementors’ technological compatibility positively influence partnership retention. Complementors’ technological lock-in positively moderates the relationship between network size and partnership retention. Technological uncertainty of partner’s technologies negatively moderates the relationship among network size, technological lock-in, and partnership retention. But it positively moderates the relationship among complementors’ technological compatibility, technological lock-in, and partnership retention. While incorporating the aspects of network externality and path dependence in technology development into the inter-firm relationship literature, this study contributes to reconciling the possible opposing explanations of their roles, and adds new insights for understanding relationship stability in uncertain network markets.