The Research of Relationship between Market Share and Quality Perception of Customer from Network Externalities and Involvement Perspectives

Abstract

The purpose of this research is to examine the relationship between market share and quality perception from perspectives of network externality and customer involvement differences. According to the study of Hellofs and Jacobson (1999), the relationship between market share and quality perception is influenced by network externality. When a product has positive network externality, market share and quality perceptions are positively correlated; the same applies to negative correlation. Upon the assumption that moat literatures support positive correlation between market share and quality perception, this study sets agenda to see if the result will be consistent providing network externality and involvement type are both taken into account. Another concern is whether customers' perceptions of product quality change over characteristics of different products. This research attempts to establish a framework based upon network externality and involvement type to reveal the relationship between market share and quality perception. Findings show that when a product has positive network externality, customers of different involvement types conclude the same perception of market share and quality as Hellofs and Jacobson (1999). However, for either positive or negative externality, customers of different involvement types perceive quality differently in intrinsic and extrinsic products. Therefore, this research raises a new point towards the relationship between market share and quality perception more than extends the stance of Hellofs and Jacobson (1999).