Article ID: | iaor20132469 |
Volume: | 24 |
Issue: | 1 |
Start Page Number: | 164 |
End Page Number: | 185 |
Publication Date: | Mar 2013 |
Journal: | Information Systems Research |
Authors: | Dou Yifan, Niculescu Marius F, Wu D J |
Keywords: | social, networks, optimization, e-commerce |
Firms nowadays are increasingly proactive in trying to strategically capitalize on consumer networks and social interactions. In this paper, we complement an emerging body of research on the engineering of word‐of‐mouth effects by exploring a different angle through which firms can strategically exploit the value‐generation potential of the user network. Namely, we consider how software firms should optimize the strength of network effects at utility level by adjusting the level of embedded social media features in tandem with the right market seeding and pricing strategies in the presence of seeding disutility. We explore two opposing seeding cost models where seeding‐induced disutility can be either