Buying Modular Systems in Technology-Intensive Markets

S. Stremersch*, A.M. Weiss, B.G.C. Dellaert, R.T. Frambach

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


Technology-intensive markets consist of products that are often interdependent and operate together as a modular system. Although prior research has extensively addressed standardization and network externalities in such markets, it has not addressed the buying of modular systems. The authors identify two focal decision dimensions of the buyer, namely the decision of whether to outsource system integration and the decision of how much to concentrate the purchase of system components with one or more suppliers. The authors develop a comprehensive production- and transaction-cost framework to explain companies' positions on these two decisions. They find that especially leakage and the buyer's know-how, together with the technological volatility the buyer faces, drive the preference for outsourcing system integration and the purchase concentration of system components. An empirical test in the market for telecommunications systems supports the theory developed.
Original languageEnglish
Pages (from-to)335-350
JournalJournal of Marketing Research
Issue numberAugust
Publication statusPublished - 1 Jan 2003

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