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Cited by 157Digital Platforms and EconomicsInnovation Diffusion and ForecastingBusiness Strategy and Innovation

Reconsideration of the Winner-Take-All Hypothesis: Complex Networks and Local Bias

Lee, Eocman, Lee, Jeho, Lee, Jongseok·2006·Management Science
DOI 10.1287/mnsc.1060.0571
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Abstract

The literature on network effects has popularized a hypothesis that competition between incompatible technologies results in the “winner-take-all” outcome. For the survival of the firm in this sort of competition, the installed base has been emphasized. We argue that the validity of this hypothesis depends on how customers interact with one another (e.g., if they exchange advice or files). In some interaction networks, customers influenced by their acquaintances may adopt a lagging technology even when a lead technology has built a large installed base. The presence of such a local bias facilitates the persistence of incompatibilities. When local bias cannot be sustained in other interaction networks, one technology corners the market. Our study suggests that overemphasizing the installed base, while ignoring network structure, could mislead practitioners.

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  • Social media are well suited to interoperable networking: users have a 'local bias' for adopting the service their friends already use rather than the largest platform overall.

    “social media are well suited to interoperable networking: users have a 'local bias' for adopting the service their friends already use rather than the largest platform overall (Lee et al., 2006(Lee et al., , p. 1839)).”

    From Make Social Media Social Again: How Platform Interoperability Can Fix Social Media and Future‐Proof Democracy (2025) · cites this paper as Lee et al., 2006

  • With user 'cliques' acting as local attractors, winner-take-all effects fail to materialize so long as those local ties remain strong.

    “With user 'cliques' acting as local attractors, winner-take-all effects fail to materialize so long as those local ties remain strong (as demonstrated by Lee et al. (2006) via simulation).”

    From Make Social Media Social Again: How Platform Interoperability Can Fix Social Media and Future‐Proof Democracy (2025) · cites this paper as Lee et al. (2006)

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Authors
Lee, E., Lee, J., & Lee, J.
Affiliations
  • Korea Advanced Institute of Science and Technology (KR)
  • Hallym University (KR)
  • Department of Business Administration, Hallym University, 39 Hallymdaehak-gil, Chunchon, Kangwon-do 200-702, Korea
ORCID
Lee, Jeho
Venue
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2006-12
Volume
52
Issue
12
Pages
1838-1848
ISSN
  • 0025-1909 (ISSN-L)
  • 1526-5501
DOI
10.1287/mnsc.1060.0571
OpenAlex
W2128344388
Cited by
157
References
48
Citations by year
2026: 6 · 2025: 3 · 2024: 5 · 2023: 16 · 2022: 11 · 2021: 12 · 2020: 12 · 2019: 11 · 2018: 9 · 2017: 10 · 2016: 9 · 2015: 9 · 2014: 3 · 2013: 9 · 2012: 5
FWCI
14.36
Type
journal article
Language
en
Open access
closed
Locations
Management Science (publishedVersion)
Topics
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
  • Social Sciences › Decision Sciences › Management Science and Operations Research › Innovation Diffusion and Forecasting
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Business Strategy and Innovation
Keywords
network effects, local bias, installed base, technology adoption, network structure, complex networks, market dominance

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