Alliances, R&D and profitability of software firms

Ali Tafti, Vishal Sachdev, Sunil Mithas, Lauren Mallik

Research output: Contribution to conferencePaper

Abstract

Like all digital products, software is fungible, has low marginal replication costs, and has a relatively high fixed cost of initial investment in development. As larger segments of economic goods become digitized, it is important to understand how software-producing firms can protect and leverage value from their R&D investments. We consider alliances as a mechanism for protecting and leveraging value from R&D investments in the software context. We use a panel of data on 464 firms in the software (IT-producing) industries, spanning the 14 year period from 1996 to 2009. We examine the economic returns to R&D as software firms form alliances with other IT-producing firms as well as with IT-consuming firms, i.e., firms in all other industries. Our findings yield insights into how IT-producing firms should position themselves within a network, through alliances with potential rivals (i.e., other IT-producing firms) or with potential clients (i.e., IT-consuming firms).

Original languageEnglish (US)
StatePublished - Jan 1 2015
Event2015 International Conference on Information Systems: Exploring the Information Frontier, ICIS 2015 - Fort Worth, United States
Duration: Dec 13 2015Dec 16 2015

Other

Other2015 International Conference on Information Systems: Exploring the Information Frontier, ICIS 2015
CountryUnited States
CityFort Worth
Period12/13/1512/16/15

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Keywords

  • Alliances
  • Economic impacts
  • Innovation
  • Network
  • Software

ASJC Scopus subject areas

  • Computer Science Applications
  • Statistics, Probability and Uncertainty
  • Library and Information Sciences
  • Applied Mathematics

Cite this

Tafti, A., Sachdev, V., Mithas, S., & Mallik, L. (2015). Alliances, R&D and profitability of software firms. Paper presented at 2015 International Conference on Information Systems: Exploring the Information Frontier, ICIS 2015, Fort Worth, United States.