Economics of Product Development by Users: The Impact of "Sticky" Local Information Export

@article{citeulike:965428, abstract = {Those who solve more of a given type of problem tend to get better at it-which suggests that problems of any given type should be brought to specialists for a solution. However, in this paper we argue that agency-related costs and information transfer costs ("sticky" local information) will tend drive the locus of problem-solving in the opposite direction-away from problem-solving by specialist suppliers, and towards those who directly benefit from a solution and who have difficult-to-transfer local information about a particular application being solved, such as the direct users of a product or service. We examine the actual location of design activities in two fields in which custom products are produced by "mass-customization" methods: application-specific integrated circuits (ASICs) and computer telephony integration (CTI) systems. In both, we find that users rather than suppliers are the actual designers of the application-specific portion of the product types examined. We offer anecdotal evidence that the pattern of user-based customization we have documented in these two fields is in fact quite general, and we discuss implications for research and practice.}, author = {von Hippel, Eric}, citeulike-article-id = {965428}, citeulike-linkout-0 = {http://dx.doi.org/10.2307/2634469}, citeulike-linkout-1 = {http://www.jstor.org/stable/2634469}, doi = {10.2307/2634469}, issn = {00251909}, journal = {Management Science}, keywords = {development, economics, impact, information, local, product, sticky, users}, number = {5}, pages = {629--644}, posted-at = {2009-10-15 10:11:57}, priority = {3}, publisher = {INFORMS}, title = {Economics of Product Development by Users: The Impact of "Sticky" Local Information}, url = {http://dx.doi.org/10.2307/2634469}, volume = {44}, year = {1998} }

TY - JOUR ID - citeulike:965428 L3 - citeulike-article-id:965428 N2 - Those who solve more of a given type of problem tend to get better at it-which suggests that problems of any given type should be brought to specialists for a solution. However, in this paper we argue that agency-related costs and information transfer costs ("sticky" local information) will tend drive the locus of problem-solving in the opposite direction-away from problem-solving by specialist suppliers, and towards those who directly benefit from a solution and who have difficult-to-transfer local information about a particular application being solved, such as the direct users of a product or service. We examine the actual location of design activities in two fields in which custom products are produced by "mass-customization" methods: application-specific integrated circuits (ASICs) and computer telephony integration (CTI) systems. In both, we find that users rather than suppliers are the actual designers of the application-specific portion of the product types examined. We offer anecdotal evidence that the pattern of user-based customization we have documented in these two fields is in fact quite general, and we discuss implications for research and practice. IS - 5 JF - Management Science SN - 00251909 EP - 644 TI - Economics of Product Development by Users: The Impact of "Sticky" Local Information PB - INFORMS VL - 44 SP - 629 KW - development KW - economics KW - impact KW - information KW - local KW - product KW - sticky KW - users AU - von Hippel, Eric PY - 1998/// UR - http://dx.doi.org/10.2307/2634469 ER -