ROBERT J. KAUFFMAN is a Professor of Information Systems at the School of Information Systems, Singapore Management University (SMU). He is now the Danske Bank Chair at Copenhagen Business School. He holds a Ph.D. from Carnegie Mellon University. He previously was Associate Dean (Faculty) and Associate Dean (Research) at SMU. He was awarded the Otto Monsted Visiting Faculty Fellowship for a sabbatical visit to the Copenhagen School of Business in 2018. His earlier faculty appointments have been at Arizona State, University of Minnesota, and New York University, and he visited the Federal Reserve Bank of Philadelphia and the University of Rochester. He had held distinguished visiting faculty appointments a number of institutions. Dr. Kauffman’s research focuses on technology and strategy, the economics of IT, financial services and technology, managerial decision-making, environmental sustainability, and empirical research methods. His work has appeared in Energy Policy; Management Science; Information Systems Research; Journal of Management Information Systems; MIS Quarterly; Review of Economics and Statistics; and many other journals.
THOMAS A. WEBER ([email protected]) holds the chair of Operations, Economics and Strategy at the Management of Technology and Entrepreneurship Institute at the Swiss Federal Institute of Technology in Lausanne (EPFL), where he also directs the Doctoral Program in Management of Technology. Earlier he was a faculty member at Stanford University. He holds a Ph.D. from the Wharton School of the University of Pennsylvania. He was visiting faculty in economics at Cambridge University and in mathematics at Moscow State University. He was previously with the Boston Consulting Group. His research interests include the economics of information and uncertainty, the design of contracts, and strategy. His articles have appeared in American Economic Journal: Microeconomics, Economic Theory, Information Systems Research, Journal of Management Information Systems, Journal of Mathematical Economics, Journal of Economic Dynamics and Control, Management Science, Operations Research, and many other journals. He is the author of Optimal Control Theory with Applications in Economics (MIT Press, 2011).
Relationships between consumers and firms can no longer be analyzed in isolation. It has long been recognized that they are subject to important network externalities. Users care about the presence and opinions of other users, and similarly, firms interact strategically with other firms—be they competitors or complementors. Yet, due to the presence of intermediaries or public planners there are additional effects, beyond mere externalities, related to incentives, reputation, and network topology. For example, in sharing markets, there is a need for somebody to own the assets to be shared. And the incentives to own can be provided by the market price or explicit encouragement to participate by a self-interested(!) intermediary, at least in the short run.
In the medical domain, where the true quality of a service is often difficult if not impossible to assess, a regulator—using mandatory disclosure protocols—can help provide informational feedback to consumers, which in turn should modulate their assessment of the service providers. The efficiency of such a publicly mandated closed information loop naturally depends on its implementation. Finally, consumers themselves may have intrinsic incentives to invest their time and effort to produce informational content, moderated by a platform such as Twitter. In this they interact, each subject to his or her field of vision, which depends on the (endogenous) topology of the underlying social network, discriminating between the participants’ respective network size and connectedness.
The three articles included in this special section deal with the observation of these new effects of influence across networks, whether in two-sided markets, in terms of a social information feedback for the assessment of physicians, or in terms of the mutual influence of endogenous information release in a social network. These are mere facets of a larger phenomenon of multilateral influence that, in the presence of large amounts of data on interactions, we are only beginning to comprehend.
“Platform Competition in the Sharing Economy: Understanding How Ride-Hailing Services Influence New Car Purchases,” by Yue Guo, Xiaotong Li, and Xiaohua Zeng, examines the effect of sharing platforms on markets for ownership. The authors find that the demand-side of sharing platforms tends to withhold new car purchases based on the expectation of a sharing platform entering the market for local transportation. This substitution effect is offset, at least partially, by platforms’ offering incentives to the supply-side of the sharing platforms, which may lead to a rebounding increase in new car purchases. In the latter case, the cars become production factors that provide transportation services across many consumers. The associated empirical study is based on car-registration data from 100 prefecture-level cities in China between 2013 and 2015. To tease out the corresponding (possibly transitory) observations, the authors use a fairly recent staggered difference-in-differences analysis, paired with a synthetic control method to estimate counterfactual outcomes based on the construction of “synthetic counterpart” as a weighted average of untreated units so as to resemble treated units before their respective treatments.
“Adherence to Clinical Guidelines, Electronic Health Record Use, and Online Reviews,” by Danish H. Saifee, Indranil R. Bardhan, Atanu Lahiri, and Zhiqiang (Eric) Zheng, highlights the fact that online reputation, especially in markets for credence goods such as healthcare, might be quite disassociated from measurable practices. Specifically, the authors use multiple datasets from the Centers for Medicare and Medicaid Services, as well as online physician reviews to study the correlation of web-based reputation and physicians’ adherence to medical guidelines in a U.S. metropolitan area. Although data from the Physician Quality Reporting System, which includes pertinent guideline-adherence information, is technically public, the lack of correlation with online reputation illustrates that care is needed by public authorities to feed the available social information back to the public. This is to avoid the informational cascades that may render efficient information aggregation from observational learning impossible.
“Diffusion on Social Media Platforms: A Point Process Model for Interaction among Similar Content” by Eunae Yoo, Bin Gu, and Elliot Rabinovich, employs the theory of mutually exciting point processes to track the influence of user-generated content on other user-generated content using Twitter data. The authors identify a size-dependent herding effect where content from users belonging to larger networks experience an amplification leading to retweeting clusters of content in parallel cascades. Users with smaller networks tend to experience an inhibiting effect of being “crowded out” by similar content from other users. The authors conclude that users with smaller networks of followers should focus their energy on generating novel and non-repetitive content which cannot easily be substituted by other parties.
What unites these contributions on social influence on the methodological side is that in each case new tools were necessary to equip and sharpen the observer’s eye for a meaningful observation of the new types of interactions. To perceive the general-equilibrium effect of increased investment in production assets as a result of increased intermediation of users on (both sides of) the car-sharing market, the authors had to appeal to new econometric methods that hitherto have not been used in the IS literature. To convince their readers that indeed the reported physician care quality (in terms of guideline-adherence) does not have a strong association with online feedback, the authors had to zoom into a particular context (one metropolitan area) and combine various data sources. Finally, to identify the complementary and substitutional nature of individuals’ information production in a social network, the authors resorted to the estimation of mutually exciting Hawkes processes, which is again a novelty in the information systems literature. More generally, as we are adapting the toolsets to capture the more integrative nature of socio-economic interactions, there is a hope that we can preserve the notion of causality despite the complexity of choice and reason in modern networked societies.
We are grateful to Prof. Emmy Hoang (RMIT Asia in Vietnam) who provided outstanding editorial assistance in the process of putting together this special section. In addition, we thank the many authors who have submitted their research to our longstanding mini-track on Strategy, Information, Technology, Economics, and Society (SITES) at the annual Hawaiian Conference on System Sciences (HICSS), which featured early versions of the full-length papers presented here.