Quasi-naturally Occurring Experiments With Electronic Markets and Digital Products

Abstract

Organizational design includes the technology infrastructure, business processes, decision rules, incentive systems and control mechanisms. However, a key question facing managers and researchers alike is whether many of the theories regarding traditional markets, products and services are applicable to digital product businesses as well. Digital products are unique in that they can be instantly delivered to the customer and they also exhibit significant economic, marketing, production and technology related differences from their physical analogs. Thus, what can be a pragmatic yet conceptually sound basis for assessing alternative design of digital product companies? To address these issues, we developed a new approach at the Center for Research in Electronic Commerce at the University of Texas under the guidance of Prof. Andrew Whinston, that we call “quasi-naturally occurring experiments” and make the case that in the absence of well-developed and tested theories in the area of digital products and markets, such experiments will be critical to testing underlying design assumptions and rationale. This chapter presents our experience during two semesters.