concept

data network effects

Facts (12)

Sources

Business ecosystems as a way to activate lock-in in business models link.springer.com Springer Mar 28, 2025 12 facts

claimCurrent business model theory identifies mechanisms for managers to leverage lock-in, including sunk costs, direct and indirect network effects, and data network effects.

referenceBusiness model theory, as conceptualized by Amit and Zott (2001) and documented by Climent et al. (2024), identifies brand loyalty, sunk costs, direct network effects, indirect network effects, and data network effects as mechanisms for achieving lock-in.

referenceGregory, Henfridsson, Kaganer, and Kyriakou (2021) analyzed the role of artificial intelligence and data network effects in creating user value.

claimActivated data network effects lock in participants and raise entry barriers because late-entry competitors lack the unique data required to match advertisers' messages with target groups as accurately as incumbents (Climent et al., 2024).

referenceCurrent business model theory identifies five primary methods to establish lock-in: loyalty, sunk costs, direct network effects, indirect network effects, and data network effects.

claimA pioneer firm can defend against imitators by activating lock-in mechanisms within its business model architecture, specifically through sunk costs, direct network effects, indirect network effects, or data network effects.

claimThe concept of data network effects, introduced by Gregory et al. in 2021, was integrated into business model theory by Costa et al. in 2023 to account for advances in machine learning technologies.

claimAmazon utilizes brand recognition, brand loyalty, sunk costs, direct network effects, dominant indirect network effects, and data network effects to activate lock-in themes.

claimData network effects act as a lock-in mechanism because larger volumes of platform data improve machine learning pattern accuracy, which increases value for advertisers and attracts more revenue (Haftor et al., 2024).

claimBusiness model theory identifies five primary lock-in mechanisms to protect pioneering firms against imitation: brand loyalty, sunk costs, direct network effects, indirect network effects, and data network effects.

claimMechanisms that contribute to the activation of a lock-in business model theme include sunk costs (Schmalensee, 1992), loyalty (Malhotra & Kubowicz Malhotra, 2013), direct network effects, indirect network effects (Clements, 2004), and data network effects emerging from machine learning technologies (Gregory et al., 2021; Climent et al., 2024; Haftor et al., 2024).

claimBusiness model theory identifies six mechanisms for activating lock-in: brand loyalty, sunk costs, direct network effects, indirect network effects, data network effects, and the business ecosystem.