Abstract

This research studies the survival of software implementation service providers in an electronic market (or e-market), and the role that vendor characteristics such as reputation, education, experience, ‘preferred provider’ status, and references play in predicting which service providers will exit the e-market after it (the e-market) implements trust enhancing mechanisms. Using theories from asymmetric information, signaling, and trust literatures, we propose a model to examine the relation between firm characteristics and survival. Our empirical results support the key role played by these signals in inducing the separating equilibrium that leads to the shakeout among software service providers in an e-market.

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