Software innovations: The influence of quality, diversity and structure of network ties
Date of Completion
Business Administration, Management|Information Technology
There is high uncertainty associated with the outcomes of Information Technology (IT) investments and innovations. In such environments, IT actors (firm and individuals) are also unsure about their actions and preferences. The social relationships of these actors create substantial value for these actors in multiple ways (e.g. providing social support and information and knowledge resources) and hence also influence their economic actions. Therefore, rather than focusing on actor's characteristics and economic incentives in isolation, it is important to consider broader social environment in which actors are embedded to explain actions and outcomes. In this research, we analyze the actions of actors and outcomes of these actions through the socio-economic lens. In the first essay, we study the factors that explain the heterogeneity in value of software innovations. Many firms invest in costly research and development to produce innovative software applications. However, software innovations exhibit an enormous variance in their "importance" or "value". Since innovation is a result of collaborative effort, in this study we investigate the impact of social capital accrued by a team of inventors from inter-personal collaboration networks on the value of the resulting software innovations. Software innovations have not only benefited from traditional social networks but have also shaped new social networks which are being constructed on digital platforms and have extended the reach and range of existing social networks. In the second essay, we study the actions (investments) of actors embedded in one such digital social network (Prosper.com—a peer to peer (P2P) lending website). As a relatively new phenomenon, online peer to peer (P2P) lending (where individual lenders provide unsecured loans directly to individual borrowers) has received great coverage in media but little attention from academic researchers. While few recent studies have examined this market from the borrower's point of view, we set out our analysis from the lender's point of view and focus on risk and returns of investments on prosper (P2P lending website). We identify important loan and borrower characteristics which can be used to segment loans in term of returns and risk profiles. We find that on average, loans through prosper provide negative returns. However, there do exist certain segments of loans that produce positive returns. We then derive the efficient frontier for investments on prosper and determine the optimal portfolio for investments for a given level of risk. Our study provides investment guidelines for lenders and design implications for online peer to peer lending websites. In the future research we want to focus on lenders' learning strategies over time. Lenders can update their beliefs about the risk and returns of various loans and thus adjust their investment strategies based on their own past experience, performance of overall prosper market and knowledge accrued from the social network of lenders in the Prosper marketplace. ^
Singh, Harpeet, "Software innovations: The influence of quality, diversity and structure of network ties" (2010). Doctoral Dissertations. AAI3420176.