The Economics of Public Beta Testing

dc.contributor.author Scheibe, Kevin
dc.contributor.author Jiang, Zhengrui
dc.contributor.author Scheibe, Kevin
dc.contributor.author Nilakanta, Sree
dc.contributor.author Jiang, Zhengrui
dc.contributor.department Supply Chain Management
dc.date 2018-02-19T01:17:50.000
dc.date.accessioned 2020-07-02T06:25:02Z
dc.date.available 2020-07-02T06:25:02Z
dc.date.copyright Sun Jan 01 00:00:00 UTC 2017
dc.date.embargo 2019-02-01
dc.date.issued 2017-01-01
dc.description.abstract <p>A growing number of software firms now rely on public beta testing to improve the quality of their products before commercial release. While the benefits resulting from improved software reliability are well recognized, some important market-related benefits have not been studied. Through word-of-mouth, public beta testers can accelerate the diffusion of a software product after its release. Additionally, because of network effects, public beta testers can increase users’ valuation of a product. In this study, we consider both reliability-related and market-related benefits, and develop models to determine the optimal number of public beta testers and the optimal duration of testing. Our analyses show that public beta testing can be profitable even if word-of-mouth and network effects are the only benefits. Furthermore, when both benefits are considered, there is significant “economies of scope”—the net profit increases at a faster rate when both word-of-mouth and network effects are significant than when only one benefit is present. Finally, our sensitivity analyses demonstrate that public beta testing remains highly valuable to software firms over a wide range of testing and market conditions. In particular, firms will realize greater profits when recruiting public beta testers who are interested in the software but unable to afford it.</p>
dc.description.comments <p>This is an accepted manuscript of an article published as Jiang , Z., K. P. Scheibe, S. Nilakanta, X. Qu. "The Economics of Public Beta Testing." Decision Sciences,2017; 48(1); 150-175. <a href="http://dx.doi.org/10.1111" target="_blank">10.1111/deci.12221</a>. Posted with permission.</p>
dc.format.mimetype application/pdf
dc.identifier archive/lib.dr.iastate.edu/scm_pubs/29/
dc.identifier.articleid 1028
dc.identifier.contextkey 10984766
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath scm_pubs/29
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/84569
dc.language.iso en
dc.source.bitstream archive/lib.dr.iastate.edu/scm_pubs/29/EonomicsPublicBetaTesting.pdf|||Fri Jan 14 23:13:34 UTC 2022
dc.source.uri 10.1111/deci.12221
dc.subject.disciplines Management Information Systems
dc.subject.disciplines Marketing
dc.subject.disciplines Operations and Supply Chain Management
dc.subject.disciplines Technology and Innovation
dc.title The Economics of Public Beta Testing
dc.type article
dc.type.genre article
dspace.entity.type Publication
relation.isAuthorOfPublication d630a3da-f88a-47db-8488-a1b3bc896486
relation.isAuthorOfPublication 1bc6119f-70fc-4d29-a55e-67199a177f4e
relation.isOrgUnitOfPublication ef3ab1b0-d571-4148-84dd-470ef1cdb17a
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