Determinants of Firm Survival in E-Markets: An Analysis with Software Service Providers

This research studies the shakeout in an e-market for software implementation service providers following the introduction of signaling mechanisms in the marketplace. We use theories from research on information economics, trust, and service marketing. We also distinguish between signals on provider technical competence such as education and experience from signals on providers' functional competence such as 'preferred provider' status and feedback ratings that are related to buyers' satisfaction with their interaction with the service provider during the service process. Our empirical results support the key role played by the signals in inducing the separating equilibrium that leads to the shakeout among software implementation service providers in an e-market.