Premium
Information asymmetries: A source of competitive advantage for diversified service firms
Author(s) -
Nayyar Praveen R.
Publication year - 1990
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.4250110703
Subject(s) - business , incentive , transaction cost , information asymmetry , competitive advantage , industrial organization , service (business) , database transaction , marketing , commerce , microeconomics , economics , finance , computer science , programming language
Information asymmetries are generally considered as leading to costs for both parties in an exchange transaction. They can, however, also be a source of competitive advantage. Potential buyers face information asymmetries in evaluating services prior to purchase. Since such asymmetries impose costs on buyers, there exists an incentive to lower such costs. This incentive may be exploited by service firms that diversify into other services that meet the needs of existing customers.