Managing Customer Switching Costs: a Framework for Competing in the Networked Environment

Previous research argues that customer switching costs play an important role in the firm’s ability to retain customers and achieve competitive advantage. Research also indicates that in the increasingly networked environment, switching costs are changing in important ways. Despite switching costs’ recognized role in contributing to competitive advantage and their increasingly strategic characteristics in the expanding networked environment, we find a lack of coherence and completeness in the conceptual tools and models developed to understand their role and help effectively manage the phenomenon. In this paper we attempt to address these needs by expanding and refining the conceptualization of switching costs and developing a more comprehensive framework for managers. (Forthcoming in 2003 in Management Research)