Product details

Product details
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Abstract

The case examines Amazon's entry into the facial recognition market to illustrate and explore the strategic implications of the concept of signal 'reaction costs' in the context of technological market convergence. Reaction costs arise when an unintended audience reacts negatively to a message that was specifically intended for a different target or customer segment group. Technological market convergence is the erosion of boundaries that demarcate previously distinct industry sectors as a consequence of the growing together of previously distinct domains of technological knowledge. When a firm enters into a technologically converging market, they send the true signal of innovation and strength to particular audiences, eg, government and shareholders. Although a firm enters into converging markets in order to capture attention and attract returns, such market entry also sends signals to audiences that the firm did not intend to send the signal to such as employees. This can lead to unanticipated adverse side effects, particularly when the technology underpinning the market convergence is evaluated differently by different audiences. Entrance into technologically converging markets raises challenge because the way different groups of people understand or are affected by the underlying innovation can vary. The sale of Amazon's nascent facial recognition technology called Rekognition to law enforcement authorities created an uproar from a group of company's shareholders, a civil liberties union as well as their employees, Amazonians. Motivated by this, the case invites students to think about the challenges that arise when firms leverage their resources into converging markets where the values differ from those the firm currently operates in. It asks students: what happens when market convergence exposes you to markets with differing values? And how can you effectively manage the resulting consequences?

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Geographical setting

Region:
Americas
Country:
United States
Location:
Seattle

Featured company

Amazon
Employees:
10000+
Turnover:
USD 386,064,000
Type:
Public company
Industry:
Information technology

About

Abstract

The case examines Amazon's entry into the facial recognition market to illustrate and explore the strategic implications of the concept of signal 'reaction costs' in the context of technological market convergence. Reaction costs arise when an unintended audience reacts negatively to a message that was specifically intended for a different target or customer segment group. Technological market convergence is the erosion of boundaries that demarcate previously distinct industry sectors as a consequence of the growing together of previously distinct domains of technological knowledge. When a firm enters into a technologically converging market, they send the true signal of innovation and strength to particular audiences, eg, government and shareholders. Although a firm enters into converging markets in order to capture attention and attract returns, such market entry also sends signals to audiences that the firm did not intend to send the signal to such as employees. This can lead to unanticipated adverse side effects, particularly when the technology underpinning the market convergence is evaluated differently by different audiences. Entrance into technologically converging markets raises challenge because the way different groups of people understand or are affected by the underlying innovation can vary. The sale of Amazon's nascent facial recognition technology called Rekognition to law enforcement authorities created an uproar from a group of company's shareholders, a civil liberties union as well as their employees, Amazonians. Motivated by this, the case invites students to think about the challenges that arise when firms leverage their resources into converging markets where the values differ from those the firm currently operates in. It asks students: what happens when market convergence exposes you to markets with differing values? And how can you effectively manage the resulting consequences?

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Settings

Geographical setting

Region:
Americas
Country:
United States
Location:
Seattle

Featured company

Amazon
Employees:
10000+
Turnover:
USD 386,064,000
Type:
Public company
Industry:
Information technology

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