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Lock-In Effects

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The Palgrave Encyclopedia of Strategic Management
FormalPara Definition

Lock-in effects occur when an individual, firm or group makes a decision to pursue a course of action only to discover subsequently that an alternative course would have been preferable. Because of the additional costs of switching at a later stage, it is ‘locked in’ to its original suboptimal course.

Lock-in occurs in situations in which it is costly to switch to an alternative course of action once an individual, firm or group has made a choice to pursue a particular course of action.

The term is sometimes reserved for situations in which, with hindsight, the individual, firm or group would have preferred to have chosen a different course of action had they known, at the time they made their initial choice, it would subsequently turn out that choosing a different course of action would have been preferable.

For example, consumers or firms may invest in buying and learning a particular computer operating system, only to subsequently discover that there is an...

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Further Reading

  • Farrell, J., and P. Klemperer. 2007. Coordination and lock-in: Competition with switching costs and network effects. In Handbook of industrial organization, vol. 3, ed. M. Armstrong and R. Porter. Amsterdam: Elsevier.

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  • Shapiro, C., and H.R. Varian. 1999. Information rules. Boston: Harvard Business School Press.

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Author information

Authors and Affiliations

  1. Berkeley Research Group, 2200 Powell Street, Suite 1200, Emeryville, CA, 94608, USA

    Edward F. Sherry

Authors
  1. Edward F. Sherry
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Correspondence to Edward F. Sherry .

Editor information

Editors and Affiliations

  1. Stanford University , Stanford, California, USA

    Mie Augier

  2. Tusher Ctr Intellectual Capital, University of California Tusher Ctr Intellectual Capital, Berkeley, California, USA

    David J. Teece

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© 2016 The Author(s)

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Sherry, E.F. (2016). Lock-In Effects. In: Augier, M., Teece, D. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-94848-2_425-1

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  • DOI: https://doi.org/10.1057/978-1-349-94848-2_425-1

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  • Publisher Name: Palgrave Macmillan, London

  • Online ISBN: 978-1-349-94848-2

  • eBook Packages: Springer Reference Business and ManagementReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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