Hsu and Shiue (2008)

Source Details

Hsu and Shiue (2008)
Title:	Consumers' willingness to pay for non-pirated software
Author(s):	Hsu, J. L., Shiue, C. W.
Year:	2008
Citation:	Hsu, J. L., & Shiue, C. W. (2008). Consumers’ willingness to pay for non-pirated software. Journal of Business Ethics, 81(4), 715-732.
Link(s):	Definitive
Key Related Studies:	Ang, Cheng, Lim and Tambyah (2001) Chiou, Huang and Lee (2005) Wang, Zhang, Zang and Ouyang (2005) Wee, Tan and Cheok (1995)
Discipline:	O33: Technological Change: Choices and Consequences • Diffusion Processes O34: Intellectual Property and Intellectual Capital P14: Property Rights P46: Consumer Economics • Health • Education and Training • Welfare; Income; Wealth; and Poverty Z13: Economic Sociology • Economic Anthropology • Social and Economic Stratification
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About the Data
Data Description:	This study surveyed high school students, college students, graduate students, and general consumers who were not currently enrolled as full-time students in order to include respondents of various age and educational levels. Valid samples of college students were 200, of graduate students were 199. For respondents who were no longer full-time students, the survey was administered at two memorial halls and Taipei Main Station. Valid samples of general consumers were 200.Total valid samples were 799.
Data Type:	Primary data
Secondary Data Sources:
Data Collection Methods:	Survey Research (quantitative; e.g. sales/income reporting)
Data Analysis Methods:	Cluster analysis Descriptive statistics (counting; means reporting; cross-tabulation) Factor Analysis
Industry(ies):	Software publishing (including video games) Computer programming Computer consultancy
Country(ies):	Taiwan
Cross Country Study?:	No
Comparative Study?:	No
Literature review?:	No
Government or policy study?:	No
Time Period(s) of Collection:	2006
Funder(s):	National Science Council, Taiwan

Abstract

This study analyzed consumers’ willingness to pay (WTP) for non-pirated computer software and examined how attitudes toward intellectual property rights and perceived risk affect WTPs. Two commonly used software products, Microsoft Windows and Microsoft Office, were used in the study as objects to reveal consumer assessed values. A consumer survey was administered in Taiwan and the total valid samples were 799. Respondents in this study included students from senior high schools, colleges, and graduate schools, and general consumers who were no longer full-time students. The estimated average WTP for Windows was USD 58.55 and for Office was USD 53.49, much lower than the respective suggested retail prices in the market. Social norms had strong positive influences on willingness-to-pay for software products. The prosecution risk did not significantly increase WTPs for software products due to the reason that individuals who used pirated software were not at a high risk of being prosecuted. Performance risk was positively correlated to WTPs for software products. The respondents segmented into the low-WTP cluster were more likely to use pirated software than those in the high- WTP segment. Source reliability, legitimacy, technical support, and customer service were emphasized in decisions of respondents in the high-WTP segment and could be used in marketing strategies.

Main Results of the Study

This article selects two commonly used commercial software products, Microsoft Windows and Microsoft Office, to examine consumers’ usage patterns of unauthorized software in addition to evaluating the dollar amount of willingness-to-pay (WTP) for these two software products. Its objective is to examine the behavioral usage of pirated software products in Taiwan. This article shows that:

• Respondents’ WTP for Windows were higher than those for Office except the nonstudent respondents.

• The sensitivity of social norms seemed to have strong positive influences on willingness-to-pay for software products.

• The risk of being prosecuted upon using pirated software did not have significant influences on willingness-to-pay for authorized software products.

• Dimensions of performance risk significantly increased WTPs for software products except for high school students.

• The vast majority of respondents obtained pirated software from family and friends as well as through Internet downloading.

Policy Implications as Stated By Author

- Software firms may need to cooperate with government administration to establish educational programs to emphasize importance and legitimacy of using authorized software.

- Lowering prices may be a way to reduce piracy levels in addition to applying price discrimination in segmented markets.

- Computer firms may utilize information marketing strategies to strengthen the reliability of copyrighted products as well as quality customer services to increase the willingness-to-pay for authorized software products.

Coverage of Study

Coverage of Fundamental Issues

Issue	Included within Study
Relationship between protection (subject matter/term/scope) and supply/economic development/growth/welfare
Relationship between creative process and protection - what motivates creators (e.g. attribution; control; remuneration; time allocation)?
Harmony of interest assumption between authors and publishers (creators and producers/investors)
Effects of protection on industry structure (e.g. oligopolies; competition; economics of superstars; business models; technology adoption)
Understanding consumption/use (e.g. determinants of unlawful behaviour; user-generated content; social media)

Coverage of Evidence Based Policies

Issue	Included within Study
Nature and Scope of exclusive rights (hyperlinking/browsing; reproduction right)
Exceptions (distinguish innovation and public policy purposes; open-ended/closed list; commercial/non-commercial distinction)
Mass digitisation/orphan works (non-use; extended collective licensing)
Licensing and Business models (collecting societies; meta data; exchanges/hubs; windowing; crossborder availability)
Fair remuneration (levies; copyright contracts)
Enforcement (quantifying infringement; criminal sanctions; intermediary liability; graduated response; litigation and court data; commercial/non-commercial distinction; education and awareness)

Datasets

Sample size:	799
Level of aggregation:	Individual
Period of material under study:	2006