Determinants of Innovation and Competition of Component System Technologies in the Local Area Network Industry

Roberto Fontana

No 117, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

Abstract: This work is concerned with the determinants of innovations and competition of technologies in the case of the Local Area Network industry. It focuses in particular on two suppliers of LAN components: the access technology industry and the internetworking industry. Two elements driving the diffusion are identified, 1) reduction of technological uncertainty, and 2) the extent of network externalities. The effects of these mechanisms on the process of diffusion of technologies into new application domains are analysed through the dynamics of entry and exit of firms in both industries. We find that the effects on the dynamic are different depending on the kind of innovation. The above mechanisms may guarantee a match between suppliers and adopters and foster the innovation diffusion. Nevertheless, it may occur that when an innovation occurs in one of the two industries and the ‘match’ is disrupted it needs time to be re-established, and innovation diffusion may slow down. We speculate on the determinants of these findings and their limitations.

Keywords: Innovation; Compatibility; Excess momentum; Excess inertia; Local area network (search for similar items in EconPapers)
JEL-codes: L15 O30 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2000-09, Revised 2000-09
New Economics Papers: this item is included in nep-net and nep-tid
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