Demand and Innovation in Services: the Case of Mobile Communications

Nicoletta Corrocher and Lorenzo Zirulia

No 199, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

Abstract: This paper aims at analyzing the characteristics and the determinants of innovation in the mobile communication service industry, by emphasising in particular the role of demand. In a Shumpeterian spirit, we argue that competition in this sector crucially depends upon innovation, and that, given the specific characteristics of the industry, firms' innovative strategies are strongly affected by demand. Our main point is that in a context of uncertainty, demand affects firms' innovative strategies in two ways: first, by providing information on users' behaviour and by increasing the capability of market segmentation; second, by providing invcentives to innovate. This argument is supported by an empirical analysis carried out on the basis of an original dataset including all the tariff plans offered in the history of the Italian market up to 2005. We find that both firms' installed base of customers and market saturation play a role in shaping firms' innovative activities, in terms of number and type of innovations.

Keywords: Service Innovation; Demand Characteristics; Mobile Communications. (search for similar items in EconPapers)
JEL-codes: D43 L96 O31 (search for similar items in EconPapers)
Pages: pages 37
Date: 2007-03, Revised 2007-03
New Economics Papers: this item is included in nep-com, nep-ino, nep-mic and nep-tid
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Journal Article: Demand and innovation in services: The case of mobile communications (2010)
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