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Entrepreneurial Innovations in Network Industries

Pehr-Johan Norbäck (), Lars Persson and Joacim Tåg

No 08-02, Working Papers from NET Institute

Abstract: In this paper, we study entrepreneurial innovations in an industry characterized by network effects. We show that the presence of network externalities tends to make the entrepreneur prefer sale to entry. Moreover, we also show that the incentive to innovate for entry decreases when network effects become stronger, whereas there is an increase in the incentive for innovation for sale. Moreover, we show that increasing the degree of industry-wide standardization furthers the goal of increasing entry by entrepreneurs. However, this may come at the cost of reducing the research intensity by reducing the bidding competition among incumbents over the innovations of entrepreneurs.

Keywords: Entrepreneurship; Entry; Compatibility; Innovation; Network Effects; Standardization (search for similar items in EconPapers)
JEL-codes: D40 L10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cse, nep-ent, nep-ino, nep-mic, nep-net, nep-soc and nep-tid
Date: 2008-09
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http://www.netinst.org/Norback_Persson_Tag_08-02.pdf (application/pdf)
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Related works:
Working Paper: Acquisitions, Entry and Innovation in Oligopolistic Network Industries (2016) Downloads
Journal Article: Acquisitions, entry, and innovation in oligopolistic network industries (2014) Downloads
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