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

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  • Roberto Fontana

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.

Suggested Citation

  • Roberto Fontana, 2000. "Determinants of Innovation and Competition of Component System Technologies in the Local Area Network Industry," KITeS Working Papers 117, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Sep 2000.
    • Handle: RePEc:cri:cespri:wp117
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    References listed on IDEAS

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    More about this item

    Keywords

    Innovation; Compatibility; Excess momentum; Excess inertia; Local area network;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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