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“…then came Cisco, and the rest is history”: a ‘history friendly’ model of the Local Area Networking industry

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  • Roberto Fontana
  • Lorenzo Zirulia

Abstract

We study the role that switching costs, compatibility, and mergers and acquisitions play in influencing the evolution of a multi-market industry. By looking at the case of the Local Area Networking industry, we propose a ‘history friendly model’ to replicate its evolution during the 1990s. Our model explains how a firm can start from a dominant position in one of the existing markets and exploit switching costs and compatibility to enter a new market. Mergers and acquisitions also play an important role as the new market is pioneered by a start-up, which is soon acquired by the dominant incumbent. As a result of the acquisition, the acquiring firm becomes the leader also in the new market. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Roberto Fontana & Lorenzo Zirulia, 2015. "“…then came Cisco, and the rest is history”: a ‘history friendly’ model of the Local Area Networking industry," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 875-899, November.
    • Handle: RePEc:spr:joevec:v:25:y:2015:i:5:p:875-899
    DOI: 10.1007/s00191-015-0422-8
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    2. Sean T. Hsu & Susan K. Cohen, 2022. "Overcoming the Incumbent Dilemma: The Dual Roles of Multimarket Contact During Disruption," Journal of Management Studies, Wiley Blackwell, vol. 59(2), pages 319-348, March.
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    4. Gianluca Capone & Franco Malerba & Richard R. Nelson & Luigi Orsenigo & Sidney G. Winter, 2019. "History friendly models: retrospective and future perspectives," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 9(1), pages 1-23, March.

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    More about this item

    Keywords

    Simulation; History friendly models; Switching costs; Compatibility; D22; G34; O30; L10; L63;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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