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Entrepreneurial Innovations in Network Industries

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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.

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File URL: http://www.netinst.org/Norback_Persson_Tag_08-02.pdf
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Bibliographic Info

Paper provided by NET Institute in its series Working Papers with number 08-02.

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Length: 29 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:net:wpaper:0802

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Web page: http://www.NETinst.org/

Related research

Keywords: Entrepreneurship; Entry; Compatibility; Innovation; Network Effects; Standardization;

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