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Innovation and Dominant Design in Mobile Telephony

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  • Heli Koski
  • Tobias Kretschmer

Abstract

We document the evolution of product innovation and features in the mobile telephone handset market. We distinguish between two types of product innovation: vertical and horizontal innovation. Using data on mobile telephone handsets from 1990 to 2003, we study the emergence of a dominant design in vertical and horizontal innovations and find that, while vertical product characteristics converged to some extent, no dominant design emerged. For horizontal product characteristics, some horizontal innovations remained differentiated, whereas others were adopted in all new handset models, thus forming a dominant design in horizontal product features. We explain this pattern using the concept of dominant design and results from the theoretical literature on the incentives for horizontal and vertical differentiation.

Suggested Citation

  • Heli Koski & Tobias Kretschmer, 2007. "Innovation and Dominant Design in Mobile Telephony," Industry and Innovation, Taylor & Francis Journals, vol. 14(3), pages 305-324.
  • Handle: RePEc:taf:indinn:v:14:y:2007:i:3:p:305-324 DOI: 10.1080/13662710701369262
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Vesselkova, Alexandr & Riikonena, Antti & Hämmäinena & Heikki, 2015. "Evolution of mobile handset feature dependences," 26th European Regional ITS Conference, Madrid 2015 127192, International Telecommunications Society (ITS).
    2. Koski, Heli & Kretchmer, Tobias, 2009. "The Role of Product Innovation on the Diffusion of Mobile Telephone," Discussion Papers 1200, The Research Institute of the Finnish Economy.
    3. Koski, Heli & Kretschmer, Tobias, 2010. "New product development and firm value in mobile handset production," Information Economics and Policy, Elsevier, pages 42-50.
    4. Ram Mudambi, 2013. "Location, control and firm innovation: the case of the mobile handset industry," Chapters,in: Handbook of Industry Studies and Economic Geography, chapter 9, pages 230-252 Edward Elgar Publishing.
    5. Riikonen, Antti & Smura, Timo & Kivi, Antero & Töyli, Juuso, 2013. "Diffusion of mobile handset features: Analysis of turning points and stages," Telecommunications Policy, Elsevier, vol. 37(6), pages 563-572.
    6. Buss, Philipp & Peukert, Christian, 2015. "R&D outsourcing and intellectual property infringement," Research Policy, Elsevier, vol. 44(4), pages 977-989.
    7. Claussen, Jörg & Essling, Christian & Kretschmer, Tobias, 2015. "When less can be more – Setting technology levels in complementary goods markets," Research Policy, Elsevier, vol. 44(2), pages 328-339.
    8. Riikonen, Antti & Smura, Timo & Töyli, Juuso, 2016. "The effects of price, popularity, and technological sophistication on mobile handset replacement and unit lifetime," Technological Forecasting and Social Change, Elsevier, vol. 103(C), pages 313-323.

    More about this item

    Keywords

    Product innovation; mobile phone handsets; dominant design; min-max principle;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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