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Demand and Innovation in Services: the Case of Mobile Communications

Author

Listed:
  • Nicoletta Corrocher

    (CESPRI - Bocconi University, Milan, Italy and NFH - University of Tromso, Tromso, Norway.)

  • Lorenzo Zirulia

    (CESPRI - Bocconi University, Milan and University of Bologna, Bologna, Italy.)

Abstract

This paper aims at analyzing the characteristics and the determinants of innovation in the mobile communication service industry, by emphasising in particular the role of demand. In a Shumpeterian spirit, we argue that competition in this sector crucially depends upon innovation, and that, given the specific characteristics of the industry, firms' innovative strategies are strongly affected by demand. Our main point is that in a context of uncertainty, demand affects firms' innovative strategies in two ways: first, by providing information on users' behaviour and by increasing the capability of market segmentation; second, by providing invcentives to innovate. This argument is supported by an empirical analysis carried out on the basis of an original dataset including all the tariff plans offered in the history of the Italian market up to 2005. We find that both firms' installed base of customers and market saturation play a role in shaping firms' innovative activities, in terms of number and type of innovations.

Suggested Citation

  • Nicoletta Corrocher & Lorenzo Zirulia, 2007. "Demand and Innovation in Services: the Case of Mobile Communications," KITeS Working Papers 199, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Mar 2007.
    • Handle: RePEc:cri:cespri:wp199
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    2. Ambre Nicolle & Christos Genakos & Tobias Kretschmer, 2025. "Strategic confusopoly: evidence from the UK mobile telecommunications market," Working Papers 202503, Cambridge Judge Business School, University of Cambridge.
    3. Francisco J. Santos-Arteaga & Debora Di Caprio & Madjid Tavana & Aidan O'Connor, 2017. "Formalising The Demand For Technological Innovations: Rational Herds, Market Frictions And Network Effects," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 21(02), pages 1-43, February.
    4. Machado Léo, Ricardo & Tello‐Gamarra, Jorge, 2016. "Inovac¸ão em servic¸os: estado da arte e perspectivas futuras [Innovation in services: state of the art and future perspectives]," MPRA Paper 82195, University Library of Munich, Germany, revised 29 Mar 2017.
    5. Wang, Ying & Lan, Jiahui & Pan, Jialing & Fang, Lin, 2024. "How do consumers’ attitudes differ across their basic characteristics toward live-streaming commerce of green agricultural products: A preliminary exploration based on correspondence analysis, logis," Journal of Retailing and Consumer Services, Elsevier, vol. 80(C).
    6. Yang, Xiuyun & Li, Min & Liang, Shanshan, 2024. "How consumers’ digital engagement affects regional innovation capacity in China?," Economic Modelling, Elsevier, vol. 139(C).
    7. Lee, Kyung Yul & Jung, Hyun Ju & Kwon, Youngsun, 2024. "Boundary-spanning technology search, product component reuse, and new product innovation: Evidence from the smartphone industry," Research Policy, Elsevier, vol. 53(4).
    8. Mu, Yu & Bossink, Bart & Vinig, Tsvi, 2022. "Developing a classification scheme of service innovation," Annals of Tourism Research, Elsevier, vol. 95(C).
    9. Lokesh Jasrai, 2014. "Measuring Mobile Telecom Service Innovativeness Among Youth," Paradigm, , vol. 18(1), pages 103-116, June.
    10. Snyder, Hannah & Witell, Lars & Gustafsson, Anders & Fombelle, Paul & Kristensson, Per, 2016. "Identifying categories of service innovation: A review and synthesis of the literature," Journal of Business Research, Elsevier, vol. 69(7), pages 2401-2408.
    11. Srinuan, Chalita & Srinuan, Pratompong & Bohlin, Erik, 2012. "Exploring mobile pricing strategies and innovations in the Thai mobile communications market," 19th ITS Biennial Conference, Bangkok 2012: Moving Forward with Future Technologies - Opening a Platform for All 72522, International Telecommunications Society (ITS).
    12. Xiao Zhou & Lu Huang & Yi Zhang & Miaomiao Yu, 2019. "A hybrid approach to detecting technological recombination based on text mining and patent network analysis," Scientometrics, Springer;Akadémiai Kiadó, vol. 121(2), pages 699-737, November.
    13. Lijie Feng & Yilang Li & Zhenfeng Liu & Jinfeng Wang, 2020. "Idea Generation and New Direction for Exploitation Technologies of Coal-Seam Gas through Recombinative Innovation and Patent Analysis," IJERPH, MDPI, vol. 17(8), pages 1-21, April.
    14. Prajogo, Daniel I., 2016. "The strategic fit between innovation strategies and business environment in delivering business performance," International Journal of Production Economics, Elsevier, vol. 171(P2), pages 241-249.
    15. Karacuka, Mehmet & Çatık, A. Nazif & Haucap, Justus, 2013. "Consumer choice and local network effects in mobile telecommunications in Turkey," Telecommunications Policy, Elsevier, vol. 37(4), pages 334-344.
    16. Cecere, Grazia & Corrocher, Nicoletta & Battaglia, Riccardo David, 2015. "Innovation and competition in the smartphone industry: Is there a dominant design?," Telecommunications Policy, Elsevier, vol. 39(3), pages 162-175.
    17. Yadav, Sanjeev & Samadhiya, Ashutosh & Kumar, Anil & Luthra, Sunil & Kumar, Vikas & Garza-Reyes, Jose Arturo & Upadhyay, Arvind, 2024. "The interplay effects of digital technologies, green integration, and green innovation on food supply chain sustainable performance: An organizational information processing theory perspective," Technology in Society, Elsevier, vol. 77(C).
    18. Jordan Robert Gamble & Michael Brennan & Rodney Mcadam, 2016. "A Contemporary And Systematic Literature Review Of User-Centric Innovation: A Consumer Perspective," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-45, January.
    19. 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.
    20. Christos Genakos & Tobias Kretschmer & Ambre Nicolle, 2021. "Strategic confusopoly: evidence from the UK mobile market," CEP Discussion Papers dp1810, Centre for Economic Performance, LSE.
    21. Grazia Cecere, 2012. "Economics of soft innovation: a review article," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(8), pages 827-835, November.
    22. Guan, Jian Cheng & Yan, Yan, 2016. "Technological proximity and recombinative innovation in the alternative energy field," Research Policy, Elsevier, vol. 45(7), pages 1460-1473.
    23. Sang-Gun Lee & Eui-bang Lee & Chang-Gyu Yang, 2014. "Strategies for ICT product diffusion: the case of the Korean mobile communications market," Service Business, Springer;Pan-Pacific Business Association, vol. 8(1), pages 65-81, March.
    24. Cailou Jiang & Ying Zhang & Qun Zhao & Chong Wu, 2020. "The Impact of Purchase Subsidy on Enterprises’ R&D Efforts: Evidence from China’s New Energy Vehicle Industry," Sustainability, MDPI, vol. 12(3), pages 1-10, February.
    25. Polykalas, Spyros E. & Prezerakos, George N., 2015. "Measuring the impact of market competition analysis process in EU׳s electronic communications sector: Catalyst or impediment towards market competition?," Telecommunications Policy, Elsevier, vol. 39(3), pages 241-252.

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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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