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Twinning Networks: Co-Evolution and Competition of System Component Technologies in the Local Area Network Industry

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Abstract

This work analyses the evolution of the Local Area Network industry in terms of the interaction of technological and economic dimensions over time. It focuses in particular on two suppliers of LAN systems: the access technology industry and the internetworking industry. Two elements driving the evolution are identified, 1) cross-substitution among the components when costs are reduced or performance improved,and 2) the need to preserve the compatibility with existing components or technologies. The effects of these mechanisms on the dynamics of entry and exit of firms in both industries are analysed by using the Organisational Ecology approach. We find that the effects on the dynamic are different depending on the presence or absence of innovation. These mechanisms may ensure a matching between the two industries and a virtuous cycle of growth in absence of innovation. Nevertheless, when an innovation occurs in one of the two industries and the carrying capacity of the system is altered, the 'match' is disrupted and it may be difficult to re-establish a matching position, thus the virtuous cycle may turn into a 'vicious one'. An interpretation of the reasons for this mismatching is given by using the concept of 'lineage process' to describe the application of a technology in new domains and by stressing the role that elements different from adaptation and availability of resource may play in delaying the process.

Suggested Citation

  • Roberto Fontana, 1999. "Twinning Networks: Co-Evolution and Competition of System Component Technologies in the Local Area Network Industry," SPRU Working Paper Series 31, SPRU - Science Policy Research Unit, University of Sussex Business School.
    • Handle: RePEc:sru:ssewps:31
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    References listed on IDEAS

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    1. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
    2. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
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    Cited by:

    1. Roberto Fontana & Alessandro Nuvolari & Bart Verspagen, 2009. "Mapping technological trajectories as patent citation networks. An application to data communication standards," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 18(4), pages 311-336.

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    More about this item

    Keywords

    local area networks; LAN; evolution; competition; innovation;
    All these keywords.

    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
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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