How high-technology start-up firms may overcome direct and indirect network externalities     [How to commercialize inventions] (Int'l J. ITSSR, 2003)

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Pruett, Mark, Lee, Hun, Lee, Ji-Ren., & O'Neal, Donald
International Journal of IT Standards and Standardization Research, 1(1): 34-46
Publication year: 2003

How to commercialize inventions:  We outline commercialization strategies for inventions that require new infrastructure, complementary goods, or many users.

Abstract

This paper presents a conceptual model of strategic choice for high-technology start-up firms in the face of network externalities–the strength of the market’s preference for standardized technology. Our model suggests that the commercialization strategies followed by such a firm will depend on the type of network externalitites–direct versus indirect–as well as the degree of appropriability–the firm’s ability to retain the value of innovation. We offer a number of propositions generated by the model and discuss their implications.

Keywords

  • network externalities;
  • appropriability;
  • high-technology start-ups;