A Study On The Introducing Strategies Of Innovation Products With Network Externalities

Network externalities the notable characteristic of network economy makes the product forms and consumption manners essentially. Under such background, we put forward that the integration of technology sourcing and marketing can improve the possibility of achieving success for products innovation and study on the necessity of integrating the technology sourcing and marketing during the products innovation process in the market, especially in the case of the market with network externalities. And then, we also mainly study on the very crucial issues such as compatibility, risk choice and timing decision-making of corporations which plan to introduce a innovation product with network externalities to the market using consumer utility theory and multistage Games theory.We prove that network externalities strengthen the necessity of integrating the technology sourcing and marketing during the products innovation process. And the new entrant in the market hold by a incumbent firms will take higer technology risk in order to gain market share when its innovation product is incompatible with the incumbent's. And if compatibility is technically feasible, the new entrant's compatibility decision-making depends on compatibility cost. We also show that the competitive firms' timing choice for entering into a emerging market in which there is no suppliers yet not only depends on the extra cost for the fist-mover, but also is concerned with the innovation degree difference between two rival firms and the rival's response. Similarly, if compatibility is technically feasible and the cost is small enough, both rivals may be better off agreeing to make prospective products compatible.Besides, we also validate my research by case studies and bring forward some worthy suggestions for the network companies engaging in IT industry to inprove R&D ability and profits.