Adoption dynamics of increasing-return technologies in systemic contexts

This paper examines the adoption dynamics of increasing-return technologies in a systemic business ecosystem context. Many systemic, complex technologies have shown to exhibit increasing returns to adoption in that the initial increase in adoption leads to increasing experience with the technology and improvements in technology and its utilization which further lead to increasing adoption. In systemic context our empirical study examines the adoption dynamics of technology utilization provisioned by another sub-system industry's actors. We hypothesize that the more a technology is utilized initially the faster the adoption would be due to experience gained in utilizing technology. Simultaneously, we hypothesize that as the technologies become more complex as they build on existing knowledge, the dynamics of adoption would slow down since the experience accumulation becomes more difficult and resource consuming. Our original empirical setting considers some 2890 products utilizing 54 different technologies and platforms in the computer industry. Our modeling results show that, technological improvements between successive technologies influences the companies' adoption of the successive technology in a way that the more there is improvement performance-wise, the less the firms adopt the technology. However, we also find some anomalies contrary to our initial expectations and discuss the managerial and research implications.