Network Intensity: Assessing The Strategic Value of Installed Base

Abstract

The purpose of this research is to explore variation in the influence of networkeffects across competitive settings. Specifically, this study tests for significantdifferences in the impact of a product’s installed base on its growth in an industryinfluenced by network effects, application software. Variation in size-on-growth effectsacross industry segments is conjectured to be a function of the network intensity,or degree of consumer interdependence, of the segments. The results illustratesignificant variation in the magnitude of size-on-growth effects across segments,consistent with the notion of network intensity. Implications for strategy in hightechnologysettings are discussed.