Merit, acceptance or access: Opposing forces to adoption of a new standard

Abstract

When faced with a new standard, a firm is influenced by various factors. Some forces motivate adoption of the standard, while other factors have a constraining effect. How do firms evaluate these opposing forces? We examine this question using data from the US cellular telephones industry and suggest that not only do firms evaluate the technical merit and likelihood of market acceptance of the standard but also evaluate factors associated with the players developing the standard. We explore how firms choose a new resource when the potential value of that resource is not yet established, a resource whose value is influenced both by its owners and its users. We find that technical merit, and new patentees have a positive effect on its adoption but concentration of ownership has a negative effect on adoption.