TECHNOLOGICAL COMPETITION, STRATEGIES OF THE FIRMS AND THE CHOICE OF THE 1ST USERS - THE CASE OF ROAD GUIDANCE TECHNOLOGIES

Based on an in-depth study of two different road guidance technologies , both under increasing returns to adoption, this paper is an attempt to elucidate the strategic game played by the producers and the first users before the introduction of the technologies onto the market. It shows that it is possible to endogenize the decisions made by the firs t users (who are chosen by the supplier) as much as those of the suppl iers when they choose the first users. When identifying first users, f irms evaluate their capacity to influence other potential adopters, a capacity which depends on their position in the social networks to whi ch they belong. In order to enrol the first users, the producers of a technology develop various strategies, including standardization in vo luntary standardization committees, pre-announcement, scientific legit imizing and even technological transformation of the product itself. I ndeed, the first users who seem strategically vital by the sponsor of the first system are not necessarily the same as those targeted by the sponsors of the second technology. Thus, the degree of substitutabili ty itself appears as an endogenous variable. This analysis provides a new basis for understanding technological competition and completes ec onomic modelling of the competition.