Positive and negative feedback effects in competition for dominance of network business systems

This paper extends the existing research on the interplay of positive and negative feedback dynamics in the competition for business system dominance. By building on an analysis of the digital television launch in the United Kingdom, we find that the expectation of network externalities intensifies competition causing strong negative feedback effects to emerge. Actions aimed at improving one's position are systematically imitated and pre-emptied. Pressure builds up in the business system, and only when the weakest firms exit, the positive feedback effects are unleashed in their full magnitude. Our findings contribute to an improved understanding of institutional dynamics in new technology introduction.