chapter 4

Question 1

Explain dominant design.

Answer 1

A single product or process architecture that dominates a product category. A dominant design is a “de facto standard,” meaning that while it may not be officially enforced or acknowledged, it has become a standard for the industry

Question 2

What is absorptive capacity?

Answer 2

The ability of an organization to recognize, assimilate, and utilize new knowledge.

Question 3

What are network externalities?

Answer 3

This is when the value of a good to a user increases
with the number of other users of the same or similar good.

Question 4

What is the installed base?

Answer 4

The number of users of a particular good.

Question 5

What are complementary goods?

Answer 5

Additional goods and services that enable or enhance the value of another good.

Question 6

Explain the self reinforcing cycle of installed base.

Answer 6

The availability of complementary goods attracts users, increasing the installed base. And a large installed
base attracts producers of complementary goods.

Question 7

What is meant by increasing returns?

Answer 7

When the rate of return (not just gross returns) from a product or process increases with the size of its installed base.

Question 8

What are the forces that choose a dominant design.

Answer 8

learning effects, network externalities and government regulations

Question 9

standard

Answer 9

technical specifications for quality,
reference, compatibility, adaptability, and
connectivity that are required for the proper
functioning of products, such as fax machines,
computers, and railway tracks