Standard Diffusion in Growing Networks: Modeling Interaction Patterns

Size matters for standardization efforts: Newly introduced, more efficient standards are often disadvantaged because they have smaller networks. Networks for commercial and technical collaboration - for instance in passenger transportation - however, suggest that network size is not all that matters. Network effect models should also account for specific interaction patterns and growth processes. Emerging islands of shared technologies may then be explained by close-knit, non-proportional interactions among members of alliances and the like. To test the effects of proportionality, degree of interaction, and preferentiality, we model standard diffusion in a growing network of organizations linked through different patterns of interaction. Extreme case analysis and agent-based simulation show that proportional and non-proportional interactions have different, non-monotonic effects on standardization outcomes. Proportional interactions-formed as a function of a growing network size - result in a path-dependent trajectory where an increasing number of links promote one standard's dominance. Non-proportional interactions, in contrast, limit network effects: Multi-standard persistence becomes more likely as new agents are less dependent on the total number of adopters in the network. We illustrate theoretical implications and planned next steps for assessing diffusion scenarios of a new standard in airline IT and distribution.