VoIP Diffusion among New Entrants: A Path Dependent Process

The path dependency literature provides insights on the dynamic allocation processes in which events are non-ergodic and have multiple absorbing states. Technological change belongs to this class of processes. This paper contributes to this conceptual framework by analysing the distinction between path and past dependence. The aim is to investigate how firms implement new innovations in localized technological changes. This conceptual framework is developed to present a longitudinal case study describing the history of VoIP (Voice over Internet Protocol) diffusion using data triangulation. From the empirical findings, it emerges that new entrants have applied the technology with creativity, following a path dependent process, offering free voice communication, while incumbents have applied the technology within a past dependent pattern and thus the benefits to their customers have been reduced and delayed.