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In industries influenced by network effects, firms with an established installed base of users experience dueling forces with regard to the quality of their product releases. On one hand, a network effects perspective suggests that such firms have limited incentive to produce higher quality products, as their entrenched installed base represents a significant barrier to competitors. However, a cumulative learning perspective suggests that such firms have the ability to produce higher-quality products than competitors. Grounded in these competing theoretical perspectives, this study examines the relationship between a firm's installed base size and the quality of its product releases in the packaged software industry. Installed base is found to have a positive and significant relationship with product quality, consistent with the cumulative learning perspective. Implications for theory and practice of strategy in network …