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The role of product quality in industries influenced by network effects has been the subject of significant debate among management theorists. Some have suggested that network effects can result in inferior products, as consumers value a large cohort of fellow adopters over the technical quality of a given product. Others argue that cases of market domination by inferior products are quite rare and that product quality is an important aspect of network‐based competition. Thus, a fundamental question has arisen from this debate: in industries influenced by network effects, does product quality matter? This research uses a sample of product releases in the application software industry from 1986 to 1998 to test the impact of product quality on installed base growth for a given product line. Using software quality measures from archival trade publication reviews, quality is found to have a positive and significant impact on …