Abstract: The paper describes the technology imitation behavior by introducing the efficiency coefficient of imitation,converts the compatibility cost to endogenous cost of imitation and degree of compatibility.From the point of the compatibility,this paper analyzes the compatibility choice in the course of improving quality of product by imitation strategy in the market with network externalities.Results show that in the premise of indistinctive effect of imitation,small-medium firms are inclined to choose compatibility in order to share installed base for the sake of reducing the gap between large-scale firms and themslves.When efficiency of imitation satisfies the definite condition,there is the optimal degree of technical compatibility,which maximizes the samll-medium firms’ profit.

Key words: small-medium firm, imitation strategy, compatibility, network externalities