Strategic Maneuvering of Technological Factors and Emergence of De Facto Standards

  • Lee J. Zane Rider University
  • Hideo Yamada Waseda University
  • Susumu "San" Kurokawa Drexel University


 The emergence of a de facto standard in a product class depends on technological, competitive, and market factors. The question is whether or not a firm can strategically manipulate various factors to help determine the winner. To address this question, three factors, technological superiority, openness, and compatibility, are examined with regard to their influence on the emergence of de facto standards. Hypotheses are tested with an analysis of 78 historical cases in 39 market categories. Results indicate that in setting de facto standards, technological superiority is uniformly important, suggesting the logic of technological determinism. Moreover, results also suggest that the influence of technological openness may be contingent on the nature of competition. Thus, strategic managers may need to incorporate a contingency perspective into the selection of an appropriate strategy.



Download data is not yet available.


Abernathy, W. J., & Utterback, J. M. (1978). Patterns of Innovation in Industry. Technology Review, 80(7).

Allison, P. D. (2001). Logistic Regression Using the SAS System: Theory and Application. NC, USA: SAS Institute Inc.

Anderson, P., & Tushman, M. L. (1990). Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly, 35(4), 604-633.

Arthur, W. B. (1989). Competing Technologies, Increasing Returns, and Lock-In by Historical Events. The Economic Journal 99(394), 116-131.

Arthur, W. B. (1996). Increasing Returns and the New World of Business Harvard Business Review, 74(4), 100- 109.

Auriol, E., & Benaim, M. (2000). Standardization in Decentralized Economies. The American Economic Review, 90(3), 550-570.

Baldwin, C. Y., & Clark, K. B. (1997). Managing modularity. Harvard Business Review, 84-93.

Barnett, W. P. (1990). The Organizational Ecology of a Technological System. Administrative Science Quarterly, 35(1), 31-60.

Barton, S. L. (1988). Diversification Strategy and Systematic Risk: Another Look. Academy of Management Journal, 31(1), 166-175.

Besen, S. M., & Farrell, J. (1994). Choosing How to Compete: Strategies and Tactics in Standardization. The Journal of Economic Perspectives,, 8(2), 117- 131.

Bonaccorsi, A., Giannangeli, S., & Rossi, C. (2006). Entry Strategies Under Competing Standards: Hybrid Business Models in the Open Source Software Industry. Management Science, 52(7), 1085-1098.

Bonaccorsi, A., & Rossi, C. (2003). Why Open Source software can succeed. Research Policy, 32(7), 1243-1258.

Christensen, C. M., Suarez, F. F., & Utterback, J. M. (1998). Strategies for Survival in Fast-Changing Industries. Management Science, 44(12), S207- S220.

Christie, P. M. J., Kwon, I.-W. G., Stoeberl, P. A., & Baumhart, R. (2003). A cross-cultural comparison of ethical attitudes of business managers: India, Korea and the United States. Journal of Business Ethics, 46(3), 263-287.

Cusumano, M. A., & Gawer, A. (2002). The Elements of Platform Leadership. MIT Sloan Management Review, 43(3), 51- 58.

Cusumano, M. A., Mylonadis, Y., & Rosenbloom, R. S. (1992). Strategic Maneuvering and Mass-Market Dynamics: The Triumph of VHS over Beta. The Business History Review, 66(1), 51-94.

Dahlander, L., & Gann, D. M. (2010). How Open is Innovation? Research Policy, 39(6), 699-709.

David, P. A. (1985). Clio and the Economics of QWERTY. The American Economic Review, 75(2), 332-337.

Droege, S. B., & Marvel, M. R. (2009). Perceived Strategic Uncertainty and Strategy Formation in Emerging Markets. Journal of Small Business Strategy, 20(2), 43-60.

Economides, N., & Katsamakas, E. (2006). Two-Sided Competition of Proprietary vs. Open Source Technology Platforms and the Implications for the Software Industry. Management Science, 52(7), 1057-1071.

Farrell, J., & Klemperer, P. (Eds.). (2006). Co-ordination and Lock-in: Competition with Switching Costs and Network Effects (Vol. 3). Amsterdam: North-Holland.

Farrell, J., & Saloner, G. (1985). Standardization, Compatibility, and Innovation. RAND Journal of Economics, 16(1), 70-83.

Farrell, J., & Saloner, G. (1986). Installed Base and Compatibility: Innovation, Product Preannouncements, and Predation. The American Economic Review, 76(5), 940-955.

Gabel, H. (1991). Competitive Strategies for Product Standards: The Strategic Use of Compatibility Standards for Competitive Advantage: McGraw-Hill.

Gandal, N. (1995). Competing Compatibility Standards and Network Externalities in the PC Software Market. The Review of Economics and Statistics, 77(4), 599-608.

Garud, R., Jain, S., & Kumaraswamy, A. (2002). Institutional Entrepreneurship In The Sponsorship Of Common Technological Standards: The Case Of Sun Microsystems And Java. Academy of Management Journal, 45(1), 196- 214.

Garud, R., & Kumaraswamy, A. (1993). Changing Competitive Dynamics in Network Industries: An Exploration of Sun Microsystems' Open Systems Strategy. Strategic Management Journal, 14(5), 351-369.

Gawer, A., & Cusumano, M. A. (2002). Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation. Boston, Massachusetts: Havard Business School Press.

Hargadon, A. B., & Douglas, Y. (2001). When Innovations Meet Institutions: Edison and the Design of the Electric Light. Administrative Science Quarterly, 46(3), 476-501.

Hitt, M. A., Dacin, M. T., Tyler, B. B., & Park, D. (1997). Understanding the differences in Korean and U.S. executives' strategic orientations. Strategic Management Journal, 18(2), 159-167.

Katz, M. L., & Shapiro, C. (1986). Product Compatibility Choice in A Market With Technological Progress. Oxford Economic Papers, 38(supp), 146-165.

Katz, M. L., & Shapiro, C. (1992). Product Introduction with Network Externalities. The Journal of Industrial Economics, 40(1), 55-83.

Katz, M. L., & Shapiro, C. (1994). Systems Competition and Network Effects. The Journal of Economic Perspectives, 8(2), 93-115.

Kim, D.-J., & Kogut, B. (1996). Technological Platforms and Diversification. Organization Science, 7(3), 283-301.

Kristiansen, E. G. (1998). R&D in the Presence of Network Externalities: Timing and Compatibility. The RAND Journal of Economics, 29(3), 531-547.

Lecraw, D. J. (1984). Some Economic Effects of Standards. Applied Economics, 16, 507-522.

Leibenstein, H. (1971). Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand. The Quarterly Journal of Economics (May 1950) Reprinted. In W. B. a. H. M. Hochman (Ed.), Readings in Microeconomics (2nd ed., pp. 115-116). New York: Holt, Rinehart and Winston, Inc.

Liebowitz, S. J., & Margolis, S. E. (1995). Path Dependence, Lock-In, and History. Journal of Law, Economics, and Organization, 11(1), 205-226.

Morris, M. H., Koçak, A., & Özer, A. (2007). Coopetition as a Small Business Strategy: Implications for Performance. Journal of Small Business Strategy, 18(1), 35-55.

Navis, C., & Glynn, M. A. (2010). How New Market Categories Emerge: Temporal Dynamics of Legitimacy, Identity, and Entrepreneurship in Satellite Radio, 1990-2005. Administrative Science Quarterly, 55(3), 439-471.

Nohria, N., & Gulati, R. (1996). Is Slack Good or Bad for Innovation? Academy of Management Journal, 39(5), 1245- 1264.

Ostrovsky, M., & Schwarz, M. (2005). Adoption of Standards under Uncertainty RAND Journal of Economics, 36(4), 816-832.

Park, D., Chinta, R., Lee, M., & Yi, D. (2010). New Product Development Project Management: Differences between Korean and U.S. Small Business Executives. Journal of Small Business Strategy, 21(1), 83-98.'

Parker, G. G., & Van Alstyne, M. W. (2005). Two-Sided Network Effects: A Theory of Information Product Design. Management Science, 51(10), 1494- 1504.

Rohlfs, J. (2001). Bandwagon effects in high technology industries. Cambridge: MIT Press.

Schilling, M. A. (2002). Technology Success And Eailure In Winner-Take- All Markets: The Impact Of Learning Orientation, Timing, and Network Externalities. Academy of Management Journal, 45(2), 387-398.

Schumpeter, J. A. (1950). Capitalism, Socialism, and Democracy (3d ed.). New York: Harper and Row.

Shapiro, C., & Varian, H. R. (1998). Information Rules: a Strategic Guide to the Network Economy: Harvard Business School Press.

Sheremata, W. A. (2004). Competing Through Innovation In Network Markets: Strategies For Challengers. Academy of Management Review, 29(3), 359-377.

Shibata, T. (1993). Sony's successful strategy for compact discs. Long Range Planning 26(4), 16-21.

Srinivasan, R., Lilien, G. L., & Rangaswamt, A. (2006). The Emergence of Dominant Designs. Journal of Marketing, 70(2), 1-17.

Stango, V. (2004). The Economics of Standards Wars. Review of Network Economics, 3(1), 1-19.

Suarez, F. F. (2004). Battles for technological dominance: an integrative framework. Research Policy, 33(2), 271-286.

Suarez, F. F. (2005). Network Effects Revisited: The Role of Strong Ties in Technology Selection. Academy of Management Journal, 48(4), 710-720.

Suarez, F. F., & Utterback, J. M. (1995). Dominant Designs and the Survival of Firms. Strategic Management Journal, 16(6), 415-430.

Swann, G. M. P. (2002). The functional form of network effects. Information Economics and Policy, 14(3), 417-429.

Tegarden, L. F., Hatfield, D. E., & Echols, A. E. (1999). Doomed from the start: what is the value of selecting a future dominant design? Strategic Management Journal, 20(6), 495-518.

Tushman, M. L., & Anderson, P. (1986). Technological Discontinuities and Organizational Environments. Administrative Science Quarterly, 31(3), 439-465.

Utterback, J. M., & Abernathy, W. J. (1975). A Dynamic Model of Process and Product Innovation. OMEGA, 3(6), 639-656.

Wernerfelt, B. (1984). A Resource-Based View of the Firm. Strategic Management Journal, 5(2), 171-180.

West, J. (2003). How open is open enough?: Melding proprietary and open source platform strategies. Research Policy, 32(7), 1259-1285.

Windrum, P. (2004). Leveraging technological externalities in complex technologies: Microsoft's exploitation of standards in the browser wars. Research Policy, 33(3), 385-394.

Witt, U. (1997). "Lock-in" vs. "critical masses" - Industrial change under network externalities. International Journal of Industrial Organization, 15(6), 753-773.

Xie, J., & Sirbu, M. (1995). Price Competition and Compatibility in the Presence of Positive Demand Externalities. Management Science, 41(5), 909-926.

Zhu, K., Kraemer, K. L., Gurbaxani, V., & Xin Xu, S. (2006). Migration to Open- Standard Interorganizational Systems: Network Effects, Switching Costs, and Path Dependency. MIS Quarterly, 30, 515-539.
How to Cite
ZANE, Lee J.; YAMADA, Hideo; KUROKAWA, Susumu "San". Strategic Maneuvering of Technological Factors and Emergence of De Facto Standards. Journal of Small Business Strategy, [S.l.], v. 24, n. 2, p. 91-113, may 2014. ISSN 2380-1751. Available at: <>. Date accessed: 22 apr. 2019.