Battle for dominant designA decision-making model

  1. Esteban Fernández 1
  2. Sandra Valle 1
  1. 1 Universidad de Oviedo
    info

    Universidad de Oviedo

    Oviedo, España

    ROR https://ror.org/006gksa02

Journal:
European Research on Management and Business Economics

ISSN: 2444-8834

Year of publication: 2019

Volume: 25

Issue: 2

Pages: 72-78

Type: Article

DOI: 10.1016/J.IEDEEN.2019.01.002 DIALNET GOOGLE SCHOLAR lock_openOpen access editor

More publications in: European Research on Management and Business Economics

Abstract

This paper synthesizes, analyses and organizes the factors that can be decisive in a battle for a dominant design. The result is the construction of a rational decision-making model, where the relevant factors are grouped into three blocks – market, technology, and complementary assets. First, the firm must decide on the strategic manoeuvres that it is going to deploy to be able to capture the market that it has created or invaded. Second, technologically, it must decide whether to compete with its design made public or private, open or closed. Finally, it must plan its access to complementary assets without which it would be impossible to exploit the new design in a mainstream market. The proposed model is integrative in character and practical in approach, and it helps in forming a strategy and decision-making in the usual design wars today. It is aimed to contribute to a literature in which the analysis of factors is usually done in a fragmented form, without the systematic approach that would facilitate rational and dynamic decision making.

Bibliographic References

  • Abernathy, W. J., & Utterback, J. M. (1978). Patterns of industrial innovation. Technology Review, 80 (7), 41–47.
  • Anderson, P., & Tushman, M. L. (1990). Technological discontinuities and dominant design: A cyclical model of technological change. Administrative Science Quarterly, 35, 604–633. http://dx.doi.org/10.2307/2393511
  • Arthur, W. B. (1996). Increasing returns and the new world of business. Harvard Business Review, 74(4), 100–109.
  • Axelrod, R., Mitchell, W., Thomas, R. E., Bennett, D. S., & Bruderer, E. (1995). Coalition formation in standard-setting alliances. Management Science, 41, 1493–1508. http://dx.doi.org/10.1287/mnsc.41.9.1493
  • Baumol, W. J. (2004). Difusión y adaptación de la tecnología: El crecimiento a través de la innovación imitativa. Información Comercial Española, 814 (marzo–abril), 5–16.
  • Bekkers, R., Duysters, G., & Verspagen, B. (2002). Intellectual property rights, strategic technology agreements and market structure: The case of GSM. Research Policy, 31, 1141–1162. http://dx.doi.org/10.1016/s0048-7333(01)00189-5
  • Bergen, M., Dutta, S., & Walker, O. C. (1992). Agency relationships in marketing: A review of the implications and applications of agency and related theories. Journal of Marketing, 56 (3), 1–24. http://dx.doi.org/10.2307/1252293
  • Besen, S. M., & Farrell, J. (1994). Choosing how to compete: Strategies and tactics in standarization. Journal of Economics Perspectives, 8(2), 117–131. http://dx.doi.org/10.1257/jep.8.2.117
  • Brem, A., Nylund, P. A., & Schuster, G. (2016). Innovation and de facto standardization: The influence of dominant design on innovative performance, radical innovation, and process innovation. Technovation, 50-51, 79–88. http://dx.doi.org/10.1016/j.technovation.2015.11.002
  • Burnham, T. A., Frels, J. K., & Mahajam, V. (2003). Consumer switching costs: A typology, antecedents and consequences. Journal of the Academy of Marketing Science, 31, 109–126. http://dx.doi.org/10.1177/0092070302250897
  • Carpenter, G. S., & Nakamoto, K. (1989). Consumer preference formationand pioneering advantage. Journal of Marketing Research, 26, 285–298. http://dx.doi.org/10.2307/3172901
  • Choi, J. P. (1996). Do converters facilitate the transition to a new incompatible technology? A dynamic analysis of converters. International Journal of Industrial Organizations, 14, 825–835. http://dx.doi.org/10.1016/0167-7187(96)01013-2
  • Clark, K. B. (1985). The interaction of design hierarchies and market concepts in technological evolution. Research Policy, 14, 235–251. http://dx.doi.org/10.1016/0048-7333(85)90007-1
  • Comanor, W. S., & Wilson, T. S. (1979). The effect of advertising on competition: A survey. Journal of Economic Literature, 27, 453–476.
  • Cusumano, M. A., Mylonadis, Y., & Rosenbloom, R. S. (1992). Strategic maneuvering and mass-market dynamics: The triumph of VHS over Beta. Business History Review, 66, 51–94. http://dx.doi.org/10.2307/3117053
  • David, P., & Greenstein, S. (1990). The economics of compatibility standards: An introduction to recent research. Economics of Innovation and New Technology, 1, 3–41. http://dx.doi.org/10.1080/10438599000000002den
  • Hartigh, E., Ortt, J. R., van de Kaa, G., & Stolwijk, C. C. (2016). Platform control during battles for market dominance: The case of Apple versus IBM in the early personal computer industry. Technovation, 48-49, 4–12. http://dx.doi.org/10.1016/j.technovation.2015.12.001
  • Dosi, G. (1982). Technological paradigms and technological trajectories: A suggested interpretation of the determinants and directions of technical change. Research Policy, 11, 147–162. http://dx.doi.org/10.1016/0048-7333(82)90016-6
  • Eisenmann, T. (2007). Internet companies’ growth strategies: Determinants of investment intensity and long-term performance. Strategic Management Journal, 27, 1183–1204. http://dx.doi.org/10.1002/smj.567
  • Eppen, G. D., Hanson, W. A., & Martin, R. K. (1991). Bundling – New products, new markets, low risk. Sloan Management Review, 32(4), 7–14.
  • Evans, D. E., & Schmalensee, R. (2016). Matchmakers. The new economics of multisided platforms. Boston: Harvard Business Review Press.
  • Farrell, J., & Saloner, G. (1985). Standardization, compability, and innovation. The Rand Journal of Economics, 16, 70–83. http://dx.doi.org/10.2307/2555589
  • Farrell, J., & Saloner, G. (1988). Coordination through committees and markets. The Rand Journal of Economics, 19, 235–252. http://dx.doi.org/10.2307/2555702
  • Frenzen, J., & Nakamoto, K. (1993). Structure, cooperation, and the flow of market information. Journal of Consumer Research, 30, 360–375. http://dx.doi.org/10.1086/209355
  • Gallagher, S., & Park, S. H. (2002). Innovation and competition in standard-based industries: A historical analysis of the U.S. home video game market. IEEE Transactions on Engineering Management, 49, 67–82. http://dx.doi.org/10.1109/17.985749
  • Gates, B. (1995). The road ahead. New York: Peguin Books.
  • Grove, A. S. (1996). Only the paranoid survive: How to exploit the crisis points that challenge every company and career. New York: Doubleday.
  • Gupta, S., Jain, D., & Sawhney, M. S. (1999). Modeling the evolution of markets with indirect network externalities: An application to digital television. Marketing Science, 18, 396–416. http://dx.doi.org/10.1287/mksc.18.3.396
  • Haan, M. (2003). Vaporware as a means of entry deterrence. Journal of Industrial Economics, 51, 345–358. http://dx.doi.org/10.1111/1467-6451.00204
  • Helfat, C. E., & Lieberman, M. B. (2002). The birth of capabilities: Market entry and the importance of pre-history. Industrial and Corporate Change, 11(4), 725–760. http://dx.doi.org/10.1093/icc/11.4.725
  • Henderson, R. M., & Clark, K. B. (1990). Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Administrative Science Quarterly, 35, 9–30. http://dx.doi.org/10.2307/2393549
  • Hill, C. W. L. (1997). Establishing a standard: Competitive strategy and technological standards in winner-take-all industries. Academy of Management Executive,11(2), 7–18. http://dx.doi.org/10.5465/ame.1997.9707132143
  • Islas, J. (1999). The gas turbine: A new technological paradigm in electricity generation. Technological Forecasting and Social Change, 60, 129–148. http://dx.doi.org/10.1016/s0040-1625(98)00036-5
  • Katz, M. L., & Shapiro, C. (1986). Technology adoption in the presence of the network externalities. Journal of Political Economy, 94, 822–841. http://dx.doi.org/10.1086/261409
  • Kerin, R. A., Varadarajan, P. R., & Peterson, R. A. (1992). First-mover advantages: A synthesis, conceptual framework, and research propositions. Journal of Marketing, 56(4), 33–52. http://dx.doi.org/10.2307/1251985
  • Khazam, J., & Mowery, D. (1994). The commercialization of RISC: Strategies for the creation of dominant designs. Research Policy, 23, 89–102. http://dx.doi.org/10.1016/0048-7333(94)90028-0
  • Klepper, S. (1996). Entry, exit, growth, and innovation over the product life cycle. American Economic Review, 86, 562–583.
  • Klepper, S. (1997). Industry life cycles. Industrial and Corporate Change, 6(1),145–181. http://dx.doi.org/10.1093/icc/6.1.145
  • Langlois, R. N., & Robertson, P. L. (1995). Firms, markets and economic change. London: Routledge.
  • Lee, J. R., O’Neal, D. E., Pruett, M. W., & Thomas, H. (1995). Planning for dominance: A strategic perspective on the emergence of a dominant design. R&D Management, 25, 3–15. http://dx.doi.org/10.1111/j.1467-9310.1995.tb00896.x
  • Leibenstein, H. (1950). Bandwagon, snob, and Veblen effects in the theory of consumer’s demand. Quarterly Journal of Economics, 64, 183–207.http://dx.doi.org/10.2307/1882692Leiponen, A. E. (2008). Competing through cooperation: The organization of standard setting in wireless telecommunications. Management Science, 54,1904–1919. http://dx.doi.org/10.1287/mnsc.1080.0912
  • Levin, R. C., Klevorick, A. K., Nelson, R. R., & Winter, S. G. (1987). Appropriating the returns from industrial research and development. Brookings Papers on Economic Activity, 3, 783–823. http://dx.doi.org/10.2307/2534454
  • Lieberman, M. B., & Montgomery, D. B. (1988). First-mover advantages. Strategic Management Journal, 9, 41–58. http://dx.doi.org/10.1002/smj.4250090706
  • Macher, J. T., & Richman, B. D. (2004). Organizational responses to discontinuous innovation: A case study approach. International Journal of Innovation Management, 8, 87–114. http://dx.doi.org/10.1142/s1363919604000939
  • Markides, C., & Gerosky, P. A. (2005). Fast second: How smart companies by pass radical innovation to enter and dominate new market. San Francisco: Jossey-Bass.
  • Moore, G. A. (2002). Crossing the chasm. Marketing and selling disruptive products to mainstream customers. New York: Harper Collins Publishers.
  • Murmann, J. P., & Frenken, K. (2006). Toward a systematic framework for researchon dominant design, technological innovations, and industrial change. Research Policy, 35, 925–952. http://dx.doi.org/10.1016/j.respol.2006.04.011
  • Narayanan, V. K., & Chen, T. (2012). Research on technology standards: Accomplishment and challenges. Research Policy, 41, 1375–1406. http://dx.doi.org/10.1016/j.respol.2012.02.006
  • Oren, S., & Dhebar, A. (1985). Optimal dynamics pricing for expanding networks. Marketing Science, 4, 336–351. http://dx.doi.org/10.1287/mksc.4.4.336
  • Porter, M. E. (1980). Competitive strategy. Techniques for analysing industries and competitors. New York: Free Press.
  • Rao, R. C., & Rutenberg, D. P. (1979). Preempting an alert rival: Strategic timing of the first plant by analysis of sophisticated rivalry. Bell Journal of Economics, 10,412–428. http://dx.doi.org/10.2307/3003344
  • Remneland-Wikhamn, B. (2013). Two different perspectives on open innovation– Libre versus control. Creativity and Innovation Management, 22, 375–389. http://dx.doi.org/10.1111/caim.12035
  • Rogers, E. M. (1962). Diffusion of innovations. New York: Free Press.
  • Saloner, G., Shepard, A., & Padolny, J. (2001). Strategic management. New York: JohnWiley.
  • Scherer, F. M. (1980). Industrial market structure and economic performance. Chicago:Rand McNally.
  • Schilling, M. A. (1998). Technological lockout: An integrative model of the economic and strategic factors driving technology success and failure. Academy of Management Review, 23, 267–284. http://dx.doi.org/10.5465/amr.1998.533226
  • Schilling, M. A. (1999). Winning the standards race: Building installed base and the availability of complementary goods. European Management Journal, 17,265–274. http://dx.doi.org/10.1016/s0263-2373(99)00005-5
  • Schmalensee, R. (1982). Product differentiation advantages of pioneering brands. American Economic Review, 72, 349–365.
  • Schumpeter, J. A. (1934). The theory of economic development. New York: Oxford University Press.
  • Shapiro, C., & Varian, H. R. (1999). Information rules. A strategic guide to the network economy. Boston: Harvard Business School Press.
  • Somaya, D., Kim, Y., & Vonortas, N. S. (2011). Exclusivity in licensing alliances: Using hostages to support technology commercialization. Strategic Management Journal, 32, 159–186. http://dx.doi.org/10.1002/smj.883
  • Spence, M. A. (1981). The learning curve and competition. Bell Journal of Economics, 12, 49–70. http://dx.doi.org/10.2307/3003508
  • Stremersch, S., Tellis, G., Franses, P., & Binken, J. (2007). Indirect network effects in the new product growth. Journal of Marketing, 71(3), 52–74. http://dx.doi.org/10.1509/jmkg.71.3.52
  • Suárez, F. F. (2004). Battles for technological dominance: An integrative framework. Research Policy, 33, 271–286. http://dx.doi.org/10.1016/j.respol.2003.07.001
  • Teece, D. J. (1986). Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy, 15, 285–305. http://dx.doi.org/10.1016/0048-7333(86)90027-2
  • Tellis, G. J., & Golder, P. N. (1996). First to market, first to fail? The real causes of enduring market leadership. Sloan Management Review, 37(2), 65–75.
  • Tripsas, M. (2000). Commercializing emerging technologies through complementary assets. In G. S. Day, J. H. Schoemaker, & R. E. Gunther (Eds.), Wharton on managing emerging technologies (pp. 172–186). New York: John Wiley.
  • Utterback, J. M. (1994). Mastering the dynamics of innovation. Boston: Harvard Business School Press.
  • Utterback, J. M., & Suárez, F. F. (1993). Innovation, competition, and industry structure. Research Policy, 22, 1–21. http://dx.doi.org/10.1016/0048-7333(93)90030-
  • lvan de Kaa, G., van den Ende, J., de vries, H. J., & van Heck, E. (2011).Factors for winning interface format battles: A review and synthesis of the literature. Technological Forecasting and Social Change, 78, 1397–1411. http://dx.doi.org/10.1016/j.techfore.2011.03.011
  • Wade, J. (1995). Dynamics of organizational communities and technological bandwagons: An empirical investigation of community evolution inthe microprocessor market. Strategic Management Journal, 16, 111–133. http://dx.doi.org/10.1002/smj.4250160920