Title: How to profit from de facto standard-based competition: learning from Japanese firms' experiences

Authors: Hideo Yamada, Sam Kurokawa

Addresses: Business School, Waseda University, Nishi-Waseda 1–21–1, Shinjuku-ku, Tokyo, 169–0051, Japan. ' Department of Management, LeBow College of Business, Drexel University, 101 N, 33rd St., Philadelphia, PA 19104, USA

Abstract: This paper discusses strategic issues related to technological de facto standards. Based on our historical and empirical analyses of 13 cases mainly observed in the Japanese audio-visual and IT-related fields, we pose the following six propositions on de facto standard-based competition: 1. User will benefit by utilising and exchanging skill/software based on de facto standards, and manufacturers will benefit by forming de facto standards through their market dominance and licensing income; 2. A product which requires a high level of connectivity and accumulated skill/software is likely to form a de facto technological standard. 3. The earlier a firm establishes a majority of the market share, the more likely it is to establish a technological de facto standard. 4. A de facto standard is likely to be fixed when its diffusion (share) reaches 2–3% of the market. 5. The more killer applications a firm can introduce the more likely it is to establish/maintain/profit from a technological de facto standard. 6. The more efforts a firm makes to promote its technology/product to its competitors, suppliers and distributors, the more likely it is to establish/maintain/profit from a technological de facto standard.

Keywords: de facto standards; competitive strategy; technology strategy; Japanese management; technology management; Japan; technological standards; standards-based competition.

DOI: 10.1504/IJTM.2005.006710

International Journal of Technology Management, 2005 Vol.30 No.3/4, pp.299 - 326

Published online: 04 Apr 2005 *

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