Title: Network effects, standardisation and competitive strategy: how companies influence the emergence of dominant designs

Authors: Marcus Ehrhardt

Addresses: Booz Allen Hamilton Inc., Frankfurt, Main, D-60323, Germany

Abstract: Network effects and standardisation are central to business success for many of today|s high-technology companies. The ability of a firm to establish its technology as a dominant design or so-called de-facto standard is a critical determinant of its long-term competitive position. Which strategy a company should choose in a de-facto standardisation process, e.g. introducing a new technology as a proprietary standard or as a more or less open standard, depends on a variety of situative factors. This paper seeks to analyse the effectiveness of different strategic actions in standardisation processes. Utilising economic theories on network effects, the paper develops a framework for analysing strategic behaviours of companies in de-facto standardisation processes with a special focus on openness strategies. Several case studies illustrate different aspects of the framework.

Keywords: competitive strategy; network effects; standardisation; dominant design; compatibility; open systems.

DOI: 10.1504/IJTM.2004.003956

International Journal of Technology Management, 2004 Vol.27 No.2/3, pp.272 - 294

Available online: 05 Feb 2004 *

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