Pavel Luksha

pavel.luksha@gmail.com

EAEPE’2009 Annual Conference, Amsterdam

7 November 2009

Strategies of Niche Construction for Dominant Technological Standards

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How is dominant position of a technological standard achieved?Self-organization (Rosenkopf & Tushman, 1998)

semi-conductor industry in the US (Langlois, 2004)automotive component industry (Thompson, 1954)

Battle of standards (incumbent-entrant battle)electric current standard (AC / DC)rpm standards in music industry (Langlois &

Robertson, 1992)VHS recording standards (Hariharan, 1990;

Cusumano et al. 1991) and (recent) DVD standards

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Technological standards as a part of industry architecture

Industry architectures (Jacobides, Knudsen, Augier, 2006):provide the contours and framework within which

actors interact; they are usually partly designed (e.g. by regulation or de facto, by standards), and partly emergent (by the creation of socially understood templates and means to coordinate economic activities).

Role of firm’s agency in shaping architecture: lobbying, branding, etc.

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Niche construction is a pro-active strategyNiche construction is a concept originating in biological

evolutionary theory (Lewontin, 1985; Odling-Smee, Feldman, Laland, 2003): a process by which organisms, through their actions or their metabolism, transform the environment

Niche construction by the firm is a sustained change to the resources and relations in organizational environment that has long-lasting effect upon the focal organization & its constituents. It is a transformation of resource pool (incl. institutional constraints), i.e. ‘change to rules of the game’ rather than ‘game by the rules’

Examples are: brand creation & consumer preference management, supplier capability management, workforce capability management, lobbying, etc.

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Governance mode

Focal organization power is low

Focal organization power is high

Legitimate use of power

Illegitimate use of power

Direct governance

Convincing, support in learning, etc.

MentoringCoopting

ManipulationViolence

Indirect / network governance

Shared values, emotional contamination etc.

Norm / goal / value setting

Deceiving

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Typical strategies of uni-organizational guided niche construction

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Case of Java and Sun MicrosystemsSun Microsystems is a leader in

workstation market (Unix servers), computer components, software and IT services

Java platform is a language for development and execution of ‘applets’ for Internet and ‘smart device’ applications

History of Java standard emergence was considered by Garud, Jain and Kamaraswamy (2002)

The task of this presentation is to reconsider the evidence

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Stages of Java standard formation

Stage E:2000-8

Stage D:1997-2006

Stage C:1996-9,

2002-8

Stage B:1995-9

Stage A:1990-5

Product development & launch

Installation base expansion

Battle with the incumbent

Standardi-zation

‘Open control’ mode of standard development

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Stage A: Product development & launch Early 1990s: ‘Project Oak’ - a universal programming

technology for smart devices (initially targeted cable TV)

1994: decided to re-focus the product as a programming language for the Internet emerging market (renamed Oak to Java)

1995: launched Java as Internet programming platform

Initial goal was to become the centre of the Internet-based programming community in post-PC era

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Stage B: Installation base expansionFast expansion of the installation base as the key

factor in spreading the standard (Schilling, 1999, 2004):1995-6: Free access to the technology for independent

developers. Supported learning: created courses and tools that facilitate the learning of the new language environment

1995-7: Expectation shaping: promise of future advantages yet not realized in the system allowed to get the support of major vendors (HP, Oracle, …)

1995-9: Used the ‘community power’: license allowed to amend the code subject to sharing it with Sun and other vendors for free

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Stage C: Battle with incumbentJava as an open alternative for the ‘closed code’ by

MicrosoftMicrosoft reactions:

initially ignored Java and tried to develop similar functionality project (Blackbird) but failed (1995-6)

had to acquire Java license to catch up with Netscape in browser market (1997)

tried to ‘poison’ Java (1997-99)Sun response

lawsuit against Microsoft on license terms violation, won in 2000

Similar projects of Microsoft:ActiveX in 1999, Microsoft .NET in 2002

Microsoft and Sun partnership in 2008

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Stage D: StandardizationStandard development in ‘open control’ mode:

Sun officially claiming its aim to maintain ‘open control’ over the technology

standard maintenance through certification of independent Java applications by Sun (‘100% Pure Java’ initiative) (1997-9)

Sun’s voluntary participation in Java Community Process (collective process for Java development) (1998-2006-)

Standardization activitieswork with leading independent standardization bodies (ISO,

ECMA, NIST)documented attempts to coopt standardization bodies in

order to push decisions desired by Sun2006-8: Java becomes GNU (free open-source technology)

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Stage E: ‘Open control’ standard developmentExpansion to complimentary markets

Acquisition of complimentary product developers (2000-2008)

Alliance with key hardware (mobile phones, DVD players) and software producers to achieve ‘universal language’ position

Marketing efforts: creation of brand that can be recognized by end users (incl. TV shows)

Education efforts:Sun Academy initiative in partnership with universitiessupport of independent Java User Groups

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Traditional explanation: focus on conflict and resource mobilization (Garud et al., 2002)

Stage E: standard

development

Stage D: standardi-

zation

Stage C: battle with

incumbent

Stage B: installation

base

Stage A:product

development & launch

Focus on Stage C: direct conflict with

the incumbent (Microsoft)

Stage B: resource mobilization

to combat incumbent

Image of ‘Java Sun open code

against Microsoft closed code’

Stage D&E: improving competitive advantage

over the incumbent

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Role of niche construction as a harmonizing strategy

Stage E: standard

development

Stage D: standardi-

zation

Stage C: battle with

incumbent

Stage B: installation

base

Stage A:product

development & launch

Stage A: role of ‘initial construct’

Stage B: role of teaching / learning (in direct contact with developers) to create

installation base

Stage D-E: switch to the standardization strategy

once the power over community is reached

Stage B, D: promotion of the common understanding (open

source) to establish common goal and values

Stage E: role of education and brand building as

niche constructing strategies strengthening central position of Sun

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Governance mode

Focal organization power is low

Focal organization power is high

Legitimate use of power

Illegitimate use of power

Direct governance

Convincing, support in learning, etc.

MentoringCoopting

ManipulationViolence

Indirect / network governance

Shared values, emotional contamination etc.

Norm / goal / value setting

Deceiving

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Typical strategies changed in time: case of Sun Java

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1

3

4

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ConclusionNiche construction strategies (pro-active changes to

the environmental constraints) are instrumental in creating and maintaining the dominant standard.

In ‘open control’ situations, niche construction strategies can guide the development of the standard and maintain the central position in the community.

Unlike the ‘battle of standard’ approach to technological standard dominance, niche construction approach seeks harmonization of industrial architecture components.