The Emergence of De-facto Standards

Increasingly, companies compete on platform technologies that bring together groups of users in two-sided networks. Examples include smartphones and on-line search engines. In industries governed by platform technologies, it is common to see one emerging as the de-facto standard because they are especially prone to network externalities (i.e. when the benefit that can be derived from a technology increases exponentially with the number of users). Competitions for the de-facto standard are high-stakes games. These ‘winner-take-all’ markets demonstrate very different competitive dynamics than markets in which many competitors can coexist relatively peacefully, as they often have a single tipping point which shifts market adoption to one particular technology. The academic field lacks a robust clarification on how firms can shape the odds of their technology emerging as the de-facto standard. This study develops an integrative framework and corresponding methodology for understanding the process by which a technology becomes the de-facto standard. By applying the framework to several technology competitions, insight is provided in how firm-, technology- and market-related elements influence technology competitions. Results indicate that the emergence of every de-facto standard displays a unique path. This path can be divided into six phases, and can be influenced by 40 unique elements, of which 19 are subject to strategic decision making. Patterns between technology competitions indicate a common set of focal points per phase.