American Hegemony in Packaged Software Trade and the ''Culture of Software''

Abstract

United States-based companies continue to dominate the global market in packaged software. Although many have predicted this U.S. dominance will wane, particularly as a result of competitive threats from Japan, and more recently from low-wage, developing nations, erosion has yet to be significant. The United States benefits from nine factors that sustain its advantage in this industry: skilled labor, favorable capital conditions, sophisticated customers, close association with hardware vendors, a competitive marketplace, geographic concentrations, first-mover advantage, a strong intellectual property regime, and English as the software lingua franca. Industry-specific strengths and weaknesses vis-a-vis Europe, Japan, and other nations are also discussed. In addition to these nine better known U.S. competitive advantages, two culturally linked assertions are presented that have received scant attention vis-a-vis competitive analysis. First, the industrial evolution of software development is at an immature stage-still a cottage industry practiced by craftsmen in a cultural milieu of artisans-and thus does not track other global high-technology trends. Second, packaged software is part of the copyright industry (e.g., film and music) in which United States-based firms have a sustained advantage. While manufacturing capabilities are significant for technology industries, culturally related factors, such as creativity, are more important for copyright industries. The U.S. ''culture of software,'' which helps explain U.S. hegemony, is introduced and discussed. The three elements of this culture are the culture of individuals as manifested by the individualistic computer hacker; the entrepreneurial culture and its risk-taking ethos; and the software development culture with its embrace of ad hoc, innovation-driven development as opposed to routinized, production-driven development.