Establishing a standard: Competitive strategy and technological standards in winner-take-all industries

Abstract

Executive Overview The ability of a firm to establish its technology as an industry standard is a critical determinant of its long-term competitive position and success. Witness, for example, the successes of Microsoft and Intel, whose technologies define standards in today's personal computer industry. The strategic options that a firm might adopt in order to establish its technology as a standard include licensing, entering into strategic alliances, adopting an appropriate positioning strategy, and diversifying into the production of complementary products. There are benefits, costs, and risks associated with each of these options. The key factors that have an impact on the scale of these outcomes include the height of barriers to imitation, the capabilities of the firm's competitors, the firm's own resources and skills, and the availability of complementary products. These factors influence the particular competitive strategy that a firm adopts.