Generative or Exclusionary? How Ecosystems Evolve with Coordination and Standardization

Abstract

The literature typically depicts ecosystem evolution as “generative”, with coordination fueling growth in complements and complementors. We suggest that it could instead be “exclusionary”, where complements increase but complementors do not grow meaningfully and core component owners dominate the complementary areas with their own complements. Using a descriptive approach and data on ICT ecosystems adopting standard setting as coordination mechanism, we systematically trace how ecosystems evolve alongside standardization, indicating signs of “exclusionary” growth. We further describe how exclusionary growth occurs – core component owners exploit standardization and litigation to crowd out other complementors over time. Findings suggest that core component owners’ strategy to coordinate across complementors is interdependent with their choice to integrate into complementary areas, and that standardization is not merely a coordination mechanism but can be used strategically to stifle competition from complementors. Findings also help substantiate the practical threat that core components owners could exhibit monopolistic behavior in ecosystems.