Standard competition: Is collaborative strategy necessary in shaping the smart card market?

Abstract

This paper is concerned with the standard competition in the three most outstanding innovation cases of videocassette recorder [VCR; video home system (VHS)/Betamax standard competition], Windows operating system for personal computers (PC; Windows standard competition), and smart cards (smart cards standard competition). The study presents a comparative analysis of major conceptual frameworks in innovation management—the Competitive Forces Model by Porter [M. Porter, Competitive Strategy, Free Press, New York, 1980] and the Managing Migration Paths Model by Hamel and Prahalad [G. Hamel and C.K. Prahalad, Competing for the future, Harvard Business School Press Boston, MA, 1994] for empirical analysis and discussions. It is argued that the ability to establish an industry standard enables an innovator to create competitive advantage. In other words, the ability to establish an industry standard provides a platform for an innovator to excel at the innovation process by generating a continuity of commercially successful innovations. The paper evaluates the strategic management of innovations by studying the previous standard competition of innovations, to suggest the direction of smart cards. The players in the smart card industry may use this empirical analysis to define strategic approach for their plan to compete in smart card launch.