Standardization in innovation ecosystems: The promise and peril of dominant platforms

Abstract

Digital platforms are changing economies and societies, challenging the fundamental institutions of democracy and requiring an understanding of the driving factors behind the development of such platforms. Therefore, we have investigated the impact of dominant platforms on standardization in innovation ecosystems on the level of technologies, firms, and societies. We have conducted a systematic review of the literature on standardization and ecosystems. We define ecosystem-based standardization as the development of a standard embodied in a dominant platform. Important innovation-related findings include that processes are embedded in the platform, allowing for complementary innovation using modular capabilities and, thus, requiring the traditional view of the relationship between product and process innovation to be revisited. Ecosystem-based standardization foments both technological and organizational modularity, which increases innovation speed as well as synergies within the ecosystem. However, the power asymmetry generated by ecosystem-based standardization favors value appropriation by platform sponsors, which has vast implications for the development of regulations and institutions.