Inderscience Publishers

How to profit from de facto standard-based competition: learning from Japanese firms' experiences

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This paper discusses strategic issues related to technological de facto standards. Based on our historical and empirical analyses of 13 cases mainly observed in the Japanese audio-visual and IT-related fields, we pose the following six propositions on de facto standard-based competition: 1. User will benefit by utilising and exchanging skill/software based on de facto standards, and manufacturers will benefit by forming de facto standards through their market dominance and licensing income; 2. A product which requires a high level of connectivity and accumulated skill/software is likely to form a de facto technological standard. 3. The earlier a firm establishes a majority of the market share, the more likely it is to establish a technological de facto standard. 4. A de facto standard is likely to be fixed when its diffusion (share) reaches 2–3% of the market. 5. The more killer applications a firm can introduce the more likely it is to establish/maintain/profit from a technological de facto standard. 6. The more efforts a firm makes to promote its technology/product to its competitors, suppliers and distributors, the more likely it is to establish/maintain/profit from a technological de facto standard.

Keywords: de facto standards, competitive strategy, technology strategy, Japanese management, technology management, Japan, technological standards, standards-based competition

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