The effects of technology standards on the structure of the global PC industry

Abstract

Investigates the effects of technology standards on the changing nature of interdependence between competitors in a global industry. Drawing on the theory of organizational ecology, the effects of technology standards on the type of interplay among competitors are investigated as the underlying process affecting new firm entry. Empirical data from the global personal computer industry provide preliminary evidence that positive interdependence, or mutualism, characterizes the nature of competition before the establishment of a technology standard. Negative interdependence, or full competition, is found to prevail after a technology standard emerged. These findings suggest that the evolution of industries where compatibility and technological standards are critical can be analyzed in two different phases: the technological legitimation phase; and the market competition phase. A discussion of the underlying interdependencies in the two phases and their implications is also provided.