In the 1970s and 1980s, home movie watchers faced a dilemma between two competing video cassette formats: Sony’s Betamax and JVC’s VHS. Though Betamax was often seen as technically superior, VHS ultimately triumphed. This success was mainly due to JVC’s decision to partner with a wider network of film and television producers, illustrating how broad collaboration can help determine the prevailing standard in a technological showdown. This so-called “format war” became a defining case study of how ecosystems of industry players influence technological adoption.
Today, such format battles continue in more advanced arenas—Apple’s iPhone versus Android or Nintendo versus PlayStation. However, modern technology firms have grown more mindful of the need to establish compatibility standards that serve an entire industry ecosystem rather than simply advancing the interests of the original inventors or patent holders. These standards are not just about technical superiority but also about ensuring a broad enough support base across companies, which can help embed technology more deeply into the market.
Recent research by Ramkumar Ranganathan, an associate professor at Texas McCombs, sheds light on how tech companies now strategically influence the shaping of such standards. His work shows that firms often cooperate and compete within the same space—particularly on standard-setting committees. These committees, composed of representatives from multiple companies, negotiate the technical specifications that become industry norms. Each participant seeks to promote their interests while coordinating with others to arrive at shared rules.
One of the case studies examined in this research is the competition between Wi-Fi and WiMAX, two rival standards for wireless internet. Wi-Fi eventually prevailed, but the path to dominance involved complex interactions among various players, from computer and router manufacturers to telecom firms and chipset developers. Ranganathan and his co-authors, John Chen and Anindya Ghosh, analysed over 40,000 technical documents and 18,000 comments from IEEE standard-setting committees dating from 1996 to 2011. Their findings reveal that success often depends on whether a company’s proposal is well-positioned within the broader technological architecture and how well it connects to others in the ecosystem.
The researchers identified two key types of resources that firms use to shape standards: patents and partnerships. Patents can grant companies a strong foundation from which others can build, lending credibility to their technical proposals. However, an abundance of patents without robust partnerships can be problematic. Other companies may be wary of engaging with a patent-heavy firm, fearing it might monopolise shared value. On the other hand, partnerships alone are not enough—if a company’s core technology is misaligned with its partners’ strategic direction, then its influence is curtailed despite its connections.
Another compelling insight from the study concerns the flexibility of potential partnerships. Companies not tied down by rigid existing alliances may have more room to manoeuvre. By forming fresh partnerships aligned with evolving standards, they may find it easier to influence the core technology. Such firms are more likely to have their proposals accepted by standards committees because their contributions are perceived as beneficial to a broader swathe of the ecosystem, not just their commercial interests.
Ultimately, Ranganathan’s research highlights the principle of interdependence in shaping technology standards. The days when a single firm could impose a proprietary standard unilaterally are gone. Instead, influence depends on being embedded within a cooperative network of stakeholders collectively invested in the outcome. Standards committees can issue technical specifications but cannot compel companies to adopt them in real-world products. As such, the actual adoption of standards is determined in the marketplace—by consumers, manufacturers, and complementary partners—making collaboration and ecosystem thinking essential for technological success.
More information: Ram Ranganathan et al, Shaping Ecosystem Rules: Complementarities, Interdependencies, and Firms’ Success in Coordinating Ecosystems Via Standard-Setting, Organization Science. DOI: 10.1287/orsc.2022.16136
Journal information: Organization Science Provided by University of Texas at Austin