The Paradox of Standard Flexibility: The Effects of Co-evolution between Standard and Interorganizational Network

Abstract

The literature has dedicated significant attention to the effects of standard-supporting, interorganizational networks on the content of standards and standard survival. However, minimal attention has been paid to the effects of the standard’s characteristics and dynamics on these networks. This paper contributes to closing this gap. We introduce the paradoxical concept of ‘standard flexibility’ and study the interaction between the characteristics of a standard-supporting network and the development of the standard itself, including the effect of the interaction on standard success. More specifically, we show how a standard’s flexibility can serve to attract new network members, facilitating growth and diversity of the network, which in turn has implications for further adaptations of the standard. We study this co-evolutionary process in three standards battles: Blu-ray versus HD-DVD, USB versus Firewire, and WiFi versus HomeRF. Our findings suggest that those participating in standardization can persuade non-participating stakeholders to join by allowing for changes in the standard. In turn, the existing members can expect that the new members will request further changes. The cases suggest that early timing of the co-evolutionary process enhances the chances of standard success. We also explore the emergence of path dependencies in the process and the forces that restrict the co-evolutionary process over time. For managers, our findings indicate that changes in standards should not be considered undesirable, but as opportunities that may strengthen the interorganizational network and contribute to a standard’s success.