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BORN GLOBAL STANDARD ESTABLISHERS IDENTIFICATION OF A NEW RESEARCH FIELD AND CONTRIBUTION TO NETWORK THEORY Dr. Simone Wurster 1 Dr. Knut Blind 1, 2, 3 Sebastian Fischer 1, 4 1Chair of Innovation Economics, University of Technology Berlin Chair of Standardization, Rotterdam School of Management Born Global 3FraunhoferStandard InstituteEstablishers for Open Communication Systems (FOKUS), Berlin Identification of a new Research Field and Contribution 4Deutsche to NetworkTelekom Theory AG, Telekom Innovation Laboratories, Berlin 2Endowed Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES TELEKOM INNOVATION LABORATORIES Agenda 1) 2) 3) 4) 5) 6) 7) 8) 9) Introduction - Definitions and Relevance Literature Review and Research Gap Research Questions Scientific Approach and Research Framework Data Sources General Framework – Success Factors General Framework – Dynamization Clusters and Specific Success Factors Recommendations (Literature) Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 2 Introduction – Definitions and Relevance Born Globals • „company which, from or near its founding, seeks to derive a substantial proportion of its revenue from the sale of its products in international markets” (Knight, 1997) • strong and growing academic interest since the emergence of the research stream in year 2000 (see Oviatt/McDougall, 2004) Standards • „sets of technical specifications adhered to buy a producer, either tacitly or by formal agreement“ (David/Greenstein, 1990) • „accepted by many/all market participants“ (Backhaus, 1999) De facto standards • „synonymous with best practices, often result from the practices of specific vendors who dominate a given market” (Stephens, 2000, Prember, 2006) • market share ≥50% for several years (see Christensen et al., 1998, Suarez, 2004), • rising market share and indicators of enduring success (see Suarez, 2004) • important topic in business for two decades, significant topic in today‘s economy (see Shapiro/Varian, 1999, Suarez, 2004) Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 3 Literature Review and Research Gap • • • • No interface between Born Global research and de facto standards Different opinions concerning success factors Dynamic success factor models for standardization processes: Suarez (2004), Lee et al. (1995) Literature about success factors for the establishment of standards by Born Global firms: not available so far Success Factors in Standardization Reserach and Born Global Research Success Factor Standardization Research Born Global Research Financial strength Brande name / Credibility Market power Alliance formation Diversity of alliances Penetration pricing Collaboration with SSO* Internationalization Key persons IP protection Early market entry Niche markets Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer *Standardization Organisations Legend Important Problem Variation TELEKOM INNOVATION LABORATORIES Research gap 4 Research Questions Appropriate preconditions? Appropriate environment? Factors to maintain the standard / remain successful? Characteristics of the standardization processes? How can Born Globals establish their solutions as international de facto standards and which factors facilitate lasting success? Possibility to identify specific clusters? Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer Attributes of successful firms? Resulting advantages for the companies? What theoretical conclusions can be derived? TELEKOM INNOVATION LABORATORIES 5 Scientific Approach and Research Framework Basis: paradigmatic framework of the Grounded Theory Source: own graphic based on Strauß/Corbin (1990) Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 6 Data Sources (1) • Following Holtbrügge/Wessely (2007) three criteria were used to identify a Born Global: first international activities within 3 years after the foundation of the company • • entry into a second international market less than 3 years later activities in at least 5 countries and 2 cultural/global clusters Focus on Born Globals who established a de facto standard before the age of 18. Operationalized by a market share of at least 50% for at least 3 years. Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 7 Data Sources (2) Company Country Industry 1 USA S 2 USA 3 4 USA AUS / USA 5 Company Industry 12 Country USA S 13 USA S S 14 USA S B 15 D B D B 16 USA 6 IL I 17 D S B 7 USA CH 18 D B 8 D B 19 USA I 9 USA I 20 FIN I 10 D B 21 USA 11 CH CH, S I F/USA B 22 Industries: B = biotechnology, I = internet, CH = computer hardware, S = software Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES S 8 All case s N=22 Total Standardizability High Added Value International Product/ Solution 21 20 19 17 17 17 16 16 16 16 15 12 12 12 12 11 11 22 22 22 Ratio 95% 86% 77% 77% 73% 73% 73% 73% 68% 100% 100% 91% 77% Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer 55% 55% 55% Large Partners Penetration Orientation Intensive Sales Activities Growth Management Price Specific Management Know-how BML+* IPO Financial Resources Market Leader Market Sensibility Economic Assets Founders Area Entry Time Intensive Communication & Market Education Outstanding Technical Assets Founders Sales & Marketing Cooperation Early in Lead Market Early Internationalisation General Framework – Success factors (1) Company in General Prod./Tech. 55% 50% 50% 100% TELEKOM INNOVATION LABORATORIES 9 General Framework – Success factors (2) Exit Competitors Long Lead Time Innovator's Dilemma 50% Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer Technical Disadvantage 55% Growing Market 68% 59% 50% 50% 91% 86% 64% 55% 55% 55% 50% 77% Niche Market 68% 73% 68% International Market Pull 77% 77% New Ratio Trust & Loyalty 11 Strong Need 12 International 15 13 11 11 20 19 14 12 12 12 11 17 12 Optimisation IP Strategy 15 Balanced IP Strategy 17 17 16 15 Advancement Total Self-preservation & Lock in All case s N=22 Quality Competition Complementary products, Features Demand Openness, Open Elements Technical Leading Environment/Platform Product/Technology Technical Superiority/ Leadership Area 55% TELEKOM INNOVATION LABORATORIES 10 General Framework – Dynamization (1) Company SF/Area Price IPO Specific Management Know how BML+ Financial Resources Intensive Sales Activities Entry Time Growth Management Large Partners Penetration Orientation 1 0 2 2 0 4 0 0 0 4 2 3 5 0 2 3 International Product/Solution Early Internationalisation 2 High Added Value Sales & Marketing Cooperation 2 Standardizability Intens. Communication & Market Edu. 2 0 22 8 1 5 Market Leader Early in Lead Market 15 15 12 10 Market Sensibility CC Economic Assets Founders Outstanding Technical Assets Founders 17 16 16 20 17 19 21 12 15 12 16 12 17 12 11 11 16 22 22 22 Co-occurrence**,*** OG* Prod./Tech. R&D 5 4 5 2 1 5 0 1 0 0 0 11 BML 4 3 6 8 21 19 16 11 11 10 10 10 9 9 7 7 0 0 19 16 EST 2 0 1 0 6 6 4 5 3 3 0 2 2 4 1 3 13 0 8 1 CONS 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 3 0 2 0 PSRS 0 0 0 0 3 2 1 1 1 0 0 1 0 1 0 0 5 0 1 0 Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 11 General Framework – Dynamization (2) SF/Area Product/Technology Demand Competition Complementary Products, Features Quality Technical Leading Environment/Platform Balanced IP Strategy Optimisation IP Strategy Self-preservation & Lock in Niche Market International Market International Market Pull New Market Growing Market Trust & Loyalty Technical Disadvantages Long Lead Time Innovator's Dilemma Exit Competitors 3 2 1 0 2 0 0 0 0 14 12 1 1 4 4 0 3 0 2 2 R&D 6 3 1 2 3 1 1 1 0 0 2 1 1 0 1 1 3 1 13 11 9 8 8 5 3 6 2 12 11 12 11 7 7 4 11 10 8 5 BML Strong Need Openness, Open Elements CC Advancement Technical Superiority, Leadership 17 15 15 15 13 11 11 17 16 19 12 20 12 12 11 14 17 12 11 12 Co-occurrence**,*** OG* 7 2 EST 6 6 6 7 1 4 10 10 4 4 4 0 1 3 0 4 6 5 3 4 CONS 0 0 3 1 0 1 1 0 0 0 0 0 0 6 0 0 0 0 3 10 PSRS 4 1 3 3 1 0 0 3 7 2 3 1 2 1 1 2 1 1 1 1 * Occurrence in general independent of links to specific process stages ** Co-occurrence of a success factor and different stages of the process possible *** Sometimes success factors were mentioned without describing links to specific stages Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 12 Identified Clusters Platform Leaders Platform Servants Cross Platform Solutions Platform Autarkics B A A Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 13 B Internet Reputation Before Standard Establishment Know-how Leadership Innovative Sales Modes A A Area Cross Platform Solutions (w ithout eco system s) N=7 Digital Product System Leaders N=8 Total 8 Ratio 100% 7 5 5 Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer 5 5 88% 63% 63% 63% 63% 63% 5 5 4 Total 6 5 5 5 4 Ratio 86% 71% 71% 71% 57% 4 TELEKOM INNOVATION LABORATORIES Comp. 63% Demand Comp. Other Promotors no additional success factors Company 50% no additional dominant factor 63% 50% 50% no additional dominant factor 4 Positive Impact of the Development of Mass Markets System Empowering Demand no additional dominant factor Company Innovative Sales Modes Lock in Partners Area Developer Tools & APIs Alliances, Standardisation Organisations Licensing Profit M&A Partner Support, Program Market Creation & Development Clusters and Success Factors (1) Other 5 14 Clusters and Success Factors (2) 3 3 3 Ratio 80% 60% 60% Platform Servants N=2 Platform Expansion Innovative Sales Mode Company Platform Choice Area Total 2 2 2 Ratio 100% 100% 100% Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer no additional dominant success factor 3 Demand Comp. Other no additional dominant success factor 3 no additional dominant success factor Early Adopters 4 no additional dominant success factor Cross-linked Total Other no additional dominant success factor Platform Autarkics N=5 Word of Mouth Comp. Automation Demand General Intangible Advantages Company Protection, Patent Area 60% 60% 60% TELEKOM INNOVATION LABORATORIES 15 Recommendations (cluster specific) Cluster Features Ecosystems with own and external solutions Partner-side lock-in effects, customer lock-ins possible Benefits, rewards Strong partnersided lock-in effects Risks and threats Mainly radical innovations Recommendations Offer incentives to invest in the ecosystem through developers programs and APIs Two-side independence concerning external technology Customer lock-ins Rather low lock-in effects Internet solutions often Interoperability tends to have high importance Independence of external platforms Partner-side lock-in effects can hardly be used Low dependence on the success of external technologies Few partner- side lockin effects Develop an ecosystem Communicate a previously realized leadership for attracting partners Develop an ecosystem Maintain competitive advantage through knowledge leadership Establish interoperability alliances Use of a common / promising external platform Customer lock-in effects Support through platform success Compared to the platform life, can last longer Few partner-side lock-in effects Dependence on the success of platform Potential for competition from better positioned platform providers Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer Select a suitable platform early Develop special offers for new platforms Lead through innovation Obtain platform independence and communicate this advantage over competing products TELEKOM INNOVATION LABORATORIES 16 Recommendations (managerial) 1. Take standardization aspects into account in the R&D phase 2. Hire managers with experience in standardization 3. Seek an early positioning in key markets 4. Be penetration oriented from the outset to use network effects later 5. Select an appropriate technology environment 6. Use communication opportunities for market manipulation 7. Gain promoters and opinion leaders 8. Use sales collaborations 9. Implement an appropriate IP strategy 10. Promote the development of lock-in effects 11. Ensure a suitable growth management 12. Practice intentional innovation Born Global Standard Establishers Identification of a new Research Field and Contribution to Network Theory Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES 17 BORN GLOBAL STANDARD ESTABLISHERS IDENTIFICATION OF A NEW RESEARCH FIELD AND CONTRIBUTION TO NETWORK THEORY Dr. Simone Wurster 1 Dr. Knut Blind 1, 2, 3 Sebastian Fischer 1, 4 Questions & Answers 1Chair of Innovation Economics, University of Technology Berlin Chair of Standardization, Rotterdam School of Management Born Global 3FraunhoferStandard InstituteEstablishers for Open Communication Systems (FOKUS), Berlin Identification of a new Research Field and Contribution 4Deutsche to NetworkTelekom Theory AG, Telekom Innovation Laboratories, Berlin 2Endowed Dr. Simone Wurster, Dr. Knut Blind, Sebastian Fischer TELEKOM INNOVATION LABORATORIES TELEKOM INNOVATION LABORATORIES