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  • NICHE CONSTRUCTION STRATEGIES IN TECHNOLOGICAL DOMINATION: CASE OF JAVA RECONSIDERED Pavel Luksha, University of Hertfordshire, UK Abstract: The paper examines the creation and maintenance of sponsored technological standards as the template for industry architecture. Following the call of paper by Jacobides and co-authors (2005) the paper examines pro-active organizational strategies that establish industry architectures. The concept of niche construction is introduced, as the pro-active strategy that transforms or creates organizational niches, a strategy for ‘setting rules of the game’. The paper reconsiders the case of Java technological dominance (Garud et al., 2002) to highlight the difference between the more conventional view of the standard dynamics as ‘the battle of systems’, and the concept of niche construction. It is shown that niche construction strategies are important for creating and maintaining the dominance of sponsored standard; in particular, in the ‘open control’ and in ‘open source’ communities, the focal organization utilizes niche construction strategies to maintain the legitimacy of its central position within the community, and to enhance its value capture opportunities. Keywords: platform leadership, niche construction, industry architecture
  • INTRODUCTION Technological standards are “codified specifications that detail the form and function of individual components and the rules of engagement among them.” (Garud et al., 2002: 6?) Modern technologies are sophisticated and intertwined, therefore the ‘rules of engagement’, the way things are made compatible, becomes critical (Garud, Kumaraswamy, 1993; Sanchez, 1995; Schilling, 2000). Compatibility makes standardization social beneficial, as it permits the production of complimentary products (whereby technological standards serves as guidelines), the economies of scale in production (especially in production of components and raw materials), and the increasing returns for technology users (e.g. the access to user support, to complimentary services, to user-made complimentary products etc.) (Teece, 1986; Arthur, 1989; Schilling, 2002) The rise of a technological standard to its dominance is envisaged as a complex self- organization process (Rosenkopf, Tushman, 1998). On the other hand, so-called sponsored technologies are rendered by companies into dominance, using a range of available leverages (Suarez, 2004; Iyer, Davenport, 2008). By successful shaping of common standards. organizations can obtain significant competitive benefits (Hamel, Prahalad, 1994). The emergence of a dominant technological standard in the course of rivalry between several technological products or processes is a well-studied phenomenon (Abernathy, Utterback 1978; Suarez, 2004). The literature on sponsored technological standards, accordingly, is focused on the ‘battling’ aspect, the rivalry between major players, their strategic plots, their assaults on each other’s market position, and so forth. The recent studies interpret dominant technological standards as a type of the ‘industry architecture’ arising through series of strategic moves and coevolutionary interactions. The industry architecture is envisaged as the range of interfaces to coordinate the division of labor: “the structure of cospecialized agents and assets … determining the nested structures
  • of industry organization” (Jacobides et al., 2006: 1202). The notion of industry architecture underlines the harmonizing aspect of technological dominance. Most importantly, industry architectures are partially dependent on pro-active agency of organizations in their environments, such as branding or lobbying. These activities are not aimed at rivals – rather, their aim is to guide the emergence of the company-specific ecosystem. The goal of the present paper is to consider strategies by which focal organizations are able to guide dynamics within the coevolutionary emerging ecosystems of dominant standards. Rather than the rivalry ‘game according to the rules’, such strategies aim at changing rules of the game. The inspiration of the present paper is derived from the evolutionary theory. The theory of biological evolution has been for a long time dominated by approaches that stressed adaptation and selection as main drivers of evolutionary processes. These approaches emphasized the unidirectional causal power of the environment, forcing evolving entities to ‘climb’ fitness landscape peaks as they evolve, and implying disruptions to the fitness landscape are exogenous. Yet, in recent years, it has been recognized that evolving entities, too, can play a remarkable role in modifying fitness landscapes, as they change their habitats. In the spirit of generic evolutionary approaches in organizational and management theory (Campbell, 1969; McKelvey, 1982; Aldrich, Ruef, 2006), it is suggested that the idea of niche construction may provide useful insights for the dynamics of organizational and entrepreneurial strategies. In particular, it may help to recognize how competitive imperfections can emerge within industries and markets, as a process governed by the focal organization or entrepreneur. The central role of communicative strategies in the transformation of environment is emphasized, and, in particular, the importance of educational efforts of organization in governed opportunity creation is suggested.
  • In order to show how the concept of niche construction can illuminate the studies of technological standards, it has been decided to re-consider one of the earlier case studies on standard domination. The case of the sponsorship of Java platform, which includes Java language and other software components, has been documented in detail by Garud, Jain, and Kamaraswamy (2002). It has been decided to extend the presentation of the case over a larger period of time: the cited paper considers the timespan of 1995-2000, whereas the present paper extends the timeframe to 2008. Second, unlike the cited paper which focuses on the competitive interactions of the focal organization with its rivals, the present paper emphasizes niche constructing activities within the coevolutionary dynamics that harmonize interactions of the organization with constituents in its ecosystem. The aim of returning to a case that has been already described in detail is to reconsider it, which acts as a repetitive experiment in strategy studies. Since every case study is post-hoc description of the flow of events, it is a sensemaking process (Weick, 1995) largely influence by the use of the chosen theoretical framework. Therefore, reconsideration using additional theoretical concepts can highlight elements of the strategy that were downplayed in the earlier study. The rest of the paper is organized as following. Section 2 considers the range of approaches to the process of technological dominance, including the ‘industry architecture’ perspective. Section 3 introduces the concept of niche construction as a type of (co)evolutionary dynamics. Section 4 presents the case of Java sponsorship, with a timeline from the platform creation to 2008. Section 5 discusses the difference between interpretation suggested in the paper of Garud, Jain, and Kamaraswamy (2002), and the interpretation suggested by the concept of niche construction. Section 6 concludes the paper.
  • TECHNOLOGICAL STANDARDS: FACTORS OF DOMINANCE Compatibility is critical for the emergence of a standard. However, compatibility means that existing and potential rivals, suppliers, consumers, providers of complimentary goods, providers of infrastructure etc. must agree upon common rules of interaction. This is a task of mutual adjustment that requires adaptation of workflow process, organizational structure, regulatory documentation and steering mechanisms within each of interacting players (Anderson, Tushman, 1990; Rosenkopf, Tushman, 1998). These adjustments occur on different levels of industrial hierarchy, suggesting the multi-level coevolutionary process in which nested hierarchies of technology cycles are adjusted to each other or selected by each other (Murrman, Tushman, 1998). The emergence of technological dominance has been explained by heterogeneity in firm performance (Prahalad, Hamel, 1994; Suarez, Utterback, 1995; Shapiro, Varian, 1999), and by the density and entry/exit rates (Rosenkopf, Tushman, 1998; Hunt, Aldrich, 1998; Wade, 1995), and by shifts in the industry structure (Langlois, Robertson, 1992; Klepper, 1996; Langlois, 2004). In industries with significant network effects, exogenous factors play important role in the rise of technological standards, and sometimes even minor exogenous impacts can lock-in the industry with a particular standard (Arthur, 1989). However, the dynamics is also to a large extent driven by endogenous forces, such as firm-level capabilities and choices. Suarez (2004) lists the range of factors that may influence the probability of technological domination. These factors are broadly grouped into firm-level and environment factors. The firm-level factors include (a) technological superiority of the firm (compared to its rivals), (b) control over complimentary assets (including non-tangible assets, e.g. past experience, reputation etc.), (c) size of the installation base, and (d) various types of strategic manoeuvring against rivals. The environment factors include (a) (favourable or unfavourable)
  • legislation (e.g. regime of intellectual property rights protection), (b) network effect (e.g. the benefit of using same software) and switching costs (e.g. the cost of re-learning), (c) capturing opportunities, or rents of ecosystem participants (the factor also known as the value capture), and (d) structure of technological field (the set of factors characterizing the distribution of power, possibilities of inter-organizational cooperation, etc.). The large set of firm-level variables can largely be controlled, as well as some of the environment-level variables; therefore, the technological domination is not wholly random, nor beyond the firm’s control (Schilling, 1998; Shapiro, Varian, 1999). Organizations are often able to appropriate high returns from owning or controlling the dominant standard (Hamel, Prahalad, 1994). Thus, they engage themselves with technology sponsorship. Their strategic goal is achieved by pursuing several tasks. The organization has to establish and maintain a base of loyal users and suppliers of complimentary products and services. It has to face the existing rivals (industry incumbents) directly and indirectly, to diminish their user base by encouraging and facilitating the switch. Finally, it has to convince potential rivals (potential entrants) to support the standard instead of competing with the focal organization (Garud et al., 2002). Cases of technological sponsorship have been studied by several authors, and include the sponsorship of 33 1/3 rpm music recording technology by Columbia (Langlois, Robertson, 1992), the sponsorship of VHS videocassette recording technology by JVC (Hariharan, 1990; Cusumano, Mylonadis, Rosenbloom, 1992), the sponsorship of Java platform by Sun (Garud et al., 2002), and the range of sponsorship activities for technological standards by Intel, Microsoft, and Cisco (Gawyer, Cusumano, 2002). Schilling (1998, 2002) indicates that the domination of standard depends on the size of technology’s installed base and the availability of complimentary goods. The focal organization can actively influence both factors by changes made to the distribution process,
  • alliances, and marketing strategies. In addition to that, firm’s learning orientation (readiness to invest in core capability development) and timing of entry are important factors influencing the chance of technological dominance. The initial cognitive framing of technological design (Garud, Rappa, 1994) also plays an important role in establishing the standard not merely as ‘the way of doing things’, but as a social construct to be institutionalized. Further success of its institutionalization, or rise to the status of a dominant standard which leads to the formation of supporting rules, norms, social movements and organizations, is dependent upon the actors’ power to mobilize minds and resources towards the effort of influencing market institutions. In this respect, organizations play the role of ‘institutional entrepreneurs’, or agents of emergent institutional transformation (DiMaggio, 1988; Fligstein, 1997). These studies indicate that, first of all, a range of crucial variables influencing technological dominance appears to be within the range of control of the firm. While some of these variables refer to processes that occur within the boundary of the firm, others refer to processes at the organizational boundary and in the environment. In addition to that, while some of these factors embed the rivalry aspect, and are considered within the competitive dynamics analysis, others appear largely unrelated to relationship with rivals. However, though the importance of such determinants is hinted, the focus of research shifts towards more evident ‘rivalry battle’ perspective. An important consideration of the dynamics of dominant industry standards is provided by the concept of ‘industry architectures’ (Jacobides et al., 2006). Architectures provide the contours and framework within which actors interact; they are usually partly designed (e.g. by regulation or de facto, by standards), and partly emergent (by the creation of socially understood templates and means to coordinate economic activities). (Jacobides et al., 2006: 1203)
  • The rise of industry architectures relates to the process of co-specialization, or the technological complimentarily, emphasized by Teece (1986). However, factors behind the rise of particular industry architectures are not purely technical, as these architectures are often shaped by legislative or regulatory means, that serve to establish new architectures (Grodal, 2006), as well as to protect existing ones (Shell, 2004). Across modern economies, “political forces and lobbying can play a substantial role, not only in supporting any one architecture, but also by discouraging other alternatives” (Jacobides et al., 2006: 1204). Apart from that, information asymmetries that call for quality verification task play an important role in shaping industry architectures. Accordingly, branding becomes one of the means of defining architectures. While agents shaping industry architecture compete between themselves for the definition of ‘how things are done’, each one carves a position not only for oneself, but also for providers of complimentary goods and services, suppliers and consumers, that is, one’s ecosystem. In this respect, activities that aim to establish a particular industry architecture (at the expense of other rivals) are at the time activities that harmonize organizational ecosystem. While coevolutionary dynamics, as well as contingencies of, technological dominance, are considered in the literature, the process of dominant design emergence is seen as the process of mutual adjustments: mutual adaptations or mutual selections (March, 1994; Murmann, Tushman, 1998). Theoretical frameworks developed within the evolutionary perspective, are biased towards the embrace of adaptation or selection processes. To the contrary, the processes by which organizations create, or transform, their environments, remain understudied. These are processes that harmonize relationships of the focal organization, or group of organizations, with its ecosystem, at the same time changing ‘rules of the game’ for other industry players. The next section considers these processes under the umbrella concept of niche construction.
  • THE CONCEPT OF NICHE CONSTRUCTION Definition of the concept The concept of niche construction has been developed in the evolutionary theory addressing the critique that, while excessive importance was assigned to the natural selection from (exogenous) environment, the role of organisms, as active entities resisting evolutionary pressures, was often downplayed (Levins, Lewontin, 1985). The gene-biased evolutionary approach was inclined to see organisms plainly as vehicles for gene transmission (Dawkins, 1979), whereas organisms, individually and collectively, able to choose and modify their environment (Lewontin, 1983). Organisms and their ecological niches are co-constructing and co-defining each other; in particular, organisms both physically shape their environments and determine which factors in the external environment are relevant to their evolution, thus assembling such factors into their niches. The evolutionary process depends not only on natural selection and genetic inheritance, but also on the process of niche construction and ecological inheritance (Odling-Smee, Laland, Feldman, 2003). Niche construction may reduce environmental pressures: e.g. building a burrow or a hive will protect organisms and their resources from some nature hazards and predators. Speaking in terms of the fitness landscape, niche constructing species do not ‘climb’ the local peak of fitness; they rather become ‘landscape shapers’, raising new mountains where these never existed before. Modification of selection pressures also generates an evolutionary feedback, so that new pressures may emerge as well and influence the process of evolution in the cumulative manner: e.g. anatomy of moles or social insects is largely influenced by the type of habitat which they construct. The legacy of niche constructing activities in inherited along with the pool of genes (Laland et al., 2000). Human species, as a striking instance, live in the complex artificially constructed environments that were produced over generations.
  • Generalization of evolutionary principles has been one of the highly effective research strategies in organization and management studies. Basic principles of Darwinian evolution (in particular, the variation-selection-retention triad), separated from specific mechanisms of inheritance and selection of organisms, represent laws of evolution in their most universal (or general) form (Campbell, 1965; Plotkin, 1994; Dennett, 1995). The principles of evolution are generic ones, applicable to social as well as biological systems (Aldrich, Ruef, 2006; Aldrich et al., 2008), even though organizational evolving entities may use mechanisms of variation, selection, retention or struggle completely different from those used in living systems (Durand, 2006). The concept of niche construction may offer a useful perspective for consideration of proactive organizational strategies with the coevolutionary framework. The process of niche construction can be envisaged as ‘guided selection’, reduction or modification of selection pressures, that steer the coevolutionary process into the desirable direction. The concept of niche is often explained as a social domain, formed by the division of labor and the distribution of knowledge, in which opportunities are organized (Brittain, 1994). More broadly, niches are characterized by the common dependence on resources (Hannan, Freeman, 1989). Respectively, the process of niche construction does not imply strategic assaults on rivals, or changes in organizational boundaries through acquisitions and divestments, although the outcome of niche construction may, and does, transform the competitive landscape. Rather, it implies sustained changes in the pool of resources in the environment (i.e. outside the organizational boundary), changes in the knowledge distribution and the typical divisions of labor. Rather than the ‘game by the rules’ strategy, it is envisaged as the ‘change of the rules of the game’ that addresses constituents (such as suppliers, consumers, complimentary product producers, regulators, social movements etc.) as well as rivals.
  • The niche construction can broadly be defined as the sustained change to the resources and relations in the organizational environment, that have long-lasting effects upon the strategy of the focal organization(s) and organizational constituents. The transformation or creation of organizational niche, therefore, results in the sustained change in patterns of strategic activities. While the definition embeds a temporal dimension that may be hard to specify without the loss of generality, the consideration here is the same as the distinguishing between the strategic vs tactical action, or long-run vs short-run in economic theory. Although this general definition encompasses a range of phenomena, including the emergence of new markets, organizational forms and other social phenomena as externalities, of particular interest to strategy scholars is the niche construction as teleological process, that is, a governed, or guided, action. The ensuing discussion focuses on the governed niche construction by individual organizations. Arguably, the collective governed niche construction will use similar strategies, although it will require additional mechanisms to reach consensus and coordinate actions (Ring, Van de Ven, 1992). Niche construction strategies Existing research suggests that the process of governed niche construction requires at least three elements: a. The organization, or group thereof, frames or reframes an issue so that a potential new construct (new beliefs and new ideas) emerges (Sarasvathy et al., 2003; Alvarez, Barney, 2007; McAdam et al., 1996; Snow, Benford, 1992). This framing may not necessarily be completely novel; though usually novel to the environment, it often may be derived from the bundle of organization-specific competencies (Peteraf, 1993). b. The focal organization then has to ‘get the message through’ its boundaries, to influence its constituents. Prior to the (possible) establishment of a new framing or belief as a legitimate
  • social construct, the focal organization engages in communications with its constituents (Rindova, Fombrun, 1999). The creation of environment by means of the ‘enactment’ strategy requires attempts to manipulate perceptions and issues, and to impose ideas on the environment (Daft, Weick, 1984). Communications are an essential part of organizational boundary shifts (Tushman, 1977; Nonaka, 1994); yet, more important, they induces transformations beyond organizational boundaries, e.g. in marketing (Frazier, Summers 1984; Smith, Taylor 2004), supplier relation management (Takeishi, 2001; Larson, Kulchitsky, 2000), and institution-changing political activities (Hillman et al., 1999, 2004). c. The learning process ensures that constituents accept the construct, and modify their framing of thought and action accordingly; and further recall the construct, so that the pattern is not forgotten. The structuring of communicative acts is thus essential for the efficiency of learning and recalling: apart from introducing, into the communication, reinforcements that encourage constituents to learn or recall, the focal organization also needs to plan repetitive communications across the range of contexts and media (Grunig, 1992). The choice of communicative formats has to be tailored to the strategic ends and circumstances. The variety of constituents, and diversity of environmental types, suggests that organizations may find different ways to construct their niches. Also, strategies applied will differ for organizations that are new and established, small and large, etc. Previous research has suggested that organizations and entrepreneurs are likely to engage in the environment constructing strategies when environments are perceived as unanalyzable or ambiguent (Daft, Weick, 1984; Santos, Eisenhardt, 2005), such as in nascent markets (Grodal, 2006). Preference of uncertainty over ambiguity stimulates the sensemaking (Weick, 1995) and the creation of environments (Santos, Eisenhardt, 2006). It was also argued that newly formed organizations are more likely to attempt ‘enactments’ than those established,
  • and conform to existing norms and standards as they become mature (Daft, Weick, 1984; Burgelman, 1983). However, the position of mature and well-established organizations in their network enables them better to employ strategies that manipulate the environment in their favor (Hillman et al., 1999, 2004; Schuler et al. 2002; Gulati, 1999; Powell et al., 1996). Role of the network position in resource mobilization is underlined by the social movement theory (McAdam et al., 1996; McCarthy, Zald, 1977) Such organizations develop and maintain the set of dynamic capabilities which supports their pro-active political actions (Oliver, Holzinger, 2008). It is also suggested that strategies of political action will differ for environments that are definite and ambiguous (Schuler et al., 2002); again, organizations are motivated to reduce the level of ambiguity (Hillman et al., 1999). These discussions indicate an important dimension of analysis: a relative power position of the focal organization and its constituents. The role of inter-organizational power is of high importance in the process of environment transformation (Santos, Eisenhardt, 2006). The organization can choose between symmetric and asymmetric relations, depending on the decision or resource control power of its constituents, as argued by the resource-dependence theory (Pfeffer, Salancik, 1978). Here, the symmetric position implies that the focal organization has little or no power leverage over its constituents. Arguably, established and large organizations are more likely to adopt the asymmetric position (since they usually have higher legitimacy and more resources available), while new organizations would tend to take symmetric positions (cf. consideration of bargaining power by Porter (1985)). The asymmetric position of power, furthermore, permits the use as well as the abuse of power: while shaping norms within the industry, or mentoring supplier and distributor organizations, is largely socially acceptable, strategies that imply manipulation, coercion and deceiving are usually not.
  • Another important dimension in governed niche construction is whether the process is governed directly, in one-to-one contacts with constituents, or indirectly, in one-to-many communicative interactions that address organizational networks and ‘ecosystems’. One-to- one interactions imply relations that are harder to avoid, and potentially stronger ties between interacting parties. Due to the directness of interaction, a range of actions is possible, and communication is likely to be adjusted to accommodate the specifics of interacting parties. Unlike that, indirect interactions between the focal organization and groups or populations within its ecosystem are more easily avoidable, and ties between interacting parties are usually weaker. Because of this, the focal organization has a notably smaller repertoire of actions to address its constituents. Along these two dimensions it is possible to indicate a range of typical strategies of niche construction (Table 1). It is also worth noting that, since the direct governance makes a broader range of strategies suitable, strategies used in the indirectly governed niche construction may also be used in directly governed processes. Table 1: Typical strategies of governed niche construction Symmetric position Asymmetric (power) position use of power abuse of power Direct governance Convince Mentor Manipulate / Coerce Co-opt Indirect / network Inspire / Share values Set norms / values Deceive governance In the direct symmetric relationship, the focal organization has little control over the constituent. It is therefore likely to adopt the strategy of convincing, that is, reframing the situation so that parties will find mutual interest in the changed environment. Convincing often requires ‘educational effort’ that reduces information asymmetries, so that the focal organization helps learning of its constituents. Strategy of convincing is important in mobilizing resources for institutional changes as the industry transcends through stages of its
  • lifecycle (Barnett, 2005). The political action, including lobbying, also requires convincing (Hillman et al., 2004). In nascent or growing industries, convincing is an important element of forming the pool of loyal suppliers and buyers (Matthyssens, Van den Bulte, 1994). When the focal organization has higher control over its constituents, it may try to change constituents’ actions through mentoring. Mentoring implies that the focal organization commits resources and teachings capabilities to transform practices and models of its constituents. In cases considered by Sako (2004, 2006), leading Japanese OEMs have committed significant efforts to the supplier development process, to teach their suppliers technological and managerial practices to suit OEM’s needs better. The transformation of activity patterns by mentoring can be complemented by gaining additional power leverage through co-opting (Oliver, 1991; Santos, Eisenhardt, 2006). While co-opting is often envisaged in terms of alliance building, and thus extending organizational boundaries, it can be considered as a sort of ‘communicative channel building’, through which the focal organization encourages the transformation of its constituents. Finally, the focal organization may coerce or otherwise manipulate its constituents to bend their actions and strategies. For instance, in the ‘Wintel’ relationship, Microsoft has used its position of power to force Intel to provide algorithms of its newly developed MMX processor to its competitor AMD, which allowed Microsoft to retain control over industry standards development and increase the market for its applications (Casadesus-Masanell, Yoffie, 2007). When the indirect governance is considered, the primary strategy is the design of communicative messages that would spread through networks of organizational constituents. The focal organization may devise constructs that can serve as ‘focal points’ in attracting supporters for organizational practices. This is largely the case with social movements, but also with organizations that coordinate large ‘ecosystems’ involving many independent players, e.g. Google (Iyer, Davenport, 2008) or Intel (Gawyer, Cusumano, 2002).
  • The indirect governance of changes in the network or population of constituents, over which the focal organization has insufficient power, stimulates communicative strategies of non- rational encouragement. The organization drives on inspiration and sharing of values that establish the positive feedback for desirable activities. Organizations can apply this strategy in growing elements of their ecosystems, such as loyal consumer groups or multi-tier supplier networks. For instance, large companies in consumer markets often cultivate brand communities (e.g. Coca-Cola, Apple, Saab, or Harley-Davidson): consumer group with strong group identity, rituals and traditions, that maintain loyalty to the brand (Muniz, O’Guinn 2001). Brand communities are usually organized around emotional, not functional, components of the brand or other organizational identity, and inspirational / value sharing communications from focal organizations are crucial for the formation and maintenance of such communities (McAlexander et al., 2002, cf. Pascale, 1984). Complex supplier networks also are emergent structures that are difficult to control, and therefore they are better managed through positive feedback communications (Choi et al., 2001). In the position of power, given e.g. by the central role in the network, the focal organization may attempt to establish norms and values for its domain. As the first step in this strategy, the organization may communicate strategic projections that increase favorable evaluations by constituents (Rindova, Fombrun, 1999). Similarly, in nascent or newly created industries and markets, organizations often attempt to ‘claim the market’, in order to establish and maintain the power position (Santos, Eisenhardt, 2006; Grodal, 2006). This is achieved primarily by communicative strategies: signaling leadership to convey the expertise superiority and market dominance, and dissemination of stories that increase awareness and reinforce perceptions about the firm (Santos, Eisenhardt, 2006: 12). Finally, organizations can choose the strategy of deception to manipulate networks and populations of constituents they confront (Daft, Weick, 1984). While some of these activities
  • may be performed only in the interest of managers involved, other may serve the strategic interest of organizations. Santos and Eisenhardt (2006) argue that the creation of illusions, which can be seen as a weak form of deception, is instrumental in achieving control over nascent markets (Rindova and Fombrun (1999) indicate risks of this strategy for more established markets). The above discussion of niche constructing strategies has two important implications. First, in the governed niche construction, the role of structured communications in establishing social constructs (issues, framings etc.) is evident. Communicative strategies provide a missing causal link between the creation of the technological construct, and the establishment of this construct in the socio-economic system. Second, these communications often embeds an educational element, especially when the direct governance is concerned. Thus, the directly governed niche construction can be described as the governance of constituents’ learning, or, the teaching of constituents. While educational efforts of organization receive only minor attention, the recent research (Sako 2004, 2006; Normann 2001) suggests that they play crucial role in transforming organizational environment, and in creation of new opportunities. The following sections of the paper provide an example of how these niche constructing strategies were used by Sun Microsystems to attain the technological dominance of its language platform Java. CASE OF JAVA PLATFORM Java is a good example of the dominant design, or platform leadership, being the major technology used for running applications in the Internet and on mobile devices. More importantly so, in the promotion of Java, Sun explicitly pursued the ‘open source’ ideology, encouraging ecosystem participants to develop Java applications as well as the language itself. It, however, navigated carefully to retain the position of the ‘open control’, retaining
  • control over essential components of the technology. In doing that, Sun has become the centre of its own ecosystem including software vendors, applet developers, hardware producers, and users. The case of Sun Java thus illuminates how the company can build its ecosystem, and, as it is argued further, employs the strategy of niche construction in doing that. The case of the emergence of Java as a ‘dominant design’ has been considered in detail by the study of Garud, Jain, and Kamaraswamy (2002). The following section uses their findings intensively. However, the section also reconsiders their case study, acting as a repetitive experiment in strategy studies. Clearly, every case study presents a consistent and rather selective description of the flow of events. This description may be limited by the availability of quantitative and qualitative evidence and the chosen timeframe, but, even more so, by the use of theoretical framework which highlights specific aspects of the dynamics and downplays others seen of lower importance. The analysis of the earlier paper was primarily focused on the ‘battle of technologies’ – a rivalry that occurred between Sun and the incumbent Microsoft. Because of this, it did not explore in detail the harmonizing actions of Sun in regard to the creation and maintenance of Java ecosystem. Apart from that, the chronology of that work considered the limited timespan of five years, from 1995 to 2000. While these have been most dramatic years, as Java was becoming a standard, further transformations after 2000 may also be worth considering. These are two essential differences of the present analysis from the one accomplished by Garud and co-authors. The comparison of interpretations suggested by the earlier paper and the insights given by niche construction concept will be provided in next section. Similar to the work of Garud et al., this paper uses publicly available information as the main source of data, such as published annual reports and other investor relationship documents
  • (available at the corporate website, http://www.sun.com), newspaper, magazine and blog reports that provide information about company’s decisions and strategic considerations. Sun Microsystems is the global producer of computer servers, components, software and integration services, with headquarters in Palo Alto, CA. It has raised into fame in late 1980s with its UNIX-based server stations which have become the backbone of the emerging network technologies. From mid-1990s, the growing attention of Sun and the increasing share of its income was coming from software development. The current portfolio of Sun software products includes the operating system Solaris, MySQL database management software, middleware software for web applications, etc. The hallmark of Sun Microsystems is Java software platform: – in August 2007, the company has even decided to switch its NASDAQ tag from SUNW to JAVA. According to Sun CEO Jonathan Schwartz, who explained this move, Java is the best recognized brand of Sun, as Java touches nearly everyone - everyone - who touches the internet. Hundreds of millions of users see Java, and its ubiquitous logo, every day. On PC's, mobile phones, game consoles - you name it, wherever the network travels, the odds are good Java's powering a portion of the experience1. Java is a programming language devised by a group of engineer enthusiasts within Sun as a universal programming platform for the emerging class of ‘smart’ devices (ranging from to telephones to houseware): the concept implying devices that could be programmed with Java to perform various functions. Some of such smart devices, e.g. ‘smartphones’, materialized only ten years after the launch of the project. However, at the point when prototype language was developed, it has become clear that the most promising domain of its utilization was Internet. Accordingly, the company has decided to establish Java as the template language of Internet software applications, and later spawn to other domains (such as mobile phone or DVD player programming). Thus, from middle 1990s Java has quickly become, and remains, 1 http://blogs.sun.com/jonathan/entry/java_is_everywhere (accessed 25 Dec 2008)
  • a dominant programming language for execution of small applications, or applets, such as those used for online banking or gaming. The timeline of Java platform development can roughly be broken into five major stages (Figure 1). These stages almost twenty years of Java history, from the product development since 1990 to the current moment, when larger part of Java is an official ‘open source’ licensed as GNU General Public License (free software operating system collection), yet Sun remaining the centre of this ‘open source’ community. These stages are conventional and, in fact, intertwine. For instance, strategy of installation base creation continued as the company engaged in the battle with the incumbent (Microsoft), and the very battle, upon the end of the active phase in late 1990s, reoccurred afterwards in 2000s (e.g. with launch of Microsoft .NET platform in 2002); and, while the active part of ‘standardization’ efforts also ended around 2000, the official recognition of Java as the public standard was only achieved in 2006. Figure 1: Stages of Java development Stage C: Stage D: Stage A: Stage B: Stage E: 1996-9, 1997- 1990-5 1995-9 2000-8 2002-8 2006 Product Installation Battle with Standardi- Standard development base creation incumbent zation development and launch in ‘open control’ mode Stage A: Product development and launch. The early stage of Java was the period before its launch to the market. In 1990, a small group of engineers at Sun Microsystem commenced a project that could serve as an alternative programming language to then-dominant Sun C++. The largest opportunity for the language was seen in programming next generation 'smart' household devices. It was therefore important to have a platform that can be easily ported to different types of devices, e.g. PDAs. The developers’ interest was in building highly-
  • interactive applications, in particular, the remote control for cable TV. However, since the cable industry companies felt that the solution gave too much control to end-users, they were reluctant to give orders, and the project had to retract to Sun. In mid-1994, the developer team re-targeted the platform for the World Wide Web. It was assumed that, with the advent of newly created graphical web browsers such as Mosaic, the Internet would evolve into the highly interactive medium, for which the language was a suitable solution. The language was then branded Java. Also, as a part of the effort, the team produced a simple web browser based on the newly developed language, named HotJava. Both products have been released to the public in early 1995. From the beginning, the developer group wanted Java to become the center of post-PC Internet-based programming community. In this respect, the model of ‘open control’ was imprinted upon Java platform from the moment of its launch. Phase B: Installation base creation. Shortly after the launch, Sun primarily concern was to build swiftly a base of installations (the ‘bandwagon’) and recruits loyal developers of complimentary products, to provide network effects to its users. These are two critical factors of attaining the technological standard dominance (Schelling, 1998). In order to attain to this goal, Sun used the same type of strategy it used earlier in its core workstation market (Garud, Kumaraswamy, 1993): provision of access to its proprietary technology to the suppliers of complimentary goods and services. Specifically, Sun allowed third-party developers to download Java software package for free from its web site (the ‘early access’ feature), so that new language could be installed and tried. In parallel, Sun began a massive marketing campaign in order to share the vision of, and the values behind, Java concept with its partners and users (independent developers). This, first of all, included the promotion of the unique selling point of Java as the software that could be ran across different devices and operating systems: the ‘write once, run anywhere’ approach,
  • contrasted to the need to re-write software for each major platform, typical for those days. Apart from that, Sun began to set expectations of existing and potential vendors, of benefits ‘yet to come’ with Java platform development: the possibility of Java to become ‘the lingua franca’ of the Internet. This idea was seen as a natural extension of Sun slogan, ‘The network is a computer’. By making sound promises of future advantages of the language (which were, in a way, legitimized by Sun superiority in network hardware technologies), Sun fought for the minds of independent developers and potential partners, and the bandwagon started to build up. The growth of the bandwagon was used by Sun to improve its product. Apart from the traditional product modification in response to customer feedback, Sun allowed Java users to modify the language according to their needs. However, the license agreement required users to share any modifications for free with other users and Sun. This critical element of the licensing policy allowed Sun to retain control over customizations of Java, while using the ‘strength of community’ to introduce new functionalities. Among one of the important moves of Sun is that it purposefully facilitated learning of the new technologies. Sun has developed and conducted online and offline free Java courses, it has created and distributed free Java tutorials, provided case studies, tips and other support to independent developers. These activities were accomplished from the early days after the launch of the platform, and they became even more important as Sun moved into other stages of the standard maintenance (see Stage E – standard development in ‘open control’ mode). Through the combination of free access, expectation management, and support to learning, by the end of 1995 Sun was able to license Java to over forty major vendors, including Adobe, AT&T, Borland, IBM, Intel, Oracle, Symantec and Toshiba. Stage C: battle with the incumbent firm. With Microsoft Windows as a dominant operating system, and Microsoft’s interest in the rapidly growing field of web technologies
  • (MS Internet Explorer was launched in early 1995), the interaction, and the potential conflict, with Java, was inevitable. Around the time when Java was launched, Microsoft was developing a similar content authoring technology, named Blackbird. Accordingly, Microsoft initially decided to actively ignore, not endorse, Java, and has refused to acquire a license. However, by the end of 1995, when Sun announced its success in the license campaign with big names on board, the propagation of Java could not be ignored any longer. In addition, in then-ongoing ‘browser wars’ with Netscape, Microsoft was keen to imitate the key advantages of the dominant rival browser Netscape Navigator (with over 80% of the market2), and Java remained one of the important yet missing functionalities. The resulting decision was to acquire a license from Sun in early 1996. However, immediately afterwards, Microsoft started to develop its proprietary extensions to Java that were only compatible with Microsoft Windows and MS Internet Explorer. These solutions posed a threat to the ability of Sun to remain in the position of ‘open control’ of their technology – and they were obviously contradictory to the initial positioning of Java as ‘write once, run anywhere’ solution. Through Microsoft actions, and the fragmentation of Java solutions into several incompatible versions, the initial focus of Java’s selling point could become diluted. Rather than a tactical battle over custom approaches to a particular technology, this conflict can be seen as a natural consequence of the early framing of solutions by each of rival companies (cf. (Garud, Rappa, 1994)). For Sun, Java was seen as a potential ubiquitous language of the Internet, which, therefore, had to be independent from specific operating systems and hardware solutions. For Microsoft, the proprietary technology of MS Windows was central, whereas a language to run ‘applets’ on the Internet was seen as an element of their solution to Internet browsing. Platform-independent Java was, in this view, an 2 http://www.cc.gatech.edu/gvu/user_surveys/ (accessed 25 Dec 2008)
  • inappropriate solution which could dilute the existing dominance of MS Windows and the future dominance of MS Internet Explorer3. It was, therefore, natural for Microsoft to place Java somewhere in the middle of their hierarchy of programming languages, and customize it to run with Windows and Internet Explorer. Though the action may seem natural to Microsoft, it appeared to violate the spirit of Java license agreement. Sun has decided to file a lawsuit charging Microsoft with infringement of the license agreement. The lawsuit was settled in 2001, and the use of Microsoft Java Virtual Machine (the proprietary solution for Internet Explorer) was discontinued afterwards. Up to date, Microsoft has launched a number of other proprietary solutions developed alongside the same perspective as customized Java solution. In late 1990s, Microsoft launched ActiveX language that allows to install additional application ‘controls’ within Internet Explorer. Further on, in 2002 Microsoft created a full-fledged alternative to Java platform, .NET framework. Although it was meant to be spread to the range of platforms, it remains fully functional only on Windows platforms. However, a shared version with limited functionality is available for education purposes, and it is distributed on other platforms, including Mac OS X and Linux. Sun-Microsoft relationship is an open-end story. However, after over a decade of rivalry, it took another turn in late 2008, when Sun Java and Microsoft agreed on strategic partnership alliance. The rationale, according to Sun’s CEO, is that “[t]his deal will be one of the most valuable distribution deals ever struck in the industry - and it likely makes Microsoft one of Sun's largest customers”4. Stage D: standardization. With vendors developing customized solutions of Java, and Microsoft openly promoting its proprietary version of MS Java, Sun risked losing the hold of 3 Note that around that time, Netscape founder Marc Andreessen promoted a ‘third view’ of the future of computer interface, claiming that “Navigator will be able to take over the whole desktop. In fact, you’ll be able to boot directly into it” (http://news.zdnet.com/2100-3513_22-128738.html, accessed 25 Dec 2008) 4 http://blogs.sun.com/jonathan/entry/the_value_of_distribution_java (accessed 27 Dec 2008)
  • the ‘open control’ position. The aim to retain this position was publicly confirmed. Standardization initiatives followed as a response. One of the first efforts was the 100% Pure Java initiative launched in the early 1997. Within this initiative, Sun would certify Java applications that passed the compatibility tests. Sun maintained that compatibility of Java and its applications was critical, and also within the scope of Java licenses. In 1998, recognizing the growth of vendor community, as the variety of extensions, Sun opened parts of Java code to the public, and released its license terms, requiring Java-based products only to pass compatibility tests developed by Sun. This process was not the one-way street. From 1998, Sun voluntarily joined the Java Community Process that allows interested parties to propose changes to any of Java technologies via expert groups, forums and consultations. Within this process, anyone interested (including not only commercial vendors, but also private and non-commercial users) can suggest changes to Java language or platform specifications. These proposals are reviewed and voted upon by community members, although Sun retains the power of veto to introduce any changes into standard implementations. Over 300 proposals have been implemented using this process. Java partners and vendors, including major ones, expressed concerns regarding the excess control over Java technology by Sun, which could represent threats for their own investments. From 1997, Sun received continuous requests to handle the standardization process, partially or fully, to an internationally recognized independent standardization body. In response, Sun approached a number of such bodies, including International Organization for Standardization (ISO), National Institute of Standards and Technology (NIST), and European Computer Manufacturers Association (ECMA). The aim of Sun was, however, to received the endorsement of any of these bodies for Java yet validate Sun’s legitimacy to retain its ‘open control’ position. Therefore, as independent sources suggest, Sun attempted to
  • coopt standardizing bodies in each case, and backed when standardization on terms desired by Sun was possible (Wolfe, 1998; Shankland, 2000). This raised concerns within Java community, and major vendors such as HP and Oracle started to develop their own versions of Java to prevent possible threats. However, Sun has not completely abandoned the standardization project. In late 2006, all of Java software, except for closed-source code elements, has been officially licensed GNU Public License to become part of GNU, a Unix-like free software operating system. In mid-2007, Java released the complete source code, with the exception of limited parts sourced to Sun by third parties, who did not want their code to be released under open-source license5. Sun made a promise to replace these closed-source elements by open-source elements with similar functionality in the future. In 2008, Red Hat, the major distributor of Linux committed to open-source software, confirmed that its fully functional open-source implementation of the Java platform, IcedTea, has passed the Sun compatibility tests. Stage E: standard development in ‘open control’ mode. As Java raised to the position of dominance in its technological field, the real challenge for Sun was to retain its central position in the evolving community. Significant pressure was coming from developers and vendors, especially major ones, that wanted Sun to release control over Java code, so that it becomes a public standard. They contested the strategy of Sun which was, in their eyes, constant framing and reframing of rules of the game. Most important, Sun was the developer of the language, and at the same competed with some its clients as the provider of applications. Sun was, however, initially reluctant to give control, since its central position in the community was not secure. However, it also faced the risk of fragmentation of the technological field, as some its major clients promised to develop their proprietary versions of Java, which would discredit the core concept of Java as the ubiquitous platform- (and 5 http://mail.openjdk.java.net/pipermail/announce/2007-May.txt
  • provider-) independent language. As noted above, Sun has finally decided to give full control over the language to the community, making it an ‘open source’ with publicly available and free code. This made the task of retaining the core position in the community – and the ability to capture value from this position – even more challenging for Sun. Therefore, in early 2000s Sun adopted two additional elements of its strategy. First of these elements was to extend Sun’s presence in complimentary products. Sun dealt with this issue so in two classical ways – through integration with key technology owners, and alliances with key vendors that could open new markets for applications developed in- house. Sun acquired several important companies in software production. One of the first Java- related acquisitions, accomplished in 1998, was NetDynamics, developers of NetDynamics Application Server, the first Java-based integrated software platform. Further, in 1999, Sun acquired NetBeans, a startup that developed modular integrated development environment for Java. In 2005, two further acquisitions were made: Tarantella, owning a series of Java applications, and SeeBeyond, owning the technology that has become central in one of Sun’s Java-related products, Sun Java Composite Application Platform Suite. In 2007, Sun acquired SavaJe, the developer of Java-based operating system for advanced mobile phones. Sun also used Java and Java-related acquisitions as a basis for the promotion for some of its new products. For instance, in 2005 Sun launched the consulting service related to the novel concept of service-oriented architecture (the essence of this concept is Sun’s slogan, ‘network is a computer’), and technologies acquired with NetBeans and SeeBeyond were used as core elements of its value proposition. In 2008, Sun launches JavaFX, a new family of Java-based software products for creating rich Internet applications, web-based applications with functionalities of traditional desktop applications, that can be used with desktop computers,
  • mobile phones, TV, DVD and other technological platforms; this product uses elements of NetBeans and SavaJe technologies. In addition to that, Sun has entered into alliances with major vendors and key industry players to extend the reach of Java. One of the first partnerships was with AOL-Netscape company in 2000; under the alliance agreement, Sun acquired many of Netscape’s non-browser software products, and further included them within the Java package (Sun Java System). In early 2000s, Sun entered into agreements with mobile phone manufacturers, such as Motorola and Nokia, to extend the reach of Java to mobile phone platforms. In 2005, Sun agreed upon alliances with a number of important software producers, including the co-development agreement with Oracle, the co-marketing agreement with Google, and the long-term collaboration agreement with IBM. In addition to that, Sun has agreed with Panasonic that Java will be supported by the next generation of DVD players using Panasonic- sponsored BluRay technology (nowadays, a dominant format in high-definition optical disks). This was an important move towards the support of the initial concept of Java as ‘write once, run anywhere’ language for different types of smart devices, not only Internet. Further on, Sun has participated in a number of initiatives that promoted its standing in ‘open source’ community. In particular, in 2006 Sun joined the OpenAJAX initiative and has become the sponsor of Dojo foundation, to support the effort of communal development of the next generation of Java web-based technologies (AJAX is one of the key technologies behind the web-based cloud computing model, supported, among others, by Google). In 2007, Sun agreed on full-scale collaboration with RedHat, one of the key promoters of open source software. These steps were important for legitimizing the retention of the Sun’s central position in Java community. However, the crucial elements of strategy to retain Sun’s control over Java community, as the formal intellectual property right is fully released, lie in marketing and education efforts.
  • On the marketing side, from 2003 Sun has decided to commit itself to the increased Java brand recognition by end-users, not vendors alone. This was seen important as more Java- based applications were available on the Internet, and Java moved to mobile telephone platforms. Apart from entering into alliances with phone manufacturers such as Nokia or service providers such as Vodafone, Sun also wanted to secure demand from consumers. In order to do so, it has actively marketed through different channels, including TV shows that featured Java-based mobile entertainment6, and produced easily recognizable brand elements such as Java mascot. By reaching end-users, Sun established the customer loyalty and secured the demand for itself. Educational effort is another important component of Java promotion strategy. By increasing the number of programmers skilled in Java application writing, Sun ensures the long-term sustainability of Java community – both on the side of staffing, and new startup launching. Therefore, it actively promotes Java to college students and instructors in academia. Elements of the campaign include free learning programs for college students (largely online courses), use of ‘campus ambassadors’ that actively promote Java to their peers, and reduced fees for Java licenses to academic institutions. Some of these elements are bundled within Sun Academy Initiative, operable since early 2000s. This program involves partnership with computer science departments in major educational institutions around the globe, that become authorized on giving training on Sun technologies to students, faculty, and staff. As a part of this initiative, Sun provides training and guidelines for instructors, training materials, and discounts for software and certification exams. In addition to that, Sun supports the creation and development of Java User Groups (JUGs), volunteer organizations that strive to distribute Java-related knowledge around the world. JUGs are instrumental in sense of building local Java communities, creating peer support and 6 http://news.cnet.com/Sun-pushes-Java-brand-harder--but-uphill/2100-1012_3-5260467.html
  • sharing knowledge through networks. As a part of its effort to coordinate JUGs, Sun runs the directory of JUGs on its website, hosts JUG online forums, and conducts JUG-focused events during its conferences with vendors and developers. DISCUSSION The paper of Garud and co-authors interprets the emergent technological domination in a fairly traditional view, as the rivalry between competing industry solutions. In some cases, such as the rivalry between electric power systems of direct current and alternating current (Shapiro, Varian, 1999; David, 1992), or between 33 rpm and 45 rpm music records (Robertson, Langlois, 1992), or, just recently, between HD DVD and BluRay high-definition optical disks, such a rivalry is evident. To some extent, Sun Java is a different case. However, Java case is also different from the standard as “immediately out of collective action within a fragmented industry.” (Langlois, 2004:14). Examples of the latter are the emergence of standards within the US semiconductor industry (Langlois, 2000), or US automotive industry (Thompson, 1954). Sun’s technology was a sponsored one, and the emergence of the standard was thoroughly guided. Yet, Sun faced no obvious rival: the company wanted to inhabit space largely unoccupied, a solution for Internet-distributed applications based on the ‘write once, run anywhere’ paradigm. When Sun started to colonize this technological space, there was no evident rival in place: while Microsoft could have some similar ‘prototype’ products, such as VBasic or Blackbird (as could have some weaker, and less known, potential rivals), the concept of Sun Java was original, and well developed. Also, extensions of Java to mobile phones, TV and DVD players appeared naturally within this concept. The challenge of Sun was not only to establish the sponsored platform as a dominant technological standard, but also to maintain its central position in standard development and
  • value capture. As a company following the narrow path of ‘open control’ strategy, Sun has to balance between two contradicting needs: the need to allow the community to use and modify the technological standard, and the need to retain control over this standard so that to prevent creation of incompatible versions. The difficulty of Sun was to steer the standard as it emerged, especially with actions of Microsoft that wanted to take over the technological field with its proprietary extensions of Java. The interpretation by Garud and co-authors stresses aspects of the standard domination process related to the ‘battle of standards’ (Figure 2). Early upon the launch, in stage B, the technology sponsor has to mobilize support (from vendors and developers) to overcome initial inertia and spread the technology further. This mobilization, in the ‘battle’ view, is required to take on the incumbent. Accordingly, supporters are provided with common meanings and identities, stressing differences with the incumbent (Garud et al, 2002: 206): The sponsor may also have to galvanize action by evoking images of a collective organized against a powerful and unpopular incumbent. Such an action is consistent with observations in the institutional theory literature on how actors generate momentum by evoking the image of a common enemy. The paper by Garud and co-authors suggests that Microsoft came to be such a ‘common enemy’, and the mobilization of the ‘open source’ community stressed its differences from the ‘closed source’ approach, of which Microsoft was a typical example. Further on, the ‘battle of standards’ moves into an open conflict (stage C), which is central to this interpretation. Actions of Microsoft aim to threaten the position of Sun, and challenge its ability to dominate the field. Respectively, they are followed by counter-actions from Sun: the use of legal mechanisms to thwart countermobilization. The successfully settled lawsuit is one of the culminations in the ‘battle’, a major tactical win leading to a strategic victory.
  • Subsequent activities of Sun, its attempts to, first of all, establish itself as the formal industry standard (through cooption of standardization bodies) are envisaged as steps to protect its technological domain from existing and potential rivals. In doing so, Sun is interpreted to address the incumbent (Microsoft) as some potential entrants (companies that use rival technologies or their proprietary versions of Java). Figure 2: Focus on ‘the battle of standards’ Stage В: resource Stage D-E: improving mobilization to competitive advantage combat incumbent over the incumbent Stage B: Stage А: Stage C: Stage D: Stage E: initial development and combating standar- standard installation product launch incumbent dization development base Image of incumbent- entrant opposition: ‘Java Sun open source Focus on stage С: opposing Microsoft direct conflict with the incumbent closed source’ (Microsoft) While these interpretations are valid, and they provide an important perspective of the competition dynamics, they also appear to deprive this complex case of some of its crucial developments. The ‘battle’ perspective stresses the high importance of conflict between major players in the field, such as Microsoft or major vendors which on later stage wanted to develop their proprietary versions of Java. Conflicts are self-evident to observers, they are well-conceived by the strategic management theory, and they are most likely to be presented by mass media, unlikely to be interested in stories of peace and harmony. Harmonizing efforts of the company are seen as ‘natural’ and therefore unimportant, thus they are often lost in the description of events. The concept of ‘niche construction’ presented in Section 3 allows to highlight some these aspects (Figure 3). First of all, it was argued that the early phase of niche construction relates to the ‘seed’ concept, the construct to be used as the guidance for niche constructing activities. Similarly to
  • Stinchcombe (1965), one can argue that organizational strategies, as well as organizations themselves, maintain certain legacy of their ‘birth’ moment. Niche construction is, for organizations, the ‘third way’, different from both organizational adaptation (when organization changes follow environment changes) and selection by the environment (when the organization, or certain part thereof, cedes to exist due to environment pressures). Niche construction is a product of organizational capabilities: organizations with specific capabilities may build new opportunities instead of (or, in addition to) exploring the existing ones (partially due to organizational rigidities (Leonard-Barton, 1992) that lead to the mismatch between organizational capabilities and the environment). To apply this argument to the case, note that the concept of Java conceived initially (Stage A) was maintained as the project developed: again, the spread of Java onto different platforms (DVD, mobile phones etc.) was within the original concept of ‘the ubiquitous language for smart devices’. In Stage B, when building its installation base, Sun employed a range of niche constructing strategies. One of the crucial ones was to facilitate and support learning (by developers), which allowed a swift take-off for the technology. Sun was also keen to inspire the emerging ‘open source’ community, to share values of the openness and co-creation. Note that, having little power over the community, Sun used approaches that governed its partners and the network from the ‘symmetric’ position of power (see Table 1). Later (at Stages D and E), when Java community took the momentum, Sun acquired certain power over the community and started to use strategies related to ‘asymmetric’ power position. Standardization of rules, setting of values, and cooption of relevant legetimizing bodies were among the steps accomplished by Sun in these stages. However, the importance of niche constructing strategies for Sun probably even increased, when coevolution of its strategy and product with Java community pushed Sun to gradually release the control over the standard. Note two important developments after 2000, described
  • in Stage E. First of all, Sun moved substantial efforts into marketing, building stronger brand to be recognized by end users, and not only the professional community. This is a type of strategy related to creation and maintenance of ‘brand community’, largely employing inspiration and value sharing. Second, Sun committed significant resources to educational programs, increasing the number of Java-focused programmers, rising opportunities for Java- related startups with complimentary products, and building higher loyalty among important consumer groups, students and academics. Also, though Sun was able to keep the technological field unified, the complexity of organizational forms, and the variety of actors, increased with time. Sun was fairly successful to manage these rising social challenges, acting as an ‘institutional entrepreneur’ (DiMaggio, 1988) guiding self-organization processes, rather than respond to unexpected challenges from unnoticed social movements. First of these developments was Java Community Process: institutionalization of the user feedback into a communal social process, carefully supported and moderated by Sun. Another development was the rise of JUGs, user groups created and steered by volunteers unrelated to Sun, yet again, supported and guided by Sun. Figure 3: Emphasis on the ‘niche construction’ aspects Stage В: role of teaching / Stage E: role of Stage А: role of learning (in direct contact education and brand building as initial with developers) to create niche constructing strategies ‘construct’ installation base strengthening central position of Sun Stage B: Stage А: Stage C: Stage D: Stage E: initial development and combating standar- standard installation product launch incumbent dization development base Stages B, D: promotion of the Stages D-E: switch to the common understanding (open standardization strategy source) to establish common goals once the power over community and values is reached 1
  • These niche construction strategies were instrumental in building Java position as the dominant technological platform, and further in maintaining Sun’s central position in Java community in ‘open control’ regime. As Sun turned Java itself largely into a public controlled standard (free ‘open source’), it relies even more on niche constructing strategies to maintain the legitimacy of its particular role for the community, and to capture value from this role. CONCLUSION This paper examines the creation and maintenance of sponsored technological standards. Standards can be envisaged as the subtype of industrial interface that establish the template for the division of labor in complex technological fields, or the industry architecture. As the paper by Jacobides and coauthors (2005) discusses, industry architectures emerge through complex coevolutionary processes, in which particular pro-active organizational strategies, including lobbying and branding, play important role. The focus of the present paper is the concept of niche construction: pro-active strategies that transform or create organizational niches, or, more precisely, the sustained change to the resources and relations in the organizational environment, that have long-lasting effects upon the strategy of the focal organization(s) and organizational constituents. Niche construction strategies can be envisaged as ‘setting rules of the game’, contrary to competitive strategies as ‘playing by the rules’. The paper takes the reconsideration of one of well-known studies in the emergence of dominant technological standard, the case of Java examined by Garud, Jain and Kumaraswamy (2002). This reconsideration serves as the ‘repetitive experiment’ to highlight the difference between the more conventional view of the standard dynamics as ‘the battle of systems’, and the concept of niche construction. Since case studies are post-hoc
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