A Proposal for a Standard With Innovation Management System

Competition Between Business Ecosystems: A Case Study
of the Mobile Phone Industry
Takashi Hirao 1 and Yusuke Hoshino 2
1
Department of Business Administration and Information, Tokyo University of
Science Suwa, Nagano, Japan
2
Department of Business Administration, Musashino University, Tokyo, Japan
hirao@rs.suwa.tus.ac.jp
yhoshino@musashino-u.ac.jp
Abstract: This study investigates why the Japanese mobile phone industry fell into the Galapagos syndrome. It
focuses on competition between business ecosystems in the global mobile phone industry from 2001 to 2007,
when third-generation mobile phones were released. More concretely, by exploring the relationships between
mobile phone manufacturers, network operators, distributors, content providers, and users, this study examines
how structural differences in business ecosystems formed in the GSM (Global System for Mobile Communications)
group and the Japanese mobile phone industry, and how they influenced the subsequent disparate technological
trajectories through competition between business ecosystems.
Keywords: business ecosystem, platform leader, entry barrier, technological trajectory, first-mover advantage
1. Introduction
Most technology-based industries are currently faced with agile competition in the global economy. As
such competition entails rapid responses to a variety of markets as well as shortening lead times in
each particular market, the role of various collaborations such as business networking, open innovation,
open platforms, and business ecosystems becomes increasingly significant in promoting innovation
(Goldman, Nagel and Preiss, 1995; Larson, 1992; Moore, 1997; Teece, 2007; Chesbrough, 2003;
Gawer and Cusmano, 2002; Iansiti and Levien, 2004). Thus, firms that utilize external resources can
gain competitive advantages in rapidly achieving technological innovations.
There are many studies that discuss the relationship between networking and outcomes in research
communities (i.e., Constant, 1980, 1987; Dietz and Bozeman, 2005). Much of the literature has argued
that actors who play a central role in the networks have an advantage. Galaskiewicz (1979) argued that
higher centrality leads to higher volume and speed of information, as well as knowledge flow, because a
central actor has greater access to external assets. Iansiti and Levien (2004) also posit that it is
important for keystone players to co-create business ecosystems with niche players. In particular, they
pointed out that it is necessary for keystone players to allow niche players to keep and explore channels
of communication that may be open with other ecosystems. These studies suggest that the structure of
a network influences its outcomes (Shimizu, 2011; Dittrich and Duysters, 2007).
This study focuses on the structure of a business ecosystem as a network of the supply chain, which
includes various complementary products and services (Tatsumoto, 2011) because it is difficult to
explain a value network in industrial structure terms beyond the boundaries of industry. Therefore, this
study examines the industrial structure of the mobile phone industry as a business ecosystem involving
actors (complementors) that supply complementary assets (Adner and Kapoor, 2010). However,
differences in each country, as prerequisites, influence the evolutionary process of business
ecosystems. Because every country has unique economic and social institutions, their innovation
systems are distinct (Nelson, 1993). Therefore, this study examines different patterns of network
formation and technological innovation in the business ecosystems of different countries.
By exploring the process of business ecosystems in the global mobile phone industry in the period
2001–2007, we aim to discover the different types of relationships that exist between networking and
outcomes in business ecosystems. More concretely, exploring the relationships between mobile phone
manufacturers, network operators, distributors, and content providers, this study examines how the
structural differences in business ecosystems could form in GSM and the Japanese mobile phone
industry, and how they influenced the disparate technological trajectories of the evolutionary process
under competition between business ecosystems. We focus on the business ecosystems of GSM,
which spread widely over the global mobile phone market, and NTT DoCoMo, which has contributed
greatly to the growth of the Japanese mobile phone industry, especially in terms of research and
development (R&D) in the field of 3G technologies.
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