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We develop and test a model of how a software firm's business strategy (product scope and market scope) interacts with the firm's network position (alliance degree and structural holes) to impact performance. We test the joint-effects hypotheses on a sample 359 packaged software firms that have entered into 5,489 alliances involving 2,849 distinct firms during the time period, 1990–2002. While prior studies have demonstrated the importance of network positions as a determinant of firm strategy and performance, this chapter begins to examine the performance effects of how a firm's business strategy and network positions interact. We find support for three of the four hypotheses lending empirical support for our theoretical model. We develop implications for network-based perspectives of strategy and outline areas for further research.

Given that value exchange in virtually every sector of the economy is increasingly dominated by software, the goals of this chapter are to bring software to the attention of the academic marketing community, to discuss the unusual product attributes of software, and to therefore suggest some research topics related to software as a product attribute. Software allows service to be physically stored and allows physical objects to perform services. Managing products that have evolved into software products creates difficult challenges for managers as software does not resemble either tangible goods or intangible services in terms of production, operations, cost structure, or prescribed strategy. Every time a business replaces an employee with an e-service interaction, and every time a business adds a line of code to a previously inert object, the nature of that business changes. And as software gets more capable, its nature as a product changes as well by adding unique product characteristics summarized as complexity, intelligence, autonomy, and agency.

Low labor costs and market access are no longer competitive differentiators; increasingly companies are looking to design and develop new products and services as a crucial source of competitive advantage. As the pressure to innovate increases, so does the tension between shorter-term exploitative development and longer-term exploratory innovation activities. We explore this tension using interview data from software SMEs and venture capitalist firms who invest in technology-driven companies. Findings indicate that, despite firm’s having established solid innovation plans, short-term exploitative demands crowd out their longer-term exploration innovation during the development phase. Agency and resource dependence theories are used to start to explore some of the reasons for this shift. Implications and suggestions for future research are discussed.

Market participants form conceptualizations of the products exchanged within product markets. Strategy scholars have begun to investigate how these product conceptual systems influence firm strategic behavior. Much of this work characterize these concepts as categories and theorize that the strategic implications derive from the potential penalties of not fitting into a category. This view has limitations in that it does not fully address the other cognitive tasks that concepts perform as well as other system-level characteristics of the conceptual systems. This chapter addresses these limitations by framing the use of concepts as part of the interpretive processes that enable market exchange. It develops a system-view of product concepts and then shows how the structure of the product categorical system influences the interpretation of product concepts. It introduces new mechanisms centered on cognitive processing that influence strategic action within product markets.

This chapter provides evidence on how young technology startups are employing intellectual property (IP) protection when innovating and competing in the United States. Although researchers and teachers of university technology transfer often think only in terms of patents and the Bayh-Dole Act, this chapter suggests that adopting a more nuanced view of IP rights is appropriate. After reviewing the primary non-patent types of IP protection available in the U.S. (copyright, trademark, and trade secret), we explain that while patents are often considered the strongest protection, for some entrepreneurs – particularly those operating in the U.S. software and Internet sectors – patents may be the least important means of capturing value from innovation. We present evidence from the 2008 Berkeley Patent Survey to demonstrate that IP is used by U.S. startups in very different ways, and to different effects, across technology sectors and other company-specific characteristics. Contrary to the common assumption in academic discourse, we show that different forms of IP protection often serve as complements, rather than substitutes.

Enterprise software is a predominant sector in the European software industry. Four of the five largest European software companies are found in this sector. Interestingly, two of these — among them SAP as one of the two global market leaders — are located within the same industrial agglomeration in South-Western Germany. This agglomeration, the SAP cluster, further consists of enterprise software SMEs forming a ‘satellite system’ centred around the large players, which fosters the formation of ‘mutualistic symbiotic’ relationships between large and small firms. At first sight, cluster formation in the context of the enterprise software industry might seem perplexing considering that traditional rationales of agglomeration economies seem obsolete in an environment where advances in communications technology would permit companies to locate in any location within a modern developed economy instead of concentrating in proximity to each other or to major players in the industry. This chapter explores possible explanations of this agglomeration phenomenon based on patterns of competition, collaboration and the formation of social capital between smaller firms and large anchor firms.

The findings of a comparative analysis between the SAP cluster environment and two categories of controls (firms in other agglomerated environments and those unaffected by agglomeration effects within Germany) show that SAP cluster SMEs might simultaneously benefit from heightened intensity of competition and a more pronounced inclination towards collaboration. Moreover, the role of social capital derived from SAP as anchor firm clearly differentiates SAP cluster participants from firms located within other environments.

In the information and communication technology (ICT) industry, and particularly in the software sector, knowledge change, the development of expertise and the construction of professionalism are crucial factors for understanding institutional patterns related to professionalization. This paper draws upon research on professionalization in the ICT industry conducted in Germany to explore how time regimes regarding innovation, qualification requirements, and working time regulations are linked to the structuration of expertise in different organizational settings and correspond to particular and contextual professionalism. Project deadlines play a crucial role in the structuration of expertise as common pattern for IT and telecommunication firms, whereas ongoing education and quality standards integrated into management systems serve to stabilize professionalism in large IT enterprises.

Purpose – This chapter discusses the difference between a product strategy and a platform strategy, relying on examples from the history of Apple and Microsoft in personal computers and other devices as well as Sony and Japan Victor Corporation in videocassette recorders.

Design/methodology/approach – The chapter begins with a review of how the term “platform” has been used in the management literature and defines an industry-wide platform (as compared to an in-house company product platform) as a foundation technology (or service) that brings multiple parties in a market together for a common purpose. An industry-wide platform can generate powerful network effects between the platform and complementary products and services that make the platform increasingly valuable. Apple, with the Macintosh computer, and Sony with the Betamax VCR as well as other products, such as the Walkman media player, are examples of firms that developed excellent products but followed a product-first strategy and ended up losing in these markets or becoming niche players. They paid relatively little attention to opening up their technology to outside firms and cultivating an ecosystem of partners. Apple changed in the early 2000s with the iPod and iTunes, and then the iPhone and iPad, and has risen from near bankruptcy to become an enormously valuable and profitable platform leader.

Findings – Historical examples suggest that, in a platform market, the winner is not the firm with the best product, but rather the firm with the best platform – that is, the foundation technology or service that is most open to outsiders and which stimulates development of the most compelling complements.

Originality/value – This result extends the literature's understanding of platform strategy.

In explaining international expansion and performance, the traditional explanation in international business literature has mainly offered country, and firm-level structural explanations for performance. Moreover, this literature has been biased toward larger, established multinational manufacturing companies (Dunning, 1958; Hymer, 1960; Aharoni, 1966; Vernon, 1966). This was understandable as, for much of the 20th century, manufacturing occupied the dominant share of the economy. However, by the early 1960s, the service sector already accounted for more than half of the domestic economic activity in developed nations. Today, even in international operations, the share of services is rapidly increasing. For example, the share of services in U.S. exports in 1997 had grown to 27%, and to 16% in U.S. imports (Contractor, 1999). Moreover, in sectors such as information technology, telecommunications or biotechnology, recent years have seen a proliferation of entrepreneurial start-up companies, where the characteristics of their founders and leaders appear to have as much, or greater, impact on performance, as traditional firm-level explanations. Since the late 1980s, the growth of venture capital markets and rise in entrepreneurship have been observed in technology-driven industries (The Economist, 1993; Gupta, 1989; Mamis, 1989). Could entrepreneurial and leadership factors assume greater importance in explaining performance, especially international performance, of younger companies in such sectors? This is the broad hypothesis pursued in this study.