The Emergence of Dominant Designs

Abstract

In many product categories, technological evolution results in the emergence of a single product design that achieves market dominance. In this paper, we examine two questions: will a dominant design emerge in a new product category? If it does, how long will it be before a dominant design emerges? Thus, we simultaneously model the probability of emergence of a dominant design and the time of that emergence, conditional on its emergence. Our model incorporates the effects of several product-market characteristics including appropriability of the rents associated with the product, network effects, size of the product's value net, the standard setting process, radicalness of innovation and R&D (research and development) intensity on the probability and the time of dominant design emergence.

We use data for 63 office products and consumer durables to estimate a split population hazard model for the probability and time of emergence of an initial dominant design. We find that a dominant design is more likely to emerge with weak appropriability, with weak network effects, with low product radicalness and with high R&D intensity. Dominant designs that do emerge are likely to emerge sooner in product categories where there is weak appropriability, where there are a large number of firms in the value net, where standards are set by a de facto process and where there is low product radicalness The proposed model can be used to predict both the probability and the time of the emergence of a dominant design in a new product category.

Keywords: dominant design, market evolution, technological evolution, split population model