NEW DIRECTIONS IN RESEARCH ON DOMINANT DESIGNS JOHANN PETER MURMANN Kellogg School of Management, Northwestern University, Evanston, Il 60201, USA KOEN FRENKEN URU, Utrecht University, The Netherlands ABSTRACT Our theory provides an unambiguous definition of dominant designs (stable core components that can be stable interfaces) and the inclusion of multiple levels of analysis (system, subsystems, components). We introduce the concept of an operational principle and offer a systematic definition of core and peripheral subsystems based on the concept of pleiotropy. INTRODUCTION Since Abernathy and Utterback (1978) first developed the concept of a dominant design from a study of the automobile industry, many writers in the field of organization theory and strategy have found the concept an extremely useful tool for studying the evolution of technological products. At the heart of dominant design thinking lies the empirical observation that technology evolves by trial and error and thus entails risks for the population of firms engaged in its development. The only way to reduce the uncertainty about technological potential and user needs is to create different designs and wait for feedback from users. Over time, only one or a few designs from the much larger number of design trials will succeed. The firms that happen to be producers of the winning designs will flourish, whereas firms that invested in the failing designs will incur economic losses and may even go out of business. The dynamics that lead to dominant designs are of central importance to firms that have a stake in the way technology evolves because the emergence of a dominant design produces winners and losers. A review of all the empirical studies concerned with dominant designs (Murmann and Frenken 2002) revealed that research is far from codified and standardized and that scholars disagree on definitions of dominant design, units of analysis and boundary conditions of their theories. We argue that part of the apparent inconsistencies surrounding dominant design research is caused by a lack of analytical concepts. We propose a complex systems approach in an attempt to reconcile, at least to an extent, the major inconsistencies in current research on dominant design. TECHNOLOGY AS A COMPLEX SYSTEM Following the work of Simon (1962) on the evolution of complex systems, and in line with work by Rosenberg (1969), we define a technology as a man-made system that is constructed from components that function collectively to produce a number of functions for users. Simon (1962) pointed out that artifacts, like other complex systems, are not just made up of elementary components, all directly interacting with one another, but rather consist of a nested hierarchy of subsystems. An entire airplane, for example, is made up of a fuselage, wings, propelling device, and landing gear, which can be represented as first-order subsystems. Each of these first-order subsystems has potentially included within it smaller second-order subsystems, and potentially many further levels of ever-smaller subsystems until the level of the fundamental Academy of Management Best Conference Paper 2005 TIM: G1