Closed Competition Systems (CCS) in Digital Business Strategies

For many firms, the ability to capture and maintain market share and profitability on the Internet is dependent on a firm’s ability to create and maintain a closed competition system (CCS) – that is, a system of business operation with customers that competitors can neither enter nor emulate very effectively. A CCS can be created through market, technological, or policy means. Sometimes these different sources of competitive advantage substitute for one another, other times they compliment each other. We illustrate the relevance of CCS with case examples from Internet environments. CCSs extend the current integrative strategy perspective. We conclude with a research agenda. Introduction Instant Messaging (“IM”) as an Internet communications technology holds great promise for Internet business applications. IM allows people to engage in simultaneous communication, both in forms of chat and “instant” email, on the Internet. The adoption rate of IM among teenagers has been phenomenal and the plans business has made for this technology promise to be revolutionary (Forbes, 2000). America OnLine (AOL) has tens of millions of registered IM users on its AOL Instant Messaging (“AIM”) and I Seek You (“ICQ”) systems. Microsoft Corporation, AT&T, and many other ISPs also have instant messaging services for their users, but none come close to having the size of the user base that AOL has been able to amass. These other companies desire a unified system where their users can interact with those of AOL. System compatibility with AOL would (1) make the other systems valuable for their users as a communication device to the broader IM community (AIM users), and (2) create more business opportunities for the clients of these other systems as they could now interact with a much larger market. In short, IM system compatibility with AOL would make the operators of these other systems (the Microsofts and AT&Ts) more valuable to their users. 1 Forrester Research reports that 35% of all employees in U.S. companies are already using it. For example, at IBM, 235,000 employees regularly use instant messaging which ties with other office productivity tools. Instant messaging is being incorporated into next generation videoconferencing and mobile computing