2013-19
Organizational Field Comprising Competitive
Relationships: The Case of the “Galapagos Syndrome”
in the Japanese Mobile Phone Industry
Satoko Uenishi Noboru Matsushima

Organizational Field Comprising Competitive Relationships: The Caseof the “Galapagos Syndrome” in the Japanese Mobile Phone Industry
Satoko Uenishi a*and Noboru Matsushimaba

Graduate Student, Graduate School of Business Administration, Kobe University,
2-1 Rokkodai, Nada, Kobe,657-8501 Japanb
Associate Professor of Managerial Science, Graduate School of Business Administration, Kobe University,
2-1 Rokkodai, Nada, Kobe,657-8501 Japan

Abstract
In this paper, we discuss the “Galapagos syndrome” in the Japanese mobile phone industry
from the perspective of organizational institutionalism. In general, the Galapagos syndrome
emerged because the Japanese companies ignored the international standards and focused on
domestic markets for product development. Organizational institutionalism explains the
diffusions of technology-related international standards to achieve social legitimacy, rather
than the mere compliance with technical requirements. However, Japanese firms were active inobtaining international standards. To explain this situation, we reviewed the studies on diffusion
in organizational institutionalism. During the review process, there was confusion with the idea
of isomorphism and this led to two ways of understanding it: isomorphism as homogeneity andas the origin of competition. By revisiting the pioneering theory of organizational
institutionalism by Weber, we can explain the Galapagos syndrome on the basis of the latter
understanding of isomorphism; that is, the incorporation of international standards createscompetitive relationships between the Japanese firms. By rearranging the logical implications
to explain isomorphism and standards, we can conclude that the Galapagos syndrome resultsfrom differentiated practices related to the incorporation of international standards.
Key words: Organizational Institutionalism, Isomorphism, Galapagos, Standards, Mobile Phone.

1. Introduction
The emergence of the “Galapagos syndrome” in theJapanese electronics industry can be attributed to theignorance of international standards and preoccupation
with the domestic market for product development bytechnologically proficient Japanese companies. In themobile phone industry, which is often referred to as a
typical example of the Galapagos syndrome, telecom
carriers have engaged in exclusive productdevelopment competitions involving mobile phone
manufacturers and users. As a result, a unique market
has been created with a variety of mobile phones
equipped with sophisticated services. Unfortunately, inspite of high-end mobile phones and advanced
technologies, it has been difficult to expand theirconsumer base in the global market because of the*ignorance of international standards by Japanesecompanies.
Organizational institutionalism suggests thatobtaining international standards by organizations isnecessary for achieving social legitimacy, rather thanthe mere compliance with technical requirements. NTT
DoCoMo, a leading telecom carrier in Japan, was thefirst telecom carrier to obtain the international standard
for telecommunications in the world. Moreover, theescalation of exclusive product developmentcompetitions, involving mobile phone manufacturers
and the fastest Japanese growing market with uniquepreferences, was after the establishment ofinternational standards for telecommunications. On thebasis of these facts, it is not logical to assert thatJapanese companies had completely ignoredinternational standards for telecommunications.

corresponding author: g-mama32@ad.cyberhome.ne.jp

Therefore, in this paper, we start with a brief review
of previous studies on isomorphism, a concept that
explains the organizational actions for obtaining
international standards such as ISO 9000, within theconceptual
frameworkoforganizational
institutionalism. After literature review, we explore thelogic behind the emergence of the Galapagos syndrome
while focusing on the influence of the international
standards for telecommunications in the Japanese
mobile phone industry.

2. Logic of differentiated practices by
the incorporation of international
standards
According to organizational institutionalism,
obtaining an international standard such as ISO 9000 isnecessary in order to achieve social legitimacy forcompanies. For instance, Delmas ([1]; [2]) shows that“companies obtain ISO 14001 as it helps to create andmaintain favorable institutions.”
In Europe, thegovernments have actively supported companies’
efforts in environmental management. Therefore,
European organizations actively aim to obtain ISO
14001 in order to achieve social legitimacy throughtheir respective government’s support. Guler et al. [3]shows that an organization that engages in businesswith the European organizations has a strong tendency
to obtain ISO 9000. In Europe, ISO 9000 has been
widely obtained. Obtaining ISO 9000 becomes a meansfor demonstrating social legitimacy while engaging inbusinesswiththeEuropeanorganizations.
Consequently, we see an increase in the number oforganizations
that
incorporate
theformalorganizational forms and procedures based on ISO
9000. Organizational institutionalism explains such asituation with the concept of isomorphism.
However, contrasting positions have been observedin previous studies on isomorphism. The first one isrelated to the discussion of the homogenization of
corporate strategy by isomorphism (e.g., [4]; [5]; and[6]). Fligstein [4] points out that there was an increasein the number of companies who incorporated themultidivisional form in the United States in the early
1900s. This was because they believed that this form
was effective by considering examples of successfulcompanies like DuPont and General Motors, who had
incorporated the multi-divisional form (pp. 380–382).
According to Takai [5], such imitated organizational
behaviors produce a dominant logic in the industry. As
a result, the more the organizations incorporate acertain organizational form, the more it becomes taken-for-granted in the industry. In other words, aproliferation of the dominant logic in the industry
brings companies into the state of cognitive
homogenization. Therefore, isomorphism leads to alack of diversity in corporate strategy (pp. 82–83).
However, this approach cannot explain the
Galapagos syndrome in the Japanese mobile phoneindustry. If the incorporation of international standards
would have led to homogenization, productdevelopment competitions would have never occurred.
With regard to the first position on isomorphism,organizational intuitionalism would have to explain theirrational behavior of organizations, but it was pointed
out that “it does not make sense unless there ispossibility to explain the strategic environmental
adaptation” [7]. In other words, the theoreticalframework for capturing the non-competitive
homogenization of companies should be questioned
and resulting implications could be drawn [8].
The second position, in contrast with the first
position, deals with the creation of a competitive
relationship by isomorphism ([9]; [10]). At a dizzying
pace of change, deciphering the actions of others
becomes difficult and non-compliance of theestablished rules appears. As a result, unexpected
uncertainties and constraints often emerge. In such aprecarious situation, it is important that organizations
construct forms to gain competitive advantage overother organizations ([11]; [12]). For instance, Hwang
and Powell [10] use isomorphism to describe
competitive relationship of experts. In modern society,experts like doctors or lawyers establish a position ofsuperiority with their specialized knowledge andtechniques. Using these skills, experts can gain acompetitive advantage over experts in otherprofessions. Moreover, with specialization, experts ineach profession need to construct their own forms togain a competitive advantage that helps to retain theirposition as experts (pp. 183–195). Thus, the dominantcompetitive relationships can be outlined throughconstructing variety of forms to gain competitive
advantage ([13]; [11]; and [14]).
A contrasting position in the same concept may leadto an initial state of confusion. However,homogenization is not the same as isomorphism ([15];[12]). By revisiting the pioneering theory oforganizational institutionalism by Weber, it can beinferred that the second position is supported byrelevant implications.

In Weber’s idea, it is particularly important adominant mode in the modern, “technical rationality.”
Generally, technical rationality is considered to exclude
values. Therefore, people can act rationally withoutbasing their decisions on individual values whileconsidering the means-end relationships. However,technical rationality does not involve the exclusion ofvalues ([16]; [17]; and [18]).
According to Weber [19], technical rationality is theabsolute criteria of values in which people believe (pp.
63-205). In other words, people believe that the mostrational way to attain their purpose is by using
technical calculations and procedures. Nevertheless,technical rationality does not dictate detailed andspecific actions. It suggests that in order to act
specifically in a situation, the action has to be based oneach practical consideration ([20]). As a result,organizations start acting differently, and thiselucidates the differences in organizational behavior
during isomorphism. In addition, technical rationality isused while interpreting the expected actions of otherpeople or organizations. By translating the actions ofother people in a technically rationale manner, people
develop an individualized form that enables them togain competitive advantage. Applying this rhetoric toorganizations, isomorphism produces an organizational
field that creates competitive relationships [13].
On the basis of the above logic, the Galapagos
syndrome today can also be considered to haveemerged under international standards. By obtaining
international standards, organizations achieve social
legitimacy and can expand their businesses
strategically. If more organizations incorporate
international standards, more business strategies are
created through new forms in those organizations.
Associated with the forms and strategies, a variety ofrelationships such as conflict and cooperation get
established.

3. The Galapagos syndrome in theJapanese mobile phone industry
In Japan, there are three telecom carriers: NTT
DoCoMo, KDDI, and J-Phone. However, during theembryonic era of mobile phones, the industry was run
by a state-owned enterprise, Nippon Telegraph andTelephone Corporation. After privatization in 1985
(the liberalization of telecommunications), otherorganizations that entered the mobile phone industry
were: IDO in 1988, DDI-Cellular in 1989, and J-Phone
and TU-KA in 1994. This period (1979–1990),

witnessed the use of the so-called first generation ofmobile phones.
However, even after the liberalization, NTT (and its
subsidiary, NTT DoCoMo), which has the government
as a major shareholder, maintained its dominantposition and controlled variety of interests related totechnologicaldevelopment.
NTT
DoCoMo'saggressive capital investment was 300 billion yen peryear, and it had superior technology and infrastructure
than competing telecom carriers [21]. Therefore, othertelecom carriers who initially incorporated otherstandards had to incorporate the standards developed
by NTT. NTT standards became the de facto standards
for the first generation mobile phone industry in Japan.
This situation continued in the second generation(1990–circa 1999), and other telecom carriers chose toincorporate a new telecommunications standard called
Personal Digital Cellular (PDC) outlined by NTT
DoCoMo, rather than fighting a losing battle. As aresult, NTT DoCoMo’s telecommunications standard
was considered as the unified second-generation
standard in Japan.
In the later second generation phase, NTT DoCoMo
proceeded to incorporate international standards in its
business for global expansion in the upcoming third
generation of the mobile phones. It proposed a mutual
establishment of the international standards fortelecommunications to European organizations. NTT
DoCoMo provided wireless technology, which had
been successfully demonstrated in Japan, and thesecond generation of the European Union’s unified
telecommunication system, Global System for Mobile
Communications (GSM), used for the base of therelay-switched network. With this proposition, Japanand the European Union announced the world's firsttelecommunications standard for the upcoming third
generation Wideband Code Division Multiple Access(W-CDMA) as the unified telecommunications
standard. However, other countries with different
interests disagreed with Japan’s and the European
Union’s plan to introduce their standard at theinternational level. The United States proposed its own
telecommunication system, Code Division Multiple
Access 2000 (CDMA 2000), as an international
standard. Furthermore, in conjunction with the failureof unifying with the U.S. proposal, China had agreed
with Japan and Europe, but it then proposed its own
telecommunications system during the final phase;
Germany adopted the same strategy of China [21]. In
November 1999, the International Telecommunication
Union (ITU) certified all five proposals as theinternational standards for telecommunications for thethird generation (1999–present). Consequently, WCDMA became an international standard, but not aunified standard as originally intended. Therefore,
NTT DoCoMo failed in its attempt to lead andestablish the international standard that governs theinternational markets, just like its standard thatgoverned the domestic market.
3.1. Differentiating the corporate strategies of thedomestic telecom carriers
However, the establishment of various international
standards in the third generation, resulting from theNTT DoCoMo's overseas advancement, gave choices
to domestic telecom carriers. This was an opportunity
to reverse the dominance in the domestic market, as thetelecom carriers had to incorporate NTT DoCoMo’s
telecommunications standards earlier. This opportunity
implied that it was not necessary to incorporate thesame telecommunications standard as that outlined by
NTT DoCoMo. There were other options related totelecommunications standards that were as competitiveas W-CDMA. Domestic telecom carriers had theopportunity to reverse the dominance of NTT DoCoMo
in the market by incorporating different international
standards.
KDDI, in the second position, obtained CDMA 2000,
which
was
the
international
standardof
telecommunications developed by the United States.
By obtaining CDMA 2000, KDDI was the first
domestic telecom carrier to provide the internationalroaming service (mainly for users traveling to the U.S.)([22]; [23]). In addition, KDDI started a new service
called “Chakuuta” (providing a melody or music on themobile phone) with excellent sound quality and highspeed data communications as advanced features ofCDMA 2000. Furthermore, KDDI began to lead theimplementation of various services such as theintroduction of flat-rate price and price reduction of thetelecommunications service, which has become
possible by incorporating the different international
standards. In fact, these approaches made KDDI’s
market share larger [24].
J-Phone incorporated the W-CDMA as well as the
NTT DoCoMo standards. However, in spite of theincorporation of W-CDMA, it didn’t mean that JPhone remained subservient to NTT DoCoMo. Withworsening finances, J-Phone was not in a position toinvest capital in third generation mobile services, while
NTT DoCoMo and KDDI initiated such capital
investments. By obtaining the international standard

though, J-Phone resolved its financial crisis bycollaborating with a foreign telecommunications
company, Vodafone, which was willing to enter theJapanese market ([25]; [26]). J-Phone succeeded inraising capital for investments and provided a unified
specification mobile phone “converged devices” inJapan and Europe by collaborating with Vodafone [27].
An important point to be noted here concerns theopportunity to expand corporate strategies on the basisof practical considerations, because there were various
international standards available as choices for
expansion. KDDI incorporated the international
standard that differed from NTT DoCoMo and aimed
at differentiating its services. J-Phone found a solution
to its financial crisis by collaborating with Vodafone.
Therefore, KDDI and J-Phone gained influence toreverse the dominant market position of NTT DoCoMo,
which had a huge technological advantage in Japan andgoverned the market with its own telecommunications
standard.
3.2. The Galapagos syndrome as an organizational
field between the telecom carriers, mobile phone
manufacturers, and users
Incorporating
theinternational
standards
differentiated the corporate strategies of local telecom
carriers from their competitors on the basis of practicalconsiderations. Subsequently, it was important to thetelecom carriers to create isomorphism under theobtained international standard against competing
carriers (especially NTT DoCoMo).
In order to achieve the above objective, it wasnecessary to involve the mobile phone manufacturers
and users. The main source of the telecom carriers’
revenue is toll revenues, and therefore, increasing thenumber of users is a key for survival. Accordingly, thetelecom carriers need to provide attractive mobile
phones and services to users. As a result, telecom
carriers have become competitive by involving mobile
phone manufacturers and focusing on the developmentof mobile phones and services with emphasis on
usability.
In this regard, telecom carriers support the mobile
phone manufactures in technology development andprepare their sales incentive plan accordingly. This
relationship offers some individual merits to thetelecom carriers and mobile phone manufacturers.
First, for the telecom carriers, investing in various
mobile phone manufacturers and letting them develop
some attractive mobile phones for users, rather thandoing it themselves, can lead to an increase in thenumber of users and toll revenues. Thus, the telecom
carriers invest and incorporate the technology
developed in collaboration with the mobile phone
manufacturers. Telecom carriers have placed adifferent representative for each mobile phone
manufacturer and have requested the manufacturers tocustomize the product line according to each carrier. In
addition, they have placed product line developers inorder to prevent the disclosure of their information andtechnology to competitors [21].
Second, mobile phone manufacturers need to create
different mobile phones for each telecom carrier. This
offers some merits to the mobile phone manufacturers
because it reduces the enormous cost in thedevelopment and manufacturing of mobile phones,
owing to monetary and technical assistance fromtelecom carriers. In addition to the development andmanufacturing costs being covered partly by thetelecom carrier, the sales incentive plan also works
effectively to absorb the difference between the
manufacturing cost and selling price. Bymanufacturing mobile phones according to therequirements of the telecom carriers, manufacturers
could easily make the profit plan, since the telecom
carriers purchased all mobile phones.
Consequently, an interdependent relationship wasdeveloped between the manufacturer and telecom
carriers and the development race began with thisrelationship. Some mobile phone manufacturers, who
had oriented to the overseas markets, transformed into
strong domestic market-oriented players.
Moreover, the relationship between the telecom
carriers and mobile phone manufacturers benefits not
only each entity but also the users of thosesophisticated mobile phones and services. As a resultof the relationship between the telecom carriers, whoinvest in technology, and mobile phone manufacturers,
who develop and manufacture mobile phones, users
can now obtain a variety of sophisticated mobile
phones at a low price. Users of such sophisticatedmobile phones and services are now seeking additional
functions in mobile phones. The telecom carriers needto meet the demands of these users in order to attract
and retain them, and not lose their market share tocompetitors. Mobile phone manufacturers respond to
this situation by receiving support from the telecom
carriers. While responding to these demands, various
features that were not considered for the primary
purpose of mobile communication, such as electronic
payment, infrared communication, and someentertainment features such as games and video, havebeen included in mobile phones.
As seen above, product development competitions
continue to intensify with mixed, different interests oftelecom carriers, mobile phone manufacturers, andmobile phone users. As a result of this cycle, anorganizational
field
comprisingcompetitive
relationships between telecom carriers, mobile phone
manufacturers, and mobile phone users has developed.
This is called the “Galapagos syndrome” of the recent
mobile phone industry in Japan, which is a uniqueindustry that involves the manufacturing and selling ofvarious advanced mobile phones.

4. Conclusion
Through the lens of organizational institutionalism,
we discussed the logic behind the development of theGalapagos syndrome while focusing on the influenceof technology-related international standards in theJapanese mobile phone industry. The incorporation ofinternational standards led to diversification in thetelecom carriers’ corporate strategies; it emphasized
the role of mobile phone manufacturers and the needsof the users’ in creating individual competitive
advantageous forms. In other words, the Galapagos
syndrome developed because of an organizational fieldcomprising competitive relationships between thetelecom carriers, mobile phone manufacturers, andmobile phone users in Japan.
In this paper, we also discuss two aspects resulting
from the above understanding of the Galapagos
syndrome. First, we explain why the Galapagos
syndrome emerged only in Japan. This was because therelationship between the Japanese telecom carriers,
mobile phone manufacturers, and mobile phone users
differs from those in other countries. Second, theGalapagos syndrome developed because the initiallydomestic market-oriented strategy is now linked to theinternational market. Mobile phone manufacturers,
who previously relied on telecom carriers, have taken
up the challenge to develop their own devices. Mobile
phone users, who are accustomed to sophisticatedmobile phones, are now being targeted by foreign
mobile phone manufacturers producing smartphones.
Considering these developments, telecom carriers aretrying to re-enter the foreign markets with innovative
corporate strategies.

References

[1] M. A. Delmas (2002) The Diffusion ofEnvironmental Management Standards in Europe
and in the United States: An Institutional
Perspective, Policy Sciences, Vol. 35, No.1, pp. 91119.
[2] M. A. Delmas (2003) In Search of ISO: An
Institutional Perspective on the Adoption ofInternational Management Standards, ISBER
Research Paper, University of California, Santa
Barbara.
[3] I. Guler, M. F. Guillén, and J. M. Macpherson(2002) Global Competition, Institutions, and the
Diffusion of Organizational Practices: The
International Spread of ISO 9000 Quality
Certificates, Administrative Science Quarterly, Vol.
47, No. 1, pp. 207-232.
[4] N. Fligstein (1985) The Spread of theMultidivisional Form among Large Firms 19191979, American Sociological Review, Vol. 50, No.
3, pp. 377-391.
[5] A. Takai (2006) The Competition Following the
Dominant Perception and the Formation ofInterfirm Differences: A Case Study of the JapaneseOnline Securities Industry, Journal of business
management, No. 16, pp. 80-94 (in Japanese).
[6] Y. Yasuda and N. Takahashi (2007) Doukeika
Mekanizumu to Seitousei: Keieigakurinkou
DiMaggio
andPowell(1983),
AkamonManagement Review, Vol. 6, No. 9, pp. 425-432 (inJapanese).
[7] T. Numagami (2010) Zissyoutekisenryakukenkyu
No Soshikikan: Nihonkigyou no Zissyoukenkyu wo
Cyuushintoshite, in Keieigakushigakkai (ed.)
KeieigakunoTenkaitoSoshikigainen(Keieigakushigakkai Nennpou Dai Zyuunana
Shyuu), Bunshin-do, pp. 69-88 (in Japanese).
[8] M. Wooten, and A. J. Hoffman (2008)
Organizational Fields: Past, Present and Future, in
R. Greenwood, C. Oliver, K. Sahlin, and R.
Suddaby (eds.) The Sage Handbook of
Organizational Institutionalism, Sage Publication,
pp. 130-148.
[9] M. S. Kraatz and E. J. Zajac (1996) Exploring theLimits of the New Institutionalism: The Causes andConsequences of Illegitimate Organizational
Change, American Sociological Review, Vol. 61,
No. 5, pp. 812-836.
[10] H. Hwang and W. W. Powell (2005) Institutions
and Entrepreneurship, in S. A. Alvarez, R. Agarwal,
andO.
Sorenson(eds.) Handbook of
EntrepreneurshipResearch:
Disciplinary
Perspectives, Springer, pp. 179-210.

[11] W. W. Powell (2000) The Sources of Managerial
Logics, Advances in Strategic Management, Vol.
17, pp. 175-179.
[12] R. Greenwood and R. E. Meyer (2008)
Influencing Ideas: A Celebration of DiMaggio andPowell (1983), Journal of Management Inquiry,Vol. 17, No. 4, pp. 258-264.
[13] P. J. DiMaggio and W. W. Powell (1983) The
Iron Cage Revisited: Institutional Isomorphism andCollective Rationality in Organizational Fields,
American Sociology Review, Vol. 48, No. 1, pp.
147-160.
[14] E. Boxenbaum and S. Jonsson (2008)
Isomorphism, Diffusion and Decoupling, in R.
Greenwood, C. Oliver, K. Sahlin, and R. Suddaby(eds.) The Sage Handbook of Organizational
institutionalism, Sage Publication, pp. 78-98.
[15] R. Greenwood, C. Oliver, K. Sahlin and R.
Suddaby (2008) Introduction, in R. Greenwood, C.
Oliver, K. Sahlin, and R. Suddaby (eds.) The Sage
Handbook of Organizational Institutionalism, Sage
Publication, pp. 1-46.
[16] M. Kanno (1971) On M. Weber's "Rationality" ofModern Society, Japanese sociological review, Vol.
21, No. 4, pp. 2-16 (in Japanese).
[17] S. Clegg (2005) Puritans, Visionaries andSurvivors, Organization Studies, Vol. 26, No. 4, pp.
527-545.
[18] S. Clegg and M. Lounsbury (2009) Weber:Sintering the Iron Cage: Translation, Domination,
and Rationality, in P. S. Adler (ed.) The Oxford
Handbook of Sociology and Organization Studies:Classical Foundations, Oxford University Press, pp.
118-145.
[19] M. Weber (1978) Economy and Society: An
Outline of Interpretive Sociology, Vol. 1, edited by
R. Guenther and W. Claus, University of California
Press.
[20] J. W. Meyer and B. Rowan (1977)
Institutionalized Organizations: Formal Structure as
Myth and Ceremony, American Journal of
Sociology, Vol. 83, No. 2, pp. 340-363.
[21] K. Tachikawa (2006) True Words from the Man
behind DoCoMo, Nikkei Business Publications (inJapanese).
[22] A. Ishikawa (2009) An All-inclusive Guide to the
Mobile Phone Industry, Ver. 1, Toyo Keizai (inJapanese).
[23] InfoCom Research (2008) Zyouhoutsuushin
Handbook 2009, NTT Publishing (in Japanese).
[24] The Nikkei, 2010. 9. 11.
[25] The Nikkei Business Daily, 2001. 2. 28.
[26] The Nikkei, 2003. 10. 2.
[27] The Nikkei Business Daily, 2000. 12. 6.

[2013.3.29 1128]