Platform Paradox

: Porter (1998) noted that with continuing global homogenization in companies’ condition to obtain resources and gain access to markets, there is an increasing need to create a local, competitive advantage in industrial clusters. He called the importance of location in this age of globalization a “location paradox.” Similarly, when industry-wide platforms appear and global development technologies are standardized, companies need to accumulate unique technical capabilities to differentiate themselves. In this paper, this phenomenon is known as the “platform paradox,” and is verified by a case of videogame industry. The utilization of development platforms (game engines and middleware) standard within this industry during the 2000s, causing global homogenization in development technology. Videogame development companies’ industrial cluster located in Japan’s city of Fukuoka cooperated in technological matters in an effort to differentiate themselves with their technological sophistication in using platforms. By aggressively sharing knowledge to optimally utilize hardware and development tools, these companies have created a store of unique


Platform Paradox
Takeaki WADA, a) Takeyasu ICHIKOHJI, b) and Fumihiko IKUINE c) Abstract: Porter (1998) noted that with continuing global homogenization in companies' condition to obtain resources and gain access to markets, there is an increasing need to create a local, competitive advantage in industrial clusters. He called the importance of location in this age of globalization a "location paradox." Similarly, when industry-wide platforms appear and global development technologies are standardized, companies need to accumulate unique technical capabilities to differentiate themselves. In this paper, this phenomenon is known as the "platform paradox," and is verified by a case of videogame industry. The utilization of development platforms (game engines and middleware) standard within this industry during the 2000s, causing global homogenization in development technology. Videogame development companies' industrial cluster located in Japan's city of Fukuoka cooperated in technological matters in an effort to differentiate themselves with their technological sophistication in using platforms. By aggressively sharing knowledge to optimally utilize hardware and development tools, these companies have created a store of unique

Introduction
Abundant transportation infrastructure and advances in telecommunications technology mean that the advantages of availability of production resources and access to markets are unchanged irrespective of a company's location. Agricultural product and large home appliance companies create large-scale production centers in regions with low labor costs, land prices, and taxes, and ship products to global markets from there. However, this does not necessarily mean that all industries in developed countries shift operations overseas. For example, Silicon Valley's high-tech industry in the US and automotive industry in Japan have kept their high levels of competitiveness. In these industries, tight communications gained by the geographical proximity of individuals, companies, and government organizations that are the prime movers of the industry have been a source of competitive advantage. Porter (1998) coined the term "location paradox" to describe the importance of local competitiveness in the global era, as competitive advantage within industrial clusters became an important differentiator.
In this paper, focus is on platforms as having an impact similar to the "global homogenization of certain competitive factors in heightening the importance of competitive advantages in industrial clusters." 1 Taking a cue from Porter (1998) Intel's CPUs (Gawer & Cusumano, 2002). In doing so, it is possible to create a product by simply assembling third-party parts, the result being a highly competitive finished goods industry. In the smartphone applications arena, Apple created the App Store as a run on computers (Cusumano, 2004;Gawer & Cusumano, 2002); within services, electronic transaction services integrate various shipping, settlement, and delivery services (Kokuryo, 1999). Recent examples of platforms include Internet services that integrate SNS, e-mail services, and web games. 2 Under the open innovation, companies do not need to own the entire technology for products and services, because they can use the third-party technologies as required and appropriately combine them (Chesbrough, 2003). sales platform, making it possible for individuals and small development shops to prosper, as well as sell applications. As a result of many developers selling on that platform, it becomes extraordinarily difficult to get attention.
The establishment of platforms and decreasing gap in certain areas of competence among companies stimulates them to build competence in other areas. For example, Christensen (2006) highlights that to gain core competencies in open innovation, companies have to accumulate internal technologies that cannot be imitated by others, while additionally evaluating outside technologies and incorporating them as required. Fujimoto (2004), as well, noted that if product architecture is open and modular, and a company simply assembles modular components to manufacture products, their only way to survive is to win a price war by their cost advantage.
To get a high added value, companies are required to master the module use, such as organizational capability, product planning, and solution providing ability to respond to customer needs using appropriate modular components.
Local networks within industrial clusters are important in combining technologies from various companies in open innovation (Simard & West, 2006). Just as with the location paradox proposed by Porter (1998), among solutions to the platform paradox, differentiation from companies in other regions can be effectively achieved by developing and consolidating regional knowledge within an industrial cluster.
In this paper, it is confirmed that as technological differences between companies shrank with the diffusion of development platforms in the videogame industry, there is an accompanying demand for technology to use these platforms. In addition, we test the effectiveness of accumulating knowledge within industrial clusters due to this phenomenon, through the case study of a videogame industrial cluster located in Fukuoka City.

Development Platform Diffusion in the Videogame Industry
According to Ikuine (2000), who studied development processes in Japan's videogame software development industry from the 1980s to 2000, there was a demand for overall integration under the concepts of each videogame software title, and therefore each title was developed under the producer who coordinated and optimized the overall process.
In contrast to the integral development model, the concept of a game engine arouse out of "Doom" and other PC-based first-person shooter games (i.e., games where the screen shows a peripheral view from the player's perspective, where the player shoots at enemies with guns) in the mid-1990s. Soon companies that offered these game engines would emerge (Gregory, 2009).
A game engine is software that executes a game and provides a set of tools to create data used within the game software, as well as workflows to determine how the game will be created. It is "a comprehensive solution for game development" (Oomae, 2010).
Companies can shorten development periods and reduce development costs by developing high-performance game engines and using it across their titles. They can sell it to third parties to achieve further economies of scale in the game engine development.
During the 2000s, the development load in the videogame industry increased along with the enhancement of hardware performance. An awareness of the importance of game engines arose as a response to that trend (Oomae, 2010). 3 Companies developing many titles created their own game engines, and were able to recover the cost by internal use. In contrast, small-and medium-sized companies select the external game engines to keep development costs low. As a result, the best game engines began to be used throughout companies' development organizations.
In addition to the game engine, "programs that provide specific functions within game development" such as music or video are a form of middleware (Oomae, 2010). Along with game engines being broadly used across companies, middleware became important for firms as well.
As a result, companies were able to develop their own games by Game development companies can heighten their competitiveness by selecting and using optimal game engines and middleware, though any global competitor can make similar choices. Thus, further competence in using game engines and middleware is required, whereby "platform paradox" occurs.

Competitiveness of a Fukuoka City Industry Cluster
In this section, the effectiveness of accumulating knowledge in industrial clusters is tested as a solution to the platform paradox in the videogame industry through the example of the videogame Within the Fukuoka City industrial cluster, companies must use globally used third-party platforms to increase development efficiency, but these companies will not be successful in using these platforms if they do not create competencies in sharing knowledge creation with other companies in the industrial cluster. This is what causes the phenomenon of the platform paradox.

Discussion
In this paper, it is confirmed that global homogenization caused by platforms increased the importance of creating competitive advantage in industrial clusters, similar to the location paradox argument proposed by Porter (1998).
However, mechanisms that demonstrate the competitive advantage of industrial clusters as confirmed in our case study differ from those discussed by Porter (1998).
Factors used to explain industrial agglomeration are the minimization of labor and transportation costs, as well as internal and external economies (Inamizu & Wakabayashi, 2013 If one were to explain Saxenian's points in strategic terms critical of Porter, it would likely be placed in the resource-based view. Saxenian states that the scope of external economies comprises intercorporate information and mutual learning, but that interactions going beyond these corporate frameworks blur the line between internal and external economies. If one was to use the concept of the transfirm organization discussed by Takahashi (2000Takahashi ( , 2014, it is regionally created, and the organizational capabilities accumulated within it become the source of their competitiveness.
In this paper's example of Fukuoka's videogame industrial cluster, CyberConnect2, a company aggressively disseminating information via information exchange forums, answered that their reason for doing these information exchanges was that "videogame software succeeds or fails based on the merits of the software's ideas and ability to entertain, and digital tools and programming technologies are nothing more than tools; winning in that area is not our objective." Based on this philosophy, the City of Fukuoka has transfirm organizations that transcend companies, and are increasing competitiveness through the accumulation of technological knowledge.
In addition to this accumulation of technological knowledge, sufficient capital and human resources make such advances possible through the power of a single company's organization. The advantage of Fukuoka's videogame industrial cluster in relation to large companies is the abundance of know-how arising from the variety of software it develops.
According to Fujimoto (2012), the evolution of organizational capabilities goes through three phases of variation, selection, and retention, necessitating diversity in organizations to induce variation.
Multiple companies within an industrial cluster develop products with each product's strategy and culture, which in turn leads to diversity of know-how. Companies then share this know-how in technology sharing forums, thus establishing a system for selecting and retaining superior technologies. This could be considered a superior system for creating innovation.