The firms that comprise the prepackaged software industry form a complex system engaged in systems-based competition. This complex system survives and grows because it follows emergent design principles notably articulated by Herbert Simon. In particular, complex systems form stable subsystems -- clusters -- that can be described (in this industry) as a stack.
In this research, we study the evolution of the software industry using data on packaged software development firms over 13 years (1990-2002) across functional markets. We show that by exploiting complementarities based on the emergent architecture, firms can outperform competitors that use complementarities that are based on the espoused architecture/stack, which outperform those that ignore architecture altogether.
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