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Too many or too few Standards Setters? Evidence from the Performance of Firms engaged in Standardization

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Abstract

Theoretical models suggest that standardisation activities in the market may be too high or too low with respect to the market optimum. This paper investigates the association of standardisation engagement with firms’ performance as indirect evidence of a sub-optimal level of market standardisation activities. Anecdotal evidence has it that firms can benefit from engagement in standardisation activities, but large quantitative studies on this topic are rather scarce. Based on a large innovation survey, this paper implements matching models to compare outcomes of firms with similar features but different standardisation activities. The outcomes of interest are several measures of innovation and growth. Standardisers and non-standardisers are matched onto a rich set of control variables. Firms engaged in standardisation have better innovation performance than firms with no such activities. However, the results for the performance measures are rather mixed, showing no association or negative association with labour productivity measures. Heteroscedasticity-based instruments mitigate possible endogeneity issues. These results can be interpreted as indirect evidence of low standardisation activity in the market, possibly due to long payback periods and appropriability issues of the standardisation investment.

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Notes

  1. A firm that seeks to “identify, analyse, and respond to the strengths, weakness, and strategies of its current and potential competitors” (Zhang et al., 2020, p.883).

  2. A “firm’s ability and will to acquire new technologies and use them in new product development” (Zhang et al., 2020, p.883).

  3. According to ETSI (2019), “‘essential’ as applied to IPR means that it is not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of the art generally available at the time of standardisation, to make, sell, lease, otherwise dispose of, repair, use or operate Equipment or Methods which comply with a Standard without infringing that IPR”.

  4. See e.g. Jakobs (2020) for a discussion of this aspect.

  5. Luxembourgish firms participate in international standardisation through ILNAS, which represents Luxembourg within international standardisation organisations. ILNAS represents Luxembourg in CEN (European Committee for Standardization), CENELEC (European Committee for Electrotechnical Standardization), ISO (International Organization for Standardization) and IEC (International Electrotechnical Commission). As firms can directly contribute to ETSI (European Telecommunications Standards Institute) and ITU (International Telecommunication Union) without the coordination by ILNAS, the analysis also considers Luxemburgish firms participating in these standards developing organisations.

  6. In the early research stages, some efforts were made to separately investigate internal and external standardisation (Riillo, 2013b). However, the results were not stable because of the low number of firms engaged in external standardisation.

  7. Breusch-Pagan test suggests that unweighted data also meet the heteroscedasticity assumption. Note that heteroscedasticity arises naturally in a setting with endogenous binary regressor and in the case of weighted survey data. The not rejection of the Kleibergen-Paap test suggests that innovation measures may be under-identified, and the rejection of the Hansen J-statistic raises doubt about the instruments’ validity in case of added value growth and Added value per emp. growth.

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Acknowledgements

The authors appreciate the feedback of the participants at 17th EURAS Annual Standardisation Conference – Boosting European Competitiveness pp. 325–340, Brussels, Belgium 24–26 June 2013; the workshop “innovation, patents and standards” Tours, France 19/11/2013; at EURAM conference, Valencia, Spain 4-7/06/2014 and in Proceeding 19th EURAS conference 8–10 September 2014, Beograd, Serbia; “ENTerprise REsearch InNOVAtion” (ENTRENOVA), Rovinj, Croatia, 8–9.09.2016; 25th EURAS Conference,Berlin, Germany; 6–8/09/2021. The authors would also like to thank anonymous referees and editors for their careful and constructive reviews. Cesare Riillo conducted the research for this paper when employed by STATEC Research A.s.b.l. ateh research department of STATEC, the National Statistical Institute of Luxembourg. Cesare A.F. Riillo gratefully acknowledges the support of the Observatoire de la Compétitivit, Ministére de l’Economie, DG Compétitivité, Luxembourg, and STATEC, the National Statistical Institute of Luxembourg. Views and opinions expressed in this article are those of the author and do not reflect those of STATEC or STATEC Research and funding partners.

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  1. RWTH Aachen University, Aachen, Germany

    Kai Jakobs

  2. STATEC Research a.s.b.l., STATEC -National Institute of Statistical and Economic Studies of Luxembourg-, Luxembourg, Luxembourg

    Cesare A.F. Riillo

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CR is responsible for study design, data collection, econometric analysis, figures, literature search, and writing; KJ for literature search, and writing.

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Riillo, C.A., Jakobs, K. Too many or too few Standards Setters? Evidence from the Performance of Firms engaged in Standardization. J Technol Transf 48, 2106–2131 (2023). https://doi.org/10.1007/s10961-022-09951-z

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