Explanatory factors for participation in formal standardisation processes: Empirical evidence at firm level

Abstract

In contrast to the long tradition of empirical research into the innovation activities and R&D collaboration of companies, the issue of standardisation has been analysed mostly in theoretical approaches. This paper presents an empirical analysis of the participation of German companies in formal standards development organisations. It becomes clear that company size has a significant positive effect on the probability of a participation in standardisation. We focus further on two aspects, on R&D as input and export intensity as performance indicator, in order to explain the likelihood to join formal standardisation processes. Both the R&D intensity and the export activities exhibit an inverse U relationship. Obviously, even participating in standardisation processes requires a certain absorptive capacity, but R&D and export intensive companies expect more disadvantages, like unintended knowledge spill-overs, from joining formal standardisation processes and, therefore, stay away. In addition, export activities increase the likelihood to join formal standardisation processes up to a certain level, although companies with very high export shares expect less benefit from joining formal standardisation processes. Finally, some policy conclusions are derived.

Keywords:

• Standards
• R&D
• Export
• Policy implications
• Microeconometric model

Acknowledgements

The author is grateful to the German Institute for Standardization (DIN) and the German Federal Ministry for Economic Affairs and Labour for financial support. The author also thanks valuable comments by the editorial board and by a reviewer of ‘Economics of Innovation and New Technology’.

Notes

Nevertheless, both export activities and R&D activities can be treated as exogenous variables, because standardisation processes are so complex that they have no direct impact on export success and R&D performance.

In the case of privately owned de facto standards caused by network externalities, the R&D decision will change towards a socially ineffective speed-up of R&D (cf. Kristiansen, 1998).

Therefore, Antonelli (1994) goes even further and characterises standards as non-pure private goods.

See Röller et al. (1998) for a review of the various incentives. The other two incentives to join research joint ventures like product complementarity and the similarity of firm size are not discussed here, because standardisation focuses always on one technology or product. Röller et al. (1998) find no clear incidence that research joint ventures are more often formed among companies producing complementary products. Finally, the role of firm size is closely connected with cost and spill-over aspects, which will be discussed below.

Even the treatment of trade secrets represents another source for uncontrollable knowledge spill-overs.

However, one might also argue that companies join standardisation activities in order to benefit from the tacit knowledge of the involved experts, to whom they have in general no direct access, in contrast to the codified knowledge disclosed in the patent applications of their competitors.

This argument was brought up by Cohen and Levinthal (1989) who argue that firms need an absorptive capacity in order to exploit external knowledge, and this capacity is built up mainly by own R&D activities. Regarding the importance of absorptive capacity in traditional research joint ventures see Kamien and Zang (2000).

This variable is based on the self-assessment of the companies.

In the Probit model, it is simply assumed that the variable in question—in this case the decision about co-operation in a standardisation committee—can only assume two values: no or 0 and yes or 1.

In order to integrate the sectoral degree of innovation, in the other model, the patent intensities of the sectors were included as dummies. However, no significant sector impact was found.

As companies with lower labour productivity are also more likely to join standardisation processes, there is also the chance that these companies benefit from the know-how transfer during a standardisation process.

Additional information

Notes on contributors

Knut Blind

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