How firms support formal standardization: The role of alliance portfolio and internal technological diversity

Abstract

Influencing formal standard setting through supporting the technical solutions advocated by leading firms is crucial for firms to make their technology become a part of the ecosystem of the dominant standards and to ensure market acceptance. Nevertheless, the problem is that potential supporters do not know how to improve their ability to support formal standardization. This problem is relevant because supporters are the majority of firms in technology ecosystems, failing to contribute to the standard may render firms irrelevant in future markets, and a low degree of support slows down standardization processes and hence technological innovation. Using the knowledge-based view of the firm, we hypothesize that the diversity of a firm's external alliance portfolio and internal technology base affects the firm's capability of supporting standardization. An analysis of panel data of 186 vehicle manufacturers in the Chinese automobile industry from 1999 to 2020 shows that the alliance portfolio diversity (APD) has an inverted U-shaped relationship with firms' ability to support formal standardization. A firm enjoys an advantage in supporting standardization when it maintains a technology base with highly related diversity but suffers a disadvantage when it is highly diversified across unrelated domains. Further, related and unrelated technological diversity steepens the slopes of the inverted U-shape relationship between alliance portfolio diversity and the ability to support standardization. This study extends standardization literature, adding new insight of knowledge-driven to the research on the antecedents of the firm capability to influence standardization.