The American System: A Schumpeterian History of Standardization (Part I)

Abstract

Standards can create intra-firm and inter-firm efficiencies. They facilitate economies of scale in manufacturing and promote interoperability between a variety of complementary products. In the final analysis, standards provide means for promoting stability over uncertainty, and for managing the complexities of industrial production. The creation and adoption of de facto standards - and the discarding of old standards for newer standards - illustrate perfectly the dynamic characteristics of the perennial gale of Schumpeterian creative destruction. This essay first traces the history of de facto standards within firms in the beginning decades of the American industrial revolution. It then looks at examples of de facto standards spreading beyond their points of origin through market mechanisms and ad hoc relationships. Finally, it discusses the status of de facto standards in the global networks of firms that are active in the Third Industrial Revolution that emerged in the latter decades of the twentieth century.