The grand coalition versus competing coalitions: trade-offs in how to standardize

Abstract

The standardization landscape in the information and communication technology industries is fragmented in many different standardization bodies, industry consortia, and alliances. The existence of competing standardization coalitions may prevent coordination on a common standard. There is a lot of debate among practitioners and analysts about whether this fragmentation creates a coordination failure. Competition between standardization coalitions may harm compatibility. It also helps to mitigate coordination failures that occur within industry-wide standardization bodies and coalitions. The negotiation process in a coalition can cause coordination failures of its own. Technology sponsors may insist on their preferred technology being accepted as standard. Their intransigence slows down the selection of a standard. Introducing competition between coalitions can speed up negotiations within them, and thus help to overcome this infra-committee coordination failure. A game theoretic model formalises this view. It explores the effect of competition between coalitions on the speed of decision-making and standardization. It finds that a fear for incompatibility may hold back competing committees to the point that a grand coalition may actually adopt a standard faster than competing committees would. This result debunks sweeping statements that industry-wide coalitions or standards bodies are necessarily slow compared to strategic alliances and consortia.