Abstract
Several studies highlight the economic benefits of standards, while the benefit of taking part in standardization remains a rather unexplored mystery to date. In theory, standard setters not only benefit from the possibility to monitor and shape the development of standards but also access a wide range of knowledge sources in the standards committee. Therefore, we investigate how the participation within formal standardization is related to the performance of 1561 German companies. A Cobb-Douglas production function is estimated in order to use the Solow-residuals as indicator for the firm performance. Participation within formal standardization is measured by the number of committee seats at the German Institute for Standardization (DIN). Our results suggest that participation within formal standardization is positively related to firm performance in the manufacturing sector. In the service sector, no clear evidence for such a relationship is found. This finding also holds true when we test if a service providers’ intellectual property is well protected through patents.
Highlights
Several studies suggest positive macro- (Blind and Jungmittag 2008; DTI 2005; Cebr 2015; Jungmittag et al 1999) and microeconomic benefits of standards in general
Our results suggest that participation within formal standardization is positively related to firm performance in the manufacturing sector
While the economic benefit of standards seems to be widely acknowledged within scientific literature, the benefit of taking part in standardization remains a rather unexplored mystery to date
Summary
Several studies suggest positive macro- (Blind and Jungmittag 2008; DTI 2005; Cebr 2015; Jungmittag et al 1999) and microeconomic benefits (for an extensive summary see Swann 2010) of standards in general. Standard setters may use standards for the promotion of the diffusion of their innovative products or services so that participation within standardization constitutes a means of marketing They may gain competitive advantages by accessing the specifications of upcoming standards prior to their publication and, therewith, prior to competitors not involved in standardization. The so-called technologyusing and technology-developing service industries are distinguished in order to shed as much light as possible on the effects of participation within formal standardization on firm performance. The section briefly reviews the literature on the relation between participation within formal standardization and firm performance, which is the major issue of this analysis to be covered.
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