Voluntary Standard Setting Research Articles

Escalation of Governance: Effects of Voluntary Standardization on Organizations, Markets and Standards in Swiss Fair Trade

Voluntary standards are a ubiquitous phenomenon in modern society that has recently started to attract sociologists’ profound interest. This paper concentrates on formal standardization over the long term and seeks to understand its effects on the coordination of an organizational field. Using an institutional approach we see standards as a form of governance that can be analytically distinguished from other modes of coordination, such as markets and hierarchical organizations. To empirically ground our understanding of formal standards’ consequences on field-level governance, we conducted a case study of the historical development of the Swiss fair trade field since the 1970s. Evidence used in this case study is drawn from 28 expert interviews, documentation and fair trade standard documents. While a formal set of voluntary standards was absent in its early development, in 1992 fair trade organizations started to use written standards as a means of achieving their objectives. Paradoxically, the introduction of a rational standardization system has led to escalating governance structures in the field. In the long run the launch of formal standards has caused more organizations, more markets, and even more standards. The use of standards as a means of creating differentiation instead of generating uniformity is thereby seen as the main reason for increased coordination demands. As a consequence, this article highlights standards’ potential to boost additional governance efforts and directs attention to the mutual enforcement of distinct modes of coordination.

Voluntary Standard Setting: Drivers and Consequences

This essay is about the drivers and consequences of changes in the voluntary consensus standard-setting (VCSS) system, the part of the contemporary global governance system that most of us encounter the most frequently, but that we rarely even notice. The VCSS system is made up of thousands of “technical committees” in which hundreds of thousands of experts (most of them engineers) create standards that constantly affect our lives—from the unique number that identifies this journal, to the electronic codes that translated my keystrokes into the words you are reading at the moment, to the rules governing the supply chain for the “fair trade” coffee you may have in a mug by your side. Historian Mark Mazower calls the International Organization for Standardization (ISO), the organization that stands at the apex of the largest network of groups that sponsor these technical committees, “perhaps the most influential private organization in the contemporary world, with a vast and largely invisible influence over most aspects of how we live, from the shape of our household appliances to the colors and smells that surround us.”

Standardization and the Cost of Using Knowledge

Voluntary standard setting organizations (SSOs) are an important catalyst for innovation in the information and communication technology (ICT) industries. We explore mechanisms that link knowledge use in the ICT sector to specific activities performed by SSOs. In particular, we argue that SSOs reduce the cost of knowledge access in two critical ways. First, SSOs reduce the transactions costs associated with using knowledge protected by intellectual property rights. Second, SSOs incur the fixed cost of discovering and defining a shared interface for key innovation inputs, so firms can rely on common standards as opposed to investing in their own absorptive capacity. We develop a formal model of these ideas and test it using data that link ICT standards to patents on the underlying technology. Our main findings show that the increase in post-standard patent citations is largest for firms with greater ex ante costs of accessing the underlying knowledge.

Standard Setting Committees: Consensus Governance for Shared Technology Platforms

Voluntary Standard Setting Organizations (SSOs) use a consensus process to create new compatibility standards. Practitioners have suggested that SSOs are increasingly politicized and perhaps incapable of producing timely standards. This article develops a simple model of standard setting committees and tests its predictions using data from the Internet Engineering Task Force, an SSO that produces many of the standards used to run the Internet. The results show that an observed slowdown in standards production between 1993 and 2003 can be linked to distributional conflicts created by the rapid commercialization of the Internet. (JEL C78, L15, L86)

A NAASTy alternative to RAND pricing commitments

Voluntary standard setting organizations (SSOs) typically require participants to disclose their patents during the standard-setting process, and will endorse a standard only if patent holders commit to license them on reasonable and non-discriminatory or RAND terms. This policy is unworkable—the RAND standard is ambiguous and thus extremely hard to adjudicate. As an alternative, a policy of Non-Assertion After Specified Time, or NAAST pricing, is proposed. Under NAAST, technology vendors commit not to assert their patent after some previous specified time, but would be free to collect royalties as they wish up until that point. Under this proposal, technology producers would be compensated, vendors would have quick and eventually free access to standards and a large element of uncertainty due to litigation would be eliminated.

Assessing the Link Between Standards and Patents

Some policymakers, courts, and academics have expressed concerns that when a firm’s patents are incorporated into a standard, the patents gain importance and can bestow on the patent holder market power that can be abused when the standard is commercialized. This paper extends the existing literature on the effect that standards can have on patents. This analysis has two aims: first, to better understand how an SSO might confer importance on included patents and second, to move closer to an empirical understanding of the impact of a standard on included patents. The authors create a dataset of patents named to voluntary standard setting organizations, as well as the patent pools that sometimes develop around such standards. The authors rely on proxies to capture a patent’s importance or value.

Assessing the Link between Standard Setting and Market Power

Some policymakers, courts, and academics have expressed concerns that when a firm’s patents are incorporated into a standard, the inclusion can create market power for the patent holders that can then be abused when the standard is commercialized. This paper offers a critical assessment of that proposition. Our analysis has two aims: first, to better understand exactly how an SSO might confer market power on included patents and second, to move closer to an empirical understanding of the market power proposition. We create a dataset of patents named to voluntary standard setting organizations, as well as the patent pools that sometimes develop around such standards, with the goal of providing some suggestive measurements of the effect standardization might have on market power. As it is extremely difficult to measure market power directly, we rely on proxies capturing a patent’s importance or value. We find that some SSOs do appear to enhance some included patents’ importance, but most do not. Moreover, the effects change over time, across standards, and across patents. Thus, we conclude that, on average, inclusion in an SSO tends to enhance a patent’s value, but for any particular patent named to a particular standard a positive effect is not inevitable. Instead, a broad range of effects is possible, some even negative but most equal to zero.

Competing on Standards? Entrepreneurship, Intellectual Property, and Platform Technologies

Entrepreneurs often rely on intellectual property (IP) to earn a return on their innovations, and also compatibility standards, which allow them to supply specialized components for a shared technology platform. This paper compares the IP strategies of small entrepreneurs and large incumbents that disclose patents at 13 voluntary standard setting organizations (SSOs). These patents have a relatively high litigation rate. For small private firms, the probability of filing a lawsuit increases after disclosure to the SSO. For large public firms, the filing rate is unchanged. Although forward citations increase after disclosure for all firms, the size of this effect is the same for entrepreneurs and incumbents. These results suggest that standards increase the difference between large and small firms’ incentives to litigate, rather than the relative value of their patents. We conclude that because specialized technology providers cannot seek rents in complementary markets, they defend IP more aggressively once it has been incorporated into an open platform.

Network Operators' Requirements and the Structure of Telecommunications Standards

This article uses citations to patents disclosed in the standard setting process to measure the technological significance of voluntary standard setting organizations (SSOs). We find that SSO patents are outliers in several dimensions and importantly, are cited far more frequently than a set of control patents. More surprisingly, we find that SSO patents receive citations for a much longer period of time. Furthermore, we find a significant correlation between citation and the disclosure of a patent to an SSO, which may imply a marginal impact of disclosure. These results provide the first empirical look at patents disclosed to SSO’s, and show that these organizations both select important technologies and play a role in establishing their significance.

Standard Setting Committees: Consensus Governance for Shared Technology Platforms

Voluntary Standard Setting Organizations (SSOs) use a consensus process to create new compatibility standards. Practitioners have suggested that SSOs are increasingly politicized and perhaps incapable of producing timely standards. This paper develops a simple model of standard setting committees and tests its predictions using data from the Internet Engineering Task Force, an SSO that produces many of the standards used to run the Internet. The results show that an observed slowdown in standards production between 1993 and 2003 can be linked to distributional conflicts created by the rapid commercialization of the Internet.

Patents and the Performance of Voluntary Standard Setting Organizations

This paper measures the technological significance of voluntary standard setting organizations (SSOs) by examining citations to patents disclosed in the standard setting process. We find that SSO patents are cited far more frequently than a set of control patents, and that SSO patents receive citations for a much longer period of time. Furthermore, we find a significant correlation between citation and the disclosure of a patent to an SSO, which may imply a marginal impact of disclosure. These results provide the first empirical look at patents disclosed to SSOs, and show that these organizations not only select important technologies, but may also play a role in establishing their significance.

Regulatory requirements for testing the donor blood supply

Abstract Over the last 30 years, there have been tremendous advances made in protecting the nation's blood supply from dangerous pathogens. From serologic testing to antigen detection to the application of nucleic acid testing, developments in technology have contributed to the reduction in the risk of transfusion transmission of hepatitis, human immunodeficiency virus (HIV), and West Nile virus. The Centers of Biologics Research of the Food and Drug Administration (FDA) has legal enforcement power and is responsible for oversight of the collection and manufacture of blood and blood products. The American Association of Blood Banks is a major voluntary standard setting organization that publishes standards, some going beyond the requirements of the FDA, to ensure blood safety. This report will highlight the major topics in blood safety and the regulatory and quality requirements that shape transfusion medicine.

Private Voluntary Standard-Setting, the International Organization for Standardization, and International Environmental Lawmaking

Private Voluntary Standard-Setting, the International Organization for Standardization, and International Environmental Lawmaking

QUALITY STANDARDS FOR CHRISTMAS TREES: HARMFUL OR HELPFUL?

It is more important than ever to produce a quality Christmas tree because of increasing competition in the Christmas tree market. Grade standards are intended to reflect quality, as defined by the consumer, to the grower. The USDA revised a set of voluntary standards for Christmas trees effective October 30, 1989. The existence of different grade standards cause the existence of several prices that correspond to each grade. The price differentials among grades should reflect the quality or desired consumer attribute. Therefore, a description of a grade that is not reflective of that desired by the consumer can lead to missallocation of resources by producers resulting in economic losses. The new USDA standards did not include consumer opinion information into the new standards, therefore, we feel these standards are more applicable to producer-wholesale transactions, and not that of the producer-consumer. It was found that over 75% of surveyed growers in Georgia sold almost 80% of their trees as choose and cut, not wholesale. Consumer demand will drive the Christmas tree market and, therefore, consumer preferences need to be incorporated into the grade standards.