Technology Standardization in Innovation Management

The profound impact of technology standards—specifications for interfacing or compatibility between different components or products to interact and function synergistically—dictates an understanding of their evolution, processes by which they come to be, and their impact on businesses, industries, and countries. Technology standards span almost every conceivable aspect of the existing business landscape, especially in dynamic industry sectors. Standardization, the processes by which standards emerge and diffuse, is a complex phenomenon encompassing various actors at multiple levels (firm, industry, institutions) that engage in a sociopolitical process of negotiation and collaboration to facilitate the coalescing of multiple stakeholder interests on a chosen standard. Standardization is multifaceted and emerges through various mechanisms, mainly involving one or more of committee-based (de jure) standards, market-based competitive battles (de facto standards), and institutional (government-based) processes, most involving collective action. Market-based processes give prominence to dominant or pioneering firms that introduce technology leveraging the power of large installed base and network externalities, many times tipping the market in favor of the technology format that was first to market. Nonetheless, markets may not tip, and several technology formats may continue to dominate the market, as in the video game market. Standard-setting organizations (SSOs) spearhead convergence around standards by bringing various entities together to derive the specifications for technical compatibility through consensus. The role of governments in the emergence and diffusion of standards varies by the country, region, and nature of the standard. Standards have facilitated innovation at the firm and industry levels and broadly enhanced trade between nations. Intellectual property, specifically standard-essential patents (SEPs), has attracted significant attention due to the strategic and economic benefits that accrue to owners of such patents as well as the challenges they create within SSOs.