Standardization and Competing Consortia: The Trade-Off Between Speed and Compatibility

The consortia movement in the standardization world has led to a fragmentation of standardization processes. This fragmentation is partly of a competitive nature, where rival coalitions support competing technologies. A critique on this movement is that it fragments technologies and multiplies the number of standards. The aim of supporting competing technologies may reflect experimentation with different technological paths. It may also, however, reflect differences in intellectual property rights of firms. From a user’s perspective, the competing technologies may represent spurious differences that increase uncertainty, and create transaction costs. The consortia do have a function for end users: Established industry-wide standard development organizations (SDOs) may be slow to act, bureaucratic, and inflexible to changes in users’ needs and new opportunities; consortia speed up the process of standardization. This paper argues that consortia do indeed tend to correct these coordination failures of the official SDOs. They do so at a cost, however, and because of this, industry-wide SDOs still have a role to play.