The Impact of Participation within Formal Standardization on Firm Performance
27 Pages Posted: 26 Apr 2012 Last revised: 12 Feb 2013
Date Written: April 24, 2012
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 1,561 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 within the German Institute for Standardization (DIN). Our results suggest that participation within formal standardization is in general positively related to the firm performance. More detailed analyses within the service industries revealed a striking pattern for technology-developing service providers insofar as for these companies only the combination of patenting and standardizing tends to be positively related to firm performance. Nevertheless, we interpret these results as a first indication for the microeconomic benefit of taking part in standardization.
Keywords: participation, formal standardization, firm performance, Cobb-Douglas
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