The Role of SMEs and Startups in Standards Development

Abstract

Small and medium-sized enterprises (SMEs) and startups are widely recognized as playing an important role in the global economy. They are traditionally known to be responsible for generating the majority of jobs and disruptive innovation. To achieve continued economic growth, SMEs and startups must be able to meaningfully contribute to the development of new technologies that will advance technology standards that bring much sought after network effects. Global standards development, however, involves hundreds of companies, and often requires heavy and upfront investment in research and development, as well as the cost of attendance in standards groups. This has led some policy makers and commentators to express concern about whether SMEs and startups are meaningfully able to contribute to and leverage the standard-setting process in traditional standards development organizations. This paper addresses this issue empirically and concludes SMEs and startups have been able to participate in and contribute to leading technology standards, although there is a continued need to promote and encourage such activities. By focusing on information from a rich dataset of the 3rd Generation Partnership Project (3GPP), that is responsible for developing global second, third, and fourth generation (2G, 3G, 4G) cellular standards, this paper estimates the participation and technical contribution by 3GPP members. The empirical findings establish that although SMEs and startups contribute up to 15% of the overall participation in the creation of 3GPP standards, the likelihood that such technical contributions will be accepted is similar to contributions from non-SMEs or non-startups. This result indicates that the rules governing 3GPP and similar open, voluntary SSOs afford effective means for active participation of SMEs and startups in the important process of standards development. Therefore, policy makers should encourage efforts by SSOs to adhere to traditional concepts of open and balanced voluntary participation for all standards development stakeholders, and also increased SME and startup participation in - and contribution to - standards efforts, in the knowledge that these entities will be in a position to earn fair returns on their investments to develop technologies and contribute them to standards, which may then be successfully implemented.

Keywords: Standards, SSOs, SMEs, Startups, European Standardisation

JEL Classification: L44, L52, L88