Too many or too few Standards Setters? Evidence from the Performance of Firms engaged in Standardization
Abstract
Theoretical models suggest that standardisation activities in the market may be too high or too low with respect to the market optimum. This paper investigates the association of standardisation engagement with firms’performance as indirect evidence of a sub-optimal level of market standardisation activities. Anecdotal evidence has it that firms can benefit from engagement in standardisation activities, but large quantitative studies on this topic are rather scarce. Based on a large innovation survey, this paper implements matching models to compare outcomes of firms with similar features but different standardisation activities. The outcomes of interest are several measures of innovation and growth. Standardisers and non-standardisers are matched onto a rich set of control variables. Firms engaged in standardisation have better innovation performance than firms with no such activities. However, the results for the performance measures are rather mixed, showing no association or negative association with labour productivity measures. Heteroscedasticity-based instruments mitigate possible endogeneity issues. These results can be interpreted as indirect evidence of low standardisation activity in the market, possibly due to long payback periods and appropriability issues of the standardisation investment.
