Technological Choice In Voluntary Standards Committees: An Empirical Analysis

Vendors frequently compete to have their technology adopted as part of a voluntary consensus standard. In this paper we report the results of an empirical study of the factors that influence the choice of technologies in voluntary technical standards committees.

Participation in standards committees is viewed as an aspect of the product development process of corporations involved in markets where network externalities are present. The factors hypothesized to affect the technology decision are: the market power of the coalition sponsoring the technology, the installed base of the products containing the technology, the size of the firms that make up the coalition, the promotional activities of the sponsors (such as technical contributions submitted), the perceived superiority of the technology, and the political skills of the coalition.

These hypotheses were tested by collecting data concerning specific technical decisions that were made in several standards committees in the area of computer communications hardware. Two sided t-tests were used to test the hypotheses, and logit regression was used to infer the importance of each factor in predicting adoption or non-adoption of the technology. A factor analysis was also performed to gain further insight into the data.

The results suggest that the size of the firms in the coalition supporting a technology and the extent to which they support their position through written contributions are significant determinants of technological choice in the standards decisions studied. The market share of the firms in the coalition was found to be significant only for the buyers of compatible products, i.e., the monopsony power was significant, not the monopoly power. In addition, the technologies whose sponsors weighted market factors more highly than technical factors were more likely to be adopted in the standards decision studied. The proponents of both the adopted and non-adopted technologies were found to have equal belief in the overall technical superiority of their technical alternative, even after the decision. The installed base of a technology and process skills were not found to be significant predictors of the committee outcome.