Standardization: bridging the gap between economic and social theory

Abstract

This article examines the dynamics of inter- and intra-firm networks in technical standard setting initiatives, and how complex social networks align in these initiatives. Specifically, we argue that in standardization, complex economic and social interactions are blended. In standardization activities, firm behavior and the behavior of individuals within firms is best explained through an integration of social, political, and economic perspectives. In this article we use two main bodies of theory. First, we draw on the economic literature on standard setting and alliance formation. Second we use social network theory to complement economic arguments. In this paper we integrate streams of literature on the creation and diffusion of technical standards from industrial organization economics, strategic management, and innovation economics with recent literature concerning the social construction of technology in order to analyze the process of standard setting. We develop our arguments with the help of three in-depth case studies of standardization initiatives in the telecommunications industry. Two case studies are in the realm of telecommunications infrastructure. The third case study analyzes the standardization of a wireless data link. The cases can be characterized as examples of the successful creation of both de facto and de jure standards.

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