|THE FINAL REPORT of a research project titled The Economic Benefits
of Standardization was recently released by DIN, the German institute
for standardization, which commissioned the study in 1997 along
with the German Federal Minister of Economic Affairs and Technology.
Thousands of companies in Germany, Austria, and Switzerland were
surveyed to determine the value of standardization to their corporations,
as well as to the overall economy of the three countries.
Over 4,000 companies in 10 industry sectors were selected at random
and sent a printed questionnaire containing 49 questions. The
response rate was over 17%, rendering 707 completed questionnaires.
The study results below offer an insiders perspective into the
corporate thinking of business leaders in the three nations. This
is, however, only a selection of the full report.
The following items were chosen for their appeal to business readers
across the board, and are extracted only from Part A of the study,
which concentrated on the Benefits of Standards for Business.
Part B of the study covered the Benefits of Standards for the
Economy as a Whole, and is not included in this article.
The full report is available in English on the DIN web site.
Benefits for Business
Strategic Significance of Standardization
Companies are generally unaware of the strategic significance
Corporate decision-makers seem hardly aware of the strategic benefits
of standards. This lack of knowledge on the part of decision-makers
in companies means that the strategic potential of standards is
not fully appreciated.
Meanwhile, the strategic benefits of standards are well understood
by the individuals involved in standards, i.e., the technical
experts who participate in standards development. Also, the survey
showed that companies actively involved in standards work more
frequently reap short- and long-term cost-savings and competitive
benefits than those that do not participate.
Potential Competitive Advantage through Standards
Having influence in the content of a standard is an important
factor in gaining competitive advantage.
Companies are motivated to participate in standardization because
they gain an edge over non-participating companies in terms of insider knowledge.
Early access to information is valuable.
The survey shows that companies can forward their interests in
the standardization process. More than 50% are able to exert a
great to very great influence on the substance of standards, 46%
are able to prevent undesired contents from being included, and
48% are able to get desired contents included.
Cost Reduction through Standardization
Standardization can lead to lower transaction costs in the economy
as a whole, as well as to savings for individual businesses.
The interviews with experts, who were representatives of major
firms as well as of small- and medium-sized enterprises, revealed
that the costs of developing company standards and industry-wide
standards are not easily quantified.
However, the businesses surveyed rate the effects of standardization
on transaction costs as positive, indicating that transaction
costs drop considerably as a result of standards, since they make
information available and they are accessible to all interested
Effects of Standards on the Supplier/Client Relationship
Standards have a positive effect on the buying power of companies.
Standards can help businesses avoid dependence on a single supplier
because the availability of standards opens up the market. The result is a
broader choice for businesses and increased competition among
Companies also have increased confidence in the quality and reliability
of suppliers who use standards. In addition, standards are used
by businesses to exert market pressure on companies further down
the value chain, i.e., their clients. Thus, businesses can use
standards to broaden their potential markets.
Standards and the Formation of Strategic Alliances
It is clear that cooperation between companies in matters of
standardization is advantageous since the resulting synergy can
help reduce costs and increase profits.
Industry-wide standards form a collection of harmonized technical
rules. This coding of knowledge can help businesses cooperate
and create strategic alliances. Respondents rated the effect of
standardization on cooperation with competitors as positive.
Standardization encourages cooperation between businesses at the
same stage in the value chain.
Standards and R&D
Businesses not only reduce the economic risk of their R&D activities
by participating in standardization, but can also lower their
When a company can influence the content of standards to its advantage,
the economic risk is lower. The businesses surveyed responded that R&D
costs increase at a considerably slower rate when they participate
in standardization than if they do not.
The expense of R&D is potentially reduced when the participants in standards work
make their results generally available, and research need not
be duplicated. Businesses must be convinced that the benefits
of sharing the R&D results of other companies are greater than
the risk involved in revealing their own results. //
Copyright © ASTM, 2001