Standard Selection Modes in Dynamic, Complex Industries: Creating Hybrids between Market Selection and Negotiated Selection of Standards

Frank Vercoulen, and Marc van Wegberg

1/01/2005
(Original Publish Date: 1999)

Several sectors within Information and Communication Technology demonstrate a shift from purely market-based selection of standards or purely negotiated selection of standards to hybrid selection processes, where both market competition and negotiation play a role. Negotiated standard setting processes (such as those organised by the ITU) assure interoperability of technical components and services. Private firms, however, increasingly tend to undercut these collective actions. Their innovations jump-start new developments, but also create incompatibilities, lock-in effects, and pockets of market power. A case study on Internet telephony shows how firms, standard setting alliances, and political institutions create a hybrid market-based / negotiated standard setting environment. The interaction between technological and strategic imperatives explains the shift to a hybrid standardisation mode.