Standard Setting Organizations, Information Flows and Business Strategies: An Empirical Investigation

The paper investigates the link between standards, business strategy and innovation, based upon a factor analysis of the stated ‘context’ for innovation contained in the 2012-2014 UK Innovation Survey (UKIS). The analysis reveals a distinction between pro-active ‘entrepreneurial’ strategies and reactive and ‘defensive’ strategies, as well as firms, although regarded in the survey as innovation ‘active’ have no clear innovation based objective. We combine this classification with sectoral indicators of the significance of standards to investigate how firms deliver these strategies. We find that, in addition to the important role played by the type of innovation strategy, standards have a significant impact not only on the extensive margin of R&D expenditures, but also on the likelihood that firms will invest in related complementary investments, notably in training and design. We test these propositions with a specific UKIS question on the value that firms put on standards. The positive impact that standards have on the acquisition of innovation related assets suggest that, on balance, the impact of standards has significant pro-competitive effects on an innovation system.