Technology Standards and Standard Setting Organizations: Introduction to the Searle Center Database

• DOI: http://doi.org/10.1111/jems.12257
• Author: Daniel F. Spulber,Justus Baron
• Date: 01 September 2018
• Published date: 01 September 2018

Received: 8 September 2015 Revised: 19 January 2017 Accepted: 3 May 2017

DOI: 10.1111/jems.12257

ORIGINAL ARTICLE

Technology Standards and Standard Setting Organizations:

Introduction to the Searle Center Database

Justus Baron1Daniel F. Spulber1,2

1Searle Center on Law,Regulation, and Eco-

nomic Growth, Northwestern University,

Chicago, IL, USA

2Department of Strategy,Kellogg School

of Management, Northwestern University,

Evanston,IL, USA

Correspondence

JustusBaron, Searle Center on Law, Reg-

ulation,and Economic Growth, North-

westernUniversity, Chicago, IL, USA.

Email:justus.baron@law.northwestern.edu

Abstract

This paper describes the Searle Center Database on Technology Standards and Stan-

dard Setting Organizations (SSOs). This database combines comprehensive informa-

tion on technology standards, SSO membership, and SSO characteristics in a format

designed for economic research. In particular, the database includes data on quan-

tifiable characteristics of 797,711 standard documents issued by 615 SSOs, insti-

tutional membership in a sample of 191 Standards Organizations, and the rules of

36 SSOs on standard adoption procedures, standard-essential patents (SEPs), partici-

pation, and openness. Using the Internet Archives, we trackboth institutional member-

ship and the SSO rules and procedures over time since the inception of the Archives

in 1996. We identify 67,417 entities participating in at least one Standards Organi-

zation. The paper describes how to combine these data with other new databases on

standard-related patents and standardization processes at 3GPP; and sketches avenues

for empirical research.

KEYWORDS

database, technology standards, standard-setting organizations

JEL CLASSIFICATION:

O30, O33, C8, Y1

1INTRODUCTION

Technology standards are of considerable importance for invention,innovation, commercial transactions, and economic growth.

Standard Setting Organizations (SSOs) establish many technology standards in addition to those set by market interactions and

government actions. Because the development and implementation of technology standards interacts with economic decisions

and market transactions, it is necessary to take standards into account in empirical economic analysis.

To help address economic research questions in this area, we have developed the Searle Center Database on Technology

Standards and SSOs. This is a comprehensive and systematic database of technology standards documents and information about

The Searle Center on Law, Regulation, and Economic Growth is making the database described in this paper available to academic researchersbeginning in

March 2018. All requestsshould be sent to searlecenter@law.northwestern.edu. The authors thank two anonymous referees, Pere Arque Castells,Stuar t Graham,

Matt Spitzer, and participants at the Searle Center Annual Research Roundtable on Technology Standards as well as the Academyof Management Workshop

on Open Datasets for Innovation Research forhelpful comments and discussions. We thank the early users of the Searle Center database for their supportand

feedback. We also thank Georgios Askalidis, Tony Chen, Jiayi Wang, Lisa Izquierdo, Tianqi Jiang, Eric Liu, and Mike Rizza forresearch assistance. Special

thanks also to Tim Pohlmann and researchers at TU Berlin for sharing data and for the permission to use data collected for joint research. Weare gratefulto

Qualcomm for a research grant for the project on InnovationEconomics. We also thank the Searle Center on Law, Regulation, and Economic Growth for their

support of our research. The opinions expressed in this paper are solely those of the author and not necessarily those of any other individual or organization.

462 © 2018 Wiley Periodicals, Inc. J Econ Manage Strat. 2018;27:462–503.wileyonlinelibrary.com/journal/jems

BARON AND SPULBER 463

SSOs. This paper introduces the Searle Center Database, provides an initial overview,and examines some potential applications

of the database to economic research.

The Searle Center Database consists of quantifiable characteristics of 797,711 standard documents. In particular, this informa-

tion includes a database of 3,863,192 references between standard documents. In addition, the database describes the rules of 36

SSOs on standard-essential patents (SEPs), openness, participation, and standard adoption procedures. The database identifies

institutional membership for a sample of 191 standards organizations including SSOs and other organizations directly involved

in the development of technology standards. Using the Internet Archives, we trackboth institutional membership and SSO r ules

and procedures over time since the inception of the Archives in 1996. We identify 67,417 organizations (including companies,

universities, and public authorities) participating in at least one standards organization.

Technology standards are rules that have far-reaching economic consequences. Spulber (2013) emphasizes the central role

of technology standards in the field of Innovation Economics because of the endogenous determination of standards, market

structure, and innovative efficiency. Swann (2010b) identifies various purposes of technology standards, including reducing

product variety, maintaining product quality and performance, making measurements, codifying knowledge, assuring compat-

ibility, articulating a vision of the industry, assuring health and safety, and controlling environmental quality. Swann (2010b)

observes that technology standards affect economic conditions such as economies of scale, the division of labor, firm compe-

tencies, barriers to entry, network effects, transaction costs, manufacturing precision, trust, and risk.

Technology standards provide a foundation for economic transactions. Technology standards often operate in the back-

ground allowing product compatibility and interoperability. For example, the U.S. Department of Commerce's National

Institute of Standards and Technology (NIST)1, although not a typical SSO, provides a time measurement standard

using atomic clocks. NIST time “is used to time-stamp hundreds of billions of dollars in U.S. financial transactions

each working day, http://www.nist.gov/pml/div688/nist-f2-atomic-clock-040314.cfm.” The time standard is essential to the

operation of networks, “NIST time is also disseminated to industry and the public through the Internet Time Service,

which as of early 2014 received about 8 billion automated requests per day to synchronize clocks in computers and

network devices; and NIST radio broadcasts, which update an estimated 50 million watches and other clocks daily,

http://www.nist.gov/pml/div688/nist-f2-atomic-clock-040314.cfm.”

To study technology standards, it is also necessary to understand how they are developed.It is common to distinguish between

formal and de facto standards (Belleflamme, 2002; David & Greenstein, 1990). Formal standards, also called de jure standards

(e.g., Simcoe, 2007), are developed and set through deliberation followingformal procedures, whereas de facto standards are set

through market competition, tacit coordination, evolution of industry norms, and informal agreements. Many formal standards

are set by SSOs. For example, the European TelecommunicationsStandards Institute (ETSI) “produces globally applicable stan-

dards for Information and Communications Technologies (ICT), including fixed,mobile, radio, converged, broadcast and Inter-

net technologies, http://www.etsi.org/about.” Not all standards organizations are SSOs. Other standards organizations include

certification bodies, lobbying groups, or industry associations that promote the use of specific standards.2In most cases, SSOs

reach a decision on standards by a vote of their members. Depending on the SSO, membership can consist in representatives of

national governments, industry members (such as companies, universities, regulators, etc.), or individuals.

There are about 1,000 standards organizations in operation, with many thousands of members.3SSOs develop tens of thou-

sands of technology standards every yeart hat interact with the innovativedecisions of most manufacturers. Technology standards

by SSOs interact with de facto standards. In addition to SSO standards, government may set regulatory standards, or mandate

the use of SSO standards through regulation.

Perhaps as a testament to the effectiveness of technology standards and SSOs, their operation primarily concerns technical

and scientific personnel and goes largely unnoticed by the general public. Earlyeconomic research on standards studied various

regulatory and market standards, but largely ignored the formal activities of SSOs. More recently, there is an increasing inter-

est in SSO standards. Several studies have explored particular aspects of standardization, and in particular have used data on

declared SEPs to analyze the interaction between standards and patents. In addition, a number of studies haveanalyzed standard-

ization processes at single SSOs. The present database aims to facilitate research by providing comprehensive information on a

large sample of standards, SSOs, and related organizations. Economists have benefited from the availability of comprehensive

databases related to other aspects of innovation, particularly patents. Studies of particular technology standards or particular

actions by a few SSOs are not directlycomparable because of a lack of consistent data spanning diverse technologies and SSOs.

There is also a need for data on technology standards and SSOs that allows different research studies to use the same data,

facilitates replication and comparisons of empirical results, and allows the development of complementary databases.

In addition to basic economic research, the Searle Center Database also may be useful for empirical research addressing

public policy issues in the area of innovation. Public policy makers have expressed concerns about the effects of technology

standards on competition and social welfare. An important policy question concerns interactions between technology standards

464 JOURNAL OF ECONOMICS & MANAGEMENTSTRATEGY

and the market value of intellectual property (IP), particularly for SEPs. Antitrust policy and public policy toward IP requires

much more extensive data about technology standards and SSOs and empirical analysis of that data.

This paper discusses the methodology of the data collection, presents preliminary empirical insights, and considers some

empirical research topics that are made possible by the new database. Section 2 presents an introduction to technology standards

and SSOs. Section 3 provides a review of the empirical economic literature on standardization and discusses how the Searle

Center Database compares with available data used in previous research. Section 4 presents the data collection methodology,

discussing in turn the analysis of SSO rules and policies, the collection of membership data, and the aggregation of databases on

standard documents. Section 5 provides summary statistics and discusses first preliminary empirical insights. Section 6 examines

some opportunities for new research using these data and Section 7 concludes the discussion.

2WHAT ARE TECHNOLOGY STANDARDS AND SSOs?

2.1 Technology standards

Standards are rules that include language, customs, traditions, social norms, business practices, industry conventions, laws, and

government regulations. Technology standards are a subset of suchr ules, manyof which govern the characteristics of goods and

services. The Searle Center Database focuses on technology standards.

Technology standards are an essential component of economic activity.Standards promote interoperability of parts and com-

ponents that are essential to the design and production of complex products, particularly in ICT.Commodities and financial assets

traded on organized financial markets must be standardized to facilitate exchange. Standards for products reduce the transaction

costs of search and bargaining because buyers and sellers can readily identify the features of the products being exchanged.

Standards for productive inputs and manufacturing equipment improve the efficiency of transactions between input suppliers

and producers. Standards promote international trade by reducing the costs of obtaining and providing goods and services across

international borders.

Technology standards are adopted byindustr ies or governmentswhenever there are benefits for economic agents to harmonize

their activities and products. For example, according to NIST, “The need for standards wasdramatized in 1904, when more than

1,500 buildings burned down in Baltimore, Maryland, due to incompatibility of fire-hose couplings. When firefighters from

Washington and as far away as New York arrived to help douse the fire, few hoses fit the hydrants. More than 600 sizes and

variations in fire-hose couplings had been collected in a previous investigation and, after the Baltimore fire, efforts immediately

began for selecting a national standard, http://gsi.nist.gov/global/index.cfm/L1-2/A-158.”

Technology standards are pervasive in the economy. Surowiecki (2002) points out that “We live in a standardized world.

Whether made by the Gap or American Eagle, a pair of khakis with a 32-inch inseam and a 34-inch waist will fit you just about

the same. A Panasonic phone will plug into the jacks in your home as easily as a phone from AT&T... And Diablo II will run

just as well on a Dell as on a PC from IBM. We take this kind of standardization for granted, but without standardization, there

would be no mass production or mass communication. Which is to say, without standardization there wouldn't be a modern

economy.”

Formal standards are clearly defined technical documents approved through binding standard setting processes. SSOs with

binding processes issuing formal standards are called formal SSOs. Technology standards produced by SSOs are expressed as

formal documents often with detailed scientific and technical language, formulas, and illustrations. According to the NIST,

“A standard is a document that contains technical specifications or other precise criteria to be used consistently as a rule,

guideline, or definition of characteristics, to ensure that materials, products, processes, personnel or services are compe-

tent and/or fit for their intended purpose(s), http://gsi.nist.gov/global/index.cfm/L1-5/L2-44.” The International Organization

for Standardization (ISO) states: “A standard is a document that provides requirements, specifications, guidelines or char-

acteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose,

http://www.iso.org/iso/home/standards.htm.”

Technology standards differ from government regulations because compliance with standards is voluntary. Voluntary stan-

dards often acquire a considerable normative character, because compliance with a standard may be necessary to compete in a

market. Some SSOs present their standards as general normative recommendations. For example, the International Telecommu-

nications Union (ITU-T)states: “The main products of ITU-T are normative Recommendations. Recommendations are standards

that define how telecommunication networks operate and interwork. ITU-T Recommendations are non-binding, however they

are generally complied with due to their high quality and because they guarantee the interconnectivity of networks and enable

telecommunication services to be provided on a worldwide scale, http://www.itu.int/en/ITU-T/publications/Pages/default.aspx.”