Architecture-Based Approaches to International Standardization and Evolution of Business Models

Standardization has a great impact on economic growth - it accelerates technology transfer and cost reduction. As technology progresses rapidly, the price of a product also quickly falls. Consequently, the efficiency of society as a whole is improved and the benefit to consumers is increased. This chain—standardization, technological progress, price fall, and expansion of consumer benefit—causes growth in global economy. Especially after the 1990s, international standardization had a strong impact on the global economy and accelerated collaboration with advanced countries and newly industrialized economies (NIEs). The background to this lies in the rapid development during the 1990s of semiconductors and digital technology. These technologies drove the modularization of product architecture forward. Modularization made it easy for countries with little technological knowledge to enter new industries such as DVD and mobile phone. It can be said that the economic growth of developing countries changed greatly because of product modularization and standardization. The major companies that play a prominent role in developing core technologies and setting international standards have, however, also sought to maximize their profits. These companies ingeniously encapsulate their knowledge and intellectual property (IP) into a framework of technological standards. Their persistence to protect their IP apparently contradicts the goals of public standards organizations. The organizations promoting international standards, such as the International Electrotechnical Commission (IEC) and government institutions in each country, are more concerned with social welfare and especially consumer benefit. This paper provides a general framework for analyzing the economic impact of international standardization. Based on an analytical framework of product architecture, we seek an economic model that can harmonize the benefit of various entities such as the leading firms in advanced countries, the firms catching up technologically in NIEs, consumers in the global market, and public standards organizations.



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AuthorsJunjiro Shintaku (University of Tokyo), Koichi Ogawa (University of Tokyo), Tetsuo Yoshimoto (University of Tokyo)
Other bibliographical information:International Electrotechnical Commission (IEC)