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The role of technology standards in product innovation: Theory and evidence from UK manufacturing firms

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  • Foucart, Renaud
  • Li, Qian Cher

Abstract

This paper studies the role of technology standards in firms’ product innovation in terms of both incremental innovation (within a technology life cycle) and radical innovation (beyond the present technology cycle). We first develop a theoretical model which predicts that technology standards can be used by firms as an “insurance” hedging against the risky process of developing new products. This insurance mechanism fosters incremental innovation and product growth especially for those further away from the technological frontier. Using data from a weighted panel of UK manufacturing firms over seven years, we find that the use of technology standards over past years significantly enables a firm’s incremental innovation while also reducing its incentive to deliver radical innovation. Additionally, we show that this relationship is contingent on a firm’s R&D intensity in line with predictions of our theoretical model.

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  • Foucart, Renaud & Li, Qian Cher, 2021. "The role of technology standards in product innovation: Theory and evidence from UK manufacturing firms," Research Policy, Elsevier, vol. 50(2).
    • Handle: RePEc:eee:respol:v:50:y:2021:i:2:s0048733320302316
    DOI: 10.1016/j.respol.2020.104157
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    Cited by:

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    3. Jasmin Joecks & Kerstin Pull & Katrin Scharfenkamp, 2023. "Women directors and firm innovation: The role of women directors' representative function," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1203-1214, March.
    4. Xihui Chen & Juan Ou & Xuemei Tang & Qinghe Yang, 2023. "The Impact of Officials’ Off-Office Accountability Audit of Natural Resource Assets on Firms’ Green Innovation Strategies: A Quasi-Natural Experiment in China," Sustainability, MDPI, vol. 15(3), pages 1-36, February.
    5. Tian Liang & Hongying Mao & Yujiao Tan & Bing Sun, 2023. "How Does Socio-technical Landscape Affect the Formation of Technical Standards?," SAGE Open, , vol. 13(4), pages 21582440231, December.
    6. Mendonça, Sandro & Damásio, Bruno & Charlita de Freitas, Luciano & Oliveira, Luís & Cichy, Marcin & Nicita, António, 2022. "The rise of 5G technologies and systems: A quantitative analysis of knowledge production," Telecommunications Policy, Elsevier, vol. 46(4).
    7. Clougherty, Joseph A. & Grajek, Michał, 2023. "Decertification in quality-management standards by incrementally and radically innovative organizations," Research Policy, Elsevier, vol. 52(1).
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    More about this item

    Keywords

    Technology standards; Incremental innovation; Radical innovation; R&D intensity;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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