The Standardization Problem in Networks - A General Framework

The Standardization Problem in Networks - A General Framework

Falk v. Westarp (J. W. Goethe University, Germany), Tim Weitzel (J. W. Goethe University, Germany), Peter Buxmann (J. W. Goethe University, Germany) and Wolfgamg Konig (J. W. Goethe University, Germany)
DOI: 10.4018/978-1-878289-70-4.ch011
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Abstract

Every interaction and all coordination in economic processes is based upon communication. The exchange of information necessarily requires both the sender and receiver of a message to use a mutual language or set of communications standards. Communications standards can be generally defined as rules which provide the basis for interaction between actors (man, as well as machine). These rules must be known or determined ex ante, i.e. before communication begins. If n actors bilaterally agree to a set of communications standards, then n•(n-1)/2 rules must be defined. Such a Babylonian cacophony of languages rarely leads to an efficient exchange of information, however. The uniqueness of communications standards lies in their solely bilateral functionality; they work only when both the sender and the receiver of a message use identical or at least compatible standards. This basic principle for the use of communications standards applies to natural languages as well as to EDI (Electronic Data Interchange) for the electronic transfer of business documents or to network protocols like TCP/IP, for example. Thus, the decision to implement a standard is necessarily tied to the standardization decision of the communications partners. The user’s benefit from a given standard generally increases with the number of other users. This phenomenon— the increase of utility derived from a good as the number of users increases—is known as a positive network effect, or demand-side economies of scale, in economic terms. See for example Katz & Shapiro (1985) or Farrell & Saloner (1988). Network effects lead to the interdependence of decisions regarding communications standards by otherwise completely independent actors. This interdependence results in coordination problems because actors, such as firms, do not know in advance when which standards will be implemented by other firms, if at all. Our research focuses on the examination of alternative forms of coordination and their impact on the selection of communications standards. We have developed two models for evaluating different coordination designs, differentiating between centralized and decentralized coordination of standardization decisions. These models can also be used to analyze and evaluate further cooperation forms between participants in communication networks. We based the economic parameters of the models and the discussion of their implications on empirical research. To gain information about the use of software standards in enterprises, we conducted a comprehensive empirical survey, both in Germany and the U.S.A. It focuses on the corporate adoption and use of various Information Technology (IT) standards, including Internet and electronic commerce standards, business software and EDI.

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Table of Contents
Chapter 1
Yesha Y. Sivan
The diverse uses of “standards” define the goal of this work, namely, to develop a general framework of standards and to reflect on the process and... Sample PDF
Knowledge Age Standards: A Brief Introduction to their Dimensions
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Chapter 2
Consensus Versus Speed  (pages 19-34)
Roy Rada
One standards organization takes years to reach consensus, while another standards organization takes months (Rada, 1995a). Changes are occurring in... Sample PDF
Consensus Versus Speed
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Chapter 3
Petri Mahonen
Information Technology is one of the most rapidly developing areas in the technological world. In fact, the classical information technology that... Sample PDF
The Standardization Process in IT - Too Slow or Too Fast?
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Chapter 4
T. M. Egyedi
The effect of Information and Communication Technologies (ICT) on our daily life needs no explanation. That standardization reduces diversity... Sample PDF
Institutional Dilemma in ICT Standardization: Coordinating the Diffusion of Technology
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Chapter 5
Martin B.H. Weiss, Michael B. Spring
This chapter explores several issues related to intellectual property in the standardization process. Different intellectual property issues... Sample PDF
Selected Intellectual Property Issues in Standardization
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Chapter 6
Eric J. Iversen
In today’s environment of rapidly evolving information and communication technologies (ICTs), technical standardization is said to be confronted by... Sample PDF
Standardization and Intellectual Property Rights: Conflicts Between Innovation and Diffusion in New Telecommunications Systems
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Chapter 7
Robert Moreton
The purpose of this chapter is to define the context of standards within an Information and Communications Technology (ICT) strategy and to suggest... Sample PDF
Standards, Strategy and Evaluation
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Chapter 8
Wilhelm Hasselbring
For integrating heterogeneous information systems, semantic interoperability is necessary to ensure that exchange of information makes sense — that... Sample PDF
The Role of Standards for Interoperating Information Systems
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Chapter 9
Klaus Turowski
The field of business applications encompassing software for production planning or order management is dominated by some big vendors offering large... Sample PDF
Establishing Standards for Business Components
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Chapter 10
Jaroslav Blaha
NATO as an international organization consists of representatives from 19 nations and has to satisfy the political, operational and technical... Sample PDF
A Standards-Based Common Operational Environment
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Chapter 11
Falk v. Westarp, Tim Weitzel, Peter Buxmann, Wolfgamg Konig
Every interaction and all coordination in economic processes is based upon communication. The exchange of information necessarily requires both the... Sample PDF
The Standardization Problem in Networks - A General Framework
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Chapter 12
Simon L. Lelieveldt
The business of payments and the provision of payment instruments have a rich history, which can be drawn upon in a discussion of standardization.... Sample PDF
Standardizing Retail Payment Instruments
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Chapter 13
Joel West
The influence of institutional pressures on standards and standardization are readily apparent in their most direct form. For example, in the... Sample PDF
Institutional Constraints in the Initial Deployment of Cellular Telephone Service on Three Continents
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Chapter 14
Vladis Fomin, Kalle Lyytinen
This article analyses social networks by looking at the standard making processes. As a framework for analysis, actor network theory is chosen.... Sample PDF
How to Distribute a Cake before Cutting It into Pieces: Alice in Wonderland or Radio Engineers' Gang in the Nordic Countries?
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Chapter 15
Michael Sherwood-Smith
There is a recognized need to spread computer literacy across every level of society to generate an inclusive global information society, in which... Sample PDF
The European Computer Driving Licence: A Standard of Basic Competence for Personal Computer Users
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About the Authors