TY - JOUR
T1 - The role of technology standards in product innovation
T2 - Theory and evidence from UK manufacturing firms
AU - Foucart, Renaud
AU - Li, Qian Cher
PY - 2021/3
Y1 - 2021/3
N2 - 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.
AB - 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.
KW - Incremental innovation
KW - R&D intensity
KW - Radical innovation
KW - Technology standards
UR - http://www.scopus.com/inward/record.url?scp=85097159738&partnerID=8YFLogxK
UR - https://www.sciencedirect.com/science/article/abs/pii/S0048733320302316?via%3Dihub
U2 - 10.1016/j.respol.2020.104157
DO - 10.1016/j.respol.2020.104157
M3 - Article
SN - 0048-7333
VL - 50
JO - Research policy
JF - Research policy
IS - 2
M1 - 104157
ER -