Standardization: Bridging the Gap Between Economic and Social Theory

This article examines the dynamics of inter- and intra-firm networks in technical standard setting initiatives, and how complex social networks align in these initiatives. Specifically, we argue that in standardization, complex economic and social interactions are blended. In standardization activities, firm behavior and the behavior of individuals within firms is best explained through an integration of social, political, and economic perspectives. In this article we use two main bodies of theory. First, we draw on the economic literature on standard setting and alliance formation. Second we use social network theory to complement economic arguments. In this paper we integrate streams of literature on the creation and diffusion of technical standards from industrial organization economics, strategic management, and innovation economics with recent literature concerning the social construction of technology in order to analyze the process of standard setting. We develop our arguments with the help of three in-depth case studies of standardization initiatives in the telecommunications industry. Two case studies are in the realm of telecommunications infrastructure. The third case study analyzes the standardization of a wireless data link. The cases can be characterized as examples of the successful creation of both de facto and de jure standards

Internet economics and policy: An Australian perspective

Publicly available information indicates that the demand and supply of Internet and Internet-related services are continuing to expand at a rapid pace. Since 1997 the number of Internet service providers (facilities-based and resellers) has increased by nearly 40 per cent; the number of points-of-presence per Internet service provider has increased by five times; the number of hosts connected to the Internet has more than quadrupled; and Internet traffic has increased from six to 10 times. The emergence of electronic commerce (e-commerce), driven by this rapid adoption of Internet services and continual technological innovation, is likely to have profound economic and social impacts on Australian society. This paper provides a detailed analysis of the impact of the Internet and e-commerce, ranging from the changes in the market structure of the telecommunications industry, its role in changing the organisation of traditional markets, the emergence of new markets, and the structural shifts to employment, productivity and trade. The paper also analyses contemporary Australian regulatory responses. IIe-commerce; internet economics

Open innovation norms and knowledge transfer in interfirm technology alliances: Evidence from information technology, 1980-1999

Firms tend to transfer more knowledge in technology joint ventures compared to contractual technology agreements. Using insights from new institutional economics, this chapter explores to what extent the alliance governance association with interfirm knowledge transfer is sensitive to an evolving industry norm of collaboration connected to the logic of open innovation. The chapter examines 1,888 dyad-year observations on firms engaged in technology alliances in the U.S. information technology industry during 1980–1999. Using fixed effects linear models, it analyzes longitudinal changes in the alliance governance association with interfirm knowledge transfer, and how such changes vary in magnitude across bilateral versus multipartner alliances, and across computers, telecommunications equipment, software, and microelectronics subsectors. Increases in industry-level alliance activity during 1980–1999 improved the knowledge transfer performance of contractual technology agreements relative to more hierarchical equity joint ventures. This effect was concentrated in bilateral rather than multipartner alliances, and in the software and microelectronics rather than computers and telecommunications equipment subsectors. Therefore, an evolving industry norm of collaboration may sometimes make more arms-length governance of a technology alliance a credible substitute for equity ownership, which can reduce the costs of interfirm R&D. Overall, the chapter shows that the performance of material practices that constitute innovation ecosystems, such as interfirm technology alliances, may differ over time subject to prevailing institutional norms of open innovation. This finding generates novel implications for the literatures on alliances, open innovation, and innovation ecosystems

Regulation, competition, and liberalization

In many countries throughout the world, regulators are struggling to determine whether and how to introduce competition into regulated industries. This essay examines the complexities involved in the liberalization process. While stressing the importance of case-specific analyses, this essay distinguishes liberalization policies that generally are pro-competitive from corresponding anti-competitive liberalization policies

A 10-Point Agenda for Comprehensive Telecom Reform

Changing committee chairmanships in Congress and a leadership shakeup at the Federal Communications Commission have once again opened a window of opportunity for comprehensive telecommunications policy reform. While new faces are taking over within Congress and at the FCC, however, old issues continue to dominate the telecom policy landscape. This is largely due to the fact that, when Congress last attempted to address these matters five years ago by passing the historic Telecommunications Act of 1996, legislators intentionally avoided providing clear deregulatory objectives for the FCC and instead delegated broad and remarkably ambiguous authority to the agency. That left the most important deregulatory decisions to the FCC, and, not surprisingly, the agency did a very poor job of following through with a serious liberalization agenda. The Telecom Act, with its backward-looking focus on correcting the market problems of a bygone era, has been a failure. Instead of thoroughly clearing out the regulatory deadwood of the past, legislators and regulators have engaged in an effort to rework regulatory paradigms that where outmoded decades ago. In short, it was an analog act for an increasingly digital world. The new leadership in Congress and the FCC should adopt a fresh approach based on deregulation and free markets

Network strategies for the new economy

In this paper we argue that the pace and scale of development in the information and communication technology industries (ICT) has had and continues to have major effects on the industry economics and competitive dynamics generally. We maintain that the size of changes in demand and supply conditions is forcing companies to make significant changes in the way they conceive and implement their strategies. We decompose the ICT industries into four levels, technology standards, supply chains, physical platforms, and consumer networks. The nature of these technologies and their cost characteristics coupled with higher degrees of knowledge specialisation is impelling companies to radical revisions of their attitudes towards cooperation and co-evolution with suppliers and customers. Where interdependencies between customers are particularly strong, we anticipate the possibility of winner-takes-all strategies. In these circumstances industry risks become very high and there will be significant consequences for competitive markets

Exports, Technical Progress and Productivity Growth in Chinese Manufacturing Industries

Theories suggesting either static or dynamic productivity gains derived from exports often assume the prior existence of a perfect market. In the presence of market failure, however, the competition effect and the resource reallocation effect of exports on productive efficiency may be greatly reduced; and there may actually be disincentives for innovation. This paper analyses the impact of exports on total factor productivity (TFP) growth in a transition economy using a panel of Chinese manufacturing industries over the period 1990-1997. TFP growth is estimated by employing a non-parametric approach and is decomposed into technical progress and efficiency change. We have not found evidence suggesting significant productivity gains at the industry level resulting from exports. Findings of the current study suggest that, for exports to generate significant positive effect on TFP growth, a well?developed domestic market and a neutral, outward-oriented policy are necessary.exports, industrial efficiency, technical progress, productivity

Innovation in the Wireless Ecosystem: A Customer-Centric Framework

The Federal Communications Commission’s Notice of Inquiry in GN 09-157 Fostering Innovation and Investment in the Wireless Communications Market is a significant event at an opportune moment. Wireless communications has already radically changed the way not only Americans but people the world over communicate with each other and access and share information, and there appears no end in sight to this fundamental shift in communication markets. Although the wireless communications phenomenon is global, the US has played and will continue to play a major role in the shaping of this market. At the start of a new US Administration and important changes in the FCC, it is most appropriate that this proceeding be launched.

The diffusion of IP telephony and vendors' commercialisation strategies

This is a post-peer-review, pre-copyedit version of an article published in the Journal of Information Technology. The definitive publisher-authenticated version is available at the link below.The Internet telephony (IP telephony) has been presented as a technology that can replace existing fixed-line services and disrupt the telecommunications industry by offering new low-priced services. This study investigates the diffusion of IP telephony in Denmark by focusing on vendors’ commercialisation strategies. The theory of disruptive innovation is introduced to investigate vendors’ perceptions about IP telephony and explore their strategies that affect the diffusion process in the residential market. The analysis is based on interview data collected from the key market players. The study's findings suggest that IP telephony is treated as a sustaining innovation that goes beyond the typical voice transmission and enables provision of advanced services such as video telephony

Is America Exporting Misguided Telecommunications Policy? The U.S.-Japan Telecom Trade Negotiations and Beyond

Global telecommunications markets have traditionally been closed to foreign trade and investment. Recent World Trade Organization negotiations resulted in a Basic Telecommunications agreement that sought to construct a multilateral framework to reverse that trend and begin opening telecom markets worldwide. Regrettably, this new WTO framework is quite ambiguous and open to pro-regulatory interpretations by member states. In fact, during recent bilateral trade negotiations with Japan, U.S. government officials adopted the position that the new framework allowed them to demand that the Japanese government adopt very specific regulatory provisions regarding telecom network interconnection and pricing policies. The Office of the U.S. Trade Representative argued that Japanese officials should require their domestic telecom providers to share their networks with rivals at a generously discounted price to encourage greater resale competition. Those interconnection and line-sharing rules were borrowed directly from the U.S. Telecommunications Act of 1996, a piece of legislation that remains the subject of intense debate within the United States. Good evidence now exists that those rules generally retard net-work investment and innovation by encouraging infrastructure sharing over facilities-based investment. Consequently, the USTR has generated resentment on the part of Japan and other trading partners as it has attempted to force them to adopt heavy-handed telecommunications mandates that have very little to do with legitimate free-trade policy. The USTR must discontinue efforts to impose American telecommunications regulations on other countries as part of free-trade negotiations and should instead focus on reforming or eliminating the most serious barriers to foreign direct investment both here and abroad