First Paper in Series Explores Standards Creation by Private Firms
WASHINGTON D.C. - Industry standardization has grown from the three distinct realms of private firms, public sector regulation and inter-firm cooperation. These standard setting institutions evolve and react to the commercial environment, creating a "distinctly American system," explains Andrew L. Russell in "The American System: A Schumpeterian History of Standardization," a series of essays examining the historical development of American industry standardization. The respective roles of the private and public sectors in standards setting have gained increased attention as the information technology sector plays a greater role in the economy. In "De Facto Standards in American Industry," the first of three papers in the series, PFF Adjunct Fellow Russell "describes how firms developed standards to promote efficient production, economies of scale, and competitive advantages."
In his paper, Russell explores the creation of de facto standards within private firms and the subsequent industry wide adoption of these standards. In noting the importance of private firms in standards creation, Russell writes, "Since the late 18 th century, there has existed no centralized, overarching authority responsible for creating and enforcing standards in the United States. This heterogeneity has been a recurrent source of controversy; but, far from being a weakness, it has been a source of flexibility and strength of American standardization." Russell identifies three characteristics of standards developed in independent firms that are successful adopted industry wide. The author explains, "First, the technical basis of the standard must be comparable or superior to existing alternatives. Second, the new standard must promote savings in costs or ease of use. Third, there must be a compelling basis of authority behind the proposed standard."
To explain the evolution of de facto standards, Russell defines three major industrial revolutions and describes corresponding movements in industrial standardization. Russell identifies the arms manufacturing industry during the first industrial revolution in the first half of the nineteenth century as an early beneficiary of industry standards. First developed by the French, arms producers began to use standardized parts in muskets in order to make repairs easier. The second movement in standardization corresponded with the industrial revolution of the late nineteenth and early twentieth century. During this period, industries that made use of more sophisticated technology and processes used standardization to create product stability. The third, and ongoing, revolution in American industry concerns "modular innovations" in the telecom, computing and electronics industries. Russell explains, "This shift towards greater modularity was due in part to the increasing complexity of technology: in many cases, a single firm did not have the technological or organizational capabilities to produce all of the components necessary for an entire system (such as wireless telephone networks)."
Andrew L. Russell is a Ph.D. student in the Department of the History of Science and Technology at The Johns Hopkins University. He has worked at the Harvard Information Infrastructure Project in Harvard University's John F. Kennedy School of Government and has presented papers on Internet standards before the Society for the History of American Foreign Relations and the Telecom Policy Research Conference.
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