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

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.

Citation

Foucart, R., & Li, Q. C. (2021). The role of technology standards in product innovation: Theory and evidence from UK manufacturing firms. Research Policy, 50(2), Article 104157. https://doi.org/10.1016/j.respol.2020.104157

• Journal Article Type: Article
• Acceptance Date: Oct 26, 2020
• Online Publication Date: Nov 19, 2020
• Publication Date: 2021-03
• Deposit Date: Oct 28, 2020
• Publicly Available Date: May 20, 2022
• Journal: Research Policy
• Print ISSN: 0048-7333
• Electronic ISSN: 1873-7625
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 50
• Issue: 2
• Article Number: 104157
• DOI: https://doi.org/10.1016/j.respol.2020.104157
• Keywords: technology standards; incremental innovation; radical innovation; R&D intensity Forthcoming in Research Policy * rfoucart@lancasteracuk; Lancaster University Management School † Corresponding author: CherLi@nottinghamacuk; Nottingham University Business
• Public URL: https://nottingham-repository.worktribe.com/output/4995469