The impact of participation within formal standardization on firm performance

Several studies highlight the economic benefits of standards, while the benefit of taking part in standardization remains a rather unexplored mystery to date. In theory, standard setters not only benefit from the possibility to monitor and shape the development of standards but also access a wide range of knowledge sources in the standards committee. Therefore, we investigate how the participation within formal standardization is related to the performance of 1561 German companies. A Cobb-Douglas production function is estimated in order to use the Solow-residuals as indicator for the firm performance. Participation within formal standardization is measured by the number of committee seats at the German Institute for Standardization (DIN). Our results suggest that participation within formal standardization is positively related to firm performance in the manufacturing sector. In the service sector, no clear evidence for such a relationship is found. This finding also holds true when we test if a service providers’ intellectual property is well protected through patents.