Drivers of Organizational Participation in XML-based Industry Standardization Efforts

Abstract

XML-based vertical standards are an emerging compatibility standard for describing business processes and data formats in specific industries that have emerged in the past decade. Vertical standards, typically implemented using eXtensible Markup Language (XML), are incomplete products in constant evolution, continually adding functionality to reflect changing business needs. Vertical standards are public goods because they are freely obtained from sponsoring organizations without investing resources in their development, which gives rise to linked collective action dilemmas at the development and diffusion stages. Firms must be persuaded to invest in development without being able to profit from the output, and a commitment to ensure the diffusion of the standard must be secured from enough potential adopters to guarantee success. In this paper, the authors explore organizational drivers for participation in vertical standards development activities for supply- and demand-side organizations (i.e., vendors and end-user firms) in light of the restrictions imposed by these dilemmas.