Standardization, Innovation, and Organization

Abstract

Companies that intend to leverage standardization to drive innovation have to set up their organizations appropriately. Data from four German companies reveal different ways for organizing the standardization activities. Companies may allocate a high level of resources by dedicating a specialized department; they may assign the standardization task to top managers; they may treat standardization within occasional projects; or create sophisticated solutions to facilitate the use of standards. Contingency theory is used to narrow down the number of factors that influence the organization of the standardization function. There are three relevant contingency factors: competition, size, and strategy. Company's age, technological complexity and volatility of customer demand are found to be less important. Instead, maturity of technology and the period of time, during which the company has been actively engaged in standardization work seem to be better contingencies. Another finding is that innovation appears to be a by-product and not the main driver of standardization work.