Abstract
The global standard, the key factor of globalization, affects firm's global strategies and the evolution of global economy. Based on the theories of standardization, this study creates an analytical framework for global standards and confirms the validity of it from the case study of the introduction of GSM cell phone into Chinese market. Prior studies focused on two approaches of standardization: de facto and de jure standardization. De facto standards are based on market process, while de jure standards are based on no market process. Both approaches are powerful, but not enough for creating global standards of complex products. The increase of complex products push the use of new form of standardization, consensus standardization. Consensus standardization is a hybrid approach of market and non market processes: many firms form a consortia to set a standard, but it has no juridical legislation for compulsory use of the standard and competes with other similar standards in a market. Consensus standards have become popular since the mid 1980s. However, there are little studies on the effect of consensus standardization on firm's strategic behaviors and the direction of industrial evolution. This study creates a theoretical framework to investigate the effect of consensus standardization. Since consensus standardization is a collaborative design process among strategic firms, the resulting standards divide the system into two parts: Open and closed areas. In an open area, standards are set so detailed that new firms can supply parts. Detailed standard-setting enables market entry of new entrants who do not have enough technological knowledge. Severe competition occurs here. On the other hand, closed area, the area where standards are not set so detailed, avoid new entry and incumbent firms keep their competitive advantages. Based on the framework, this study investigate the introduction of GSM cell phone into Chinese market. The case study support the theories that suggest global standards push the division of labors among multinational and local companies.
