Standard Selection Modes in Dynamic, Complex Industries: Creating Hybrids between Market Selection and Negotiated Selection of Standards

Several sectors within Information and Communication Technology demonstrate a shift from purely market-based selection of standards or purely negotiated selection of standards to hybrid selection processes, where both market competition and negotiation play a role. Negotiated standard setting processes (such as those organised by the ITU) assure interoperability of technical components and services. Private firms, however, increasingly tend to undercut these collective actions. Their innovations jump-start new developments, but also create incompatibilities, lock-in effects, and pockets of market power. Internet telephony is an example, where firms, standard setting alliances, and political institutions create a hybrid market-based / negotiated standard setting environment. The paper explores the development of this hybrid networking environment. It posits propositions which are illustrated by means of case studies of the DVD and Internet telephony.