Consortium-based standardization as two-stage collective actions: Case study on AUTOSAR

Publication Type:

Conference Paper

Source:

Gerpisa colloquium, Ann Arbor (2020)

Keywords:

consortium-based standardization,

Abstract:

Research question and purpose
The purpose of this study is to understand the various motivations that contribute to “consortium-based standardization.” Product system complexity increases the importance of open technical standards that are shared across the boundaries of firms (Narayanan and Chen, 2012). In recent years, cooperative and flexible standard-setting is likely to be oriented. That is why there have been many standardization processes developed by consortiums of private firms, rather than competition-based (de facto) or official committee-based (de jure) standardization. In the automotive industry, we can see examples such as AUTOSAR, GENIVI, PEGASUS, 5GAA, etc.
In such “consortium-based standardization,” the benefits of the standard are realized by developing and implementing technical standards in cooperation. In other words, when the technical standard achieves the critical mass, each firm can obtain the economies of scale and network effect.
However, such consortium-based standardization generates two-stage collective action dilemmas (Markus et al., 2006; Zhao, Xia, and Shaw, 2011); developing stage and implementation stage. It is a reasonable action to free ride without investing their resources in the developing stage. The standard has nature as a public good; therefore, any member firm can implement technical standards without contributing the development stage. Furthermore, even if standards are developed over the problem, it is reasonable to wait and see in the early implementation stage. It is because there is uncertainty about the implementation of standards ahead of other firms before achieving critical mass. The former problem is also called “prisoner's dilemma,” and the latter “first penguin dilemma.”
As mentioned above, because of this two-stage collective action problems, there will be a variety of firms' behaviors for each game. However, existing studies focus only on the dilemma of the developing stage, and the research which examined the two-stage dilemma is scarce (Wiegmann, de Vries and Blind, 2017). Therefore, in this research, we conduct an empirical analysis of what companies with what kind of motivation will contribute/not contribute to the development and implementation of standards.

Methodological design
We designed a single embedded case study in multiple periods for “AUTOSAR(AUTomotive Open System Architecture).” AUTOSAR is the consortium of the standard-setting for automotive software in response to the complexity. To observe the heterogeneity of the individual behavior of participating firms, we conducted a semi-structured interview with 14 ECU suppliers in Japan and Europe. As a result, we collected data on the firms’ behavior of a total of 36 companies, including relating OEMs.

Main results
The main results of this study are as follows. First, about firms’ behavior over the dilemmas of the two collective actions, it was suggested that there were firms with consistent contributions or non-contributions and firms that did not. In other words, there are four firms’ behavior groups as follows: 1) Promotors: contribute to the development and contribute to the implementation. 2) Monitors: contribute to the development and non-contribute to the implementation. 3) Adoptors: non-contribute to the development and contribute to the implementation. 4) Inhabitants: non-contribute to the development and non-contribute to the implementation.
Second, we found that each behavior groups have different motivations. That is how they make decisions about contributions/non-contributions to the collective actions of the development and implementation stages. For example, many promoters were German firms with a moderate level of knowledge, and they had the motivation to reduce their standard implementation costs by advocating standards that were highly compatible with their existing systems. They also pursue profits using the standpoint of promoters, such as sizing AUTOSAR-recommended subsystem standards and IT tools for AUTOSAR implementation. On the other hand, many monitors had the motivation to accumulate knowledge for future implementation while monitoring trends of other firms such as promoters at the development stage. Adaptors were motivated to just free-ride at the development stage, while at the implementation stage, they would aim to catch up with technology at an early stage and expand their business.

Practical implications
In this study, the following four practical implications can be mentioned. First, in consortium-based standardization, the main actors of the collective action of the development stage and the implementation stage may be different. Second, it is uncertain whether adaptors intended for a free-rider at the development stage can remain a free-rider at the implementation stage. Third, promoters have the motivation to earn profits by preventing free rides at the standard implementation stage. Fourth, it is suggested that the action in the implementation stage of the monitors with a large amount of knowledge is uncertain and requires attention.

Bibliography
Markus, M. L., C. W. Steinfield, R. T. Wigand & G. Minton (2006). Industry-wide information systems standardization as collective action: The case of the U.S. residential mortgage industry. MIS Quarterly, 30, Special Issue, 439-465.
Narayanan, V. K., & Chen, T. (2012). Research on technology standards: Accomplishment and challenges. Research Policy, 41 (8), 1375-1406.
Wiegmann, P. M., de Vries, H. J., & Blind, K. (2017). Multi-mode standardisation: A critical review and a research agenda. Research Policy, 46 (8), 1370-1386.
Zhao, K., M. Xia & M. J. Shaw (2011). What Motivates Firms to Contribute to Consortium-Based E-Business Standardization?. Journal of Management Information Systems, 28 (2), 305–334.

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