236 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. EM-34, NO. 4, NOVEMBER 1987

Voluntary Product Standards: Linking Technical Criteria to Marketing Decisions

N. MOHAN R E D D Y

Abstract—This article reports on research carried out to test some of the prevailing hypotheses on engineering standards. The * 'economic view" is that use of industry standards tends to introduce a higher level of price-based competition in the marketplace. An alternate conceptualiza­tion of voluntary product standards which actively factors in market considerations is presented. This conceptualization termed the "institu­tional approach*' clearly acknowledges the interdependency technology creates in industrial markets. From this viewpoint industry standards tend to be coordinating mechanisms to organize and direct technological change, not change buyer behavior.

INTRODUCTION

ENGINEERING specifications and industry standards, the historical domain of the engineering specialist, are

increasingly affecting business decision-making. Of all U.S.-made products, 70 percent have a foreign competitor and almost 50 percent of all international trade is covered by nontariff barriers (of which technical standards is one). International standardization activity is taking an increasing role in this "globalization" of the industrial marketplace. In the last ten years more international standards have been generated as compared to the previous thirty [27], [29]. This increased standardization activity, coupled with the fact that almost 75 percent of the International Organization for Standardization's (ISO) membership is comprised of develop­ing nations is likely to speed adoption of formulated standards; a substantial number of developing nations have mandatory national standards policies using formulated international standards as the basis of their national standards.

The number and growing force of international standards puts the U.S. in a particularly vulnerable position. The United States has adopted about 20 percent of formulated ISO standards, as compared to our major trading partners, the United Kingdom, West Germany, France, and Japan, who subscribe to about 65 percent of ISO standards. In addition, the U.S. holds fewer technical secretariats at the international level than any other developed nation. The U.S. position in the international arena is symptomatic of its domestic standardiza­tion activity. With over 300 000 volunteers running up an annual bill of $2 billion, the U.S. represents the largest voluntary standards community in the world [29]. Paradoxi­cally, as much energy seems to be expended fighting standards (output and process) as formulating them [11], [13]. This

Manuscript received March 10, 1986; revised June 15, 1986. This work was supported by The American Society for Testing and Materials (ASTM) and the National Association of Purchasing Management (ΝΑΡΜ).

The author is with Weatherhead School of Management, Case Western Reserve University, Cleveland, OH 44106.

IEEE Log Number 8715502.

stems from a lack of understanding of the role these standards play in the marketplace. Standardization activity for industrial products is in large part an attempt to arrive at an understand­ing and agreement on the technical criteria that will be used to evaluate a product offering. The tension however, is between the technical specialists creating rationality in order to ensure ongoing technological refinement and growth, and the busi­ness manager's concern with market position.

The standards community has not helped much in educating the business community. From Harriman's 1928 discussion [10] to Sullivan's 1983 treatment [29] of standardization, the primary concern of this profession has been with internal efficiency consideration of standards. This article reports on a research study whose objective is to define the role voluntary product standards play in the industrial marketplace. Two competing conceptualizations of this role are presented in the next two sections, followed by an empirical test of their contentions.

THE ECONOMIC VIEW

Looking at product standards from a market perspective using published material may prove futile as sources are minimal and fraught with definitional problems; economists, the natural constituents to explore this issue, have either neglected it [11] or have decried the standard setting process as collusive and incapable of social good. Brady [3] in fact goes so far as to claim that economists are almost unaware of its existence.

The few economists who have dealt with standards and standardization do so as the inverse of product differentiation ([5], [11], [14]). These theorists focus on the information content of an industry standard, arguing that use of a standard reduces uncertainty along the technical dimension thus elimi­nating or decreasing the role of marketing characteristics such as brand name and manufacturer's reputation in the market­place. Noneconomic criteria, (e.g., manufacturer's reputa­tion) it is argued, are surrogates for product performance and reliability, concluding that an industry standard by virtue of its information content eliminates or sharply reduces concerns about product performance and reliability and hence the importance of these noneconomic criteria. The purchaser's evaluative criteria thus becoming more price based. The National Industrial Conference Board in a Survey of Standards concluded:

"The object of standards and specifications is primarily to eliminate superficial barriers and to center attention on price/' [22, p. 260].

0018-9391/87/1100-0236$01.00 © 1987 IEEE

REDDY: VOLUNTARY PRODUCT STANDARDS 237

The theorizing and the empirical work in industrial market­ing has followed similar conceptualizations. Parket [25] in a survey of purchasing managers reports that for standard products the two main attributes in the choice criteria are price and delivery. Lehman and O'Shaughnessy [19] report similar findings in a survey of 220 purchasing managers. Corey [6] notes the concern some vinyl manufacturers had with an industry standard and the "equalization" it may bring about in their brand names. These results and observations, though consistent with the economists' theoretical constructs, intro­duce a methodological and definitional problem.

The word "standard," though often used in the marketing literature, has never been clearly defined and operationalized. For example, in a given study, is it an individual respondent's construct? One imposed by the researcher? Or a widely known industry one? Given these questions about the basic construct of these studies, interpretation can only be undertaken in the context specified or implied by the researcher.

The only two researchers that have clearly acknowledged the distinction between company-specific and industry-wide standards in the marketing literature take similar stands with respect to interpreting their role in the industrial marketplace [7], [21]. Both articles take a normative stance on the standardization issue, suggesting that industrial firms should take a proactive stand toward standards development. This is an attempt to influence the standard setting procedure, either by fighting it so that standards are not developed and the evaluation by buyers does not become price based, or failing which, dominating the standard setting process to get their company product characteristics "spec'd in" to the industry standard. Given the due process requirements of the standard setting procedure and the antitrust laws of the United States, these authors' suggestions are at best difficult and at worst illegal.

The prime operating assumptions of these theorists to date remains equalization, i.e., once an industry standard is formulated and used as the basis for procurement, the decision-making criteria center on economic variables thus negating or minimizing the investment in goodwill built up in the marketplace by an individual firm.

THE INSTITUTIONAL APPROACH

An alternate conceptualization of the role of standards clearly acknowledges the cooperative activity that is inherent in development and diffusion of technology. This argument, termed the institutional approach, differs from the economic argument on one crucial dimension—the result of the coopera­tive action (a standard) is viewed as inseparable from the process that brings it about. Product standards are an output of activity involving competitors, customers, and suppliers. The resulting document is appropriately titled a public good whose stated purpose is self regulation of product quality and variety.

The primary impetus for this cooperative activity is the interdependence technology imposes on players in the industrial marketplace. Industries characterized by stable technologies and mature markets tend to operate within a product network that is highly stable (e.g., mature technology based indus­

tries). This stability in turn creates subunits of the network that for a period of time take on the characteristics of total independence. However, in an environment where change is ever present, the effectiveness of an industrial manager may, in large part, be determined by the conscious attention paid to managing such interorganizational, interindustry interdepen­dences.

Horizontal [1] and vertical [28] interdependencies have been acknowledged in industrial markets. The focus, how­ever, has remained at the micro level, not fully exploring its implications at the macro or the institutional level. The work of Thompson [30] on the early automobile industry and Corey's [6] research detailing the development of markets for the then new products of vinyl and aluminum provide excellent examples of vertical interdependencies mediated and managed by horizontal collective action-standard setting.

Thompson [30] looked at intercompany technical standard­ization in the early automobile industry in an attempt to explore interrelationships between mechanical technology and business structure. Early automobile manufacturers were inextricably tied to their parts suppliers and the suppliers to their individual customers, creating a high level of vertical interdependence in the marketplace. It was conscious collec­tive action by the suppliers of parts and manufacturers of automobiles mediated by the Society of Automotive Engineers (SAE) that enabled industry-wide standards to be developed. The development of these standards decreased tying arrange­ments at the vertical level but increased horizontal interdepen­dence amongst the parts suppliers as compatibility became a critical issue. Standardization enabled manufacturers of compo­nents to reduce their reliance on individual automobile manufacturers and specialize in fewer product lines. This specialization brings forth the issue of compatibility among vendors of components as the automotive manufacturer needs to mix and match components from different manufacturers to create his final product—the automobile.

Corey [6] took the perspective of the manufacturers of vinyl and the trouble they faced maintaining end product quality due to the introduction of a fabricator in their linkage to the end user market. Their efforts were focused on the information needs of the end user market to which they had no direct link. The manufacturers, by banding together around common concerns of fabricators dilution of quality, were able to specify certain performance expectations to the market through the Society of Plastic Industries (SPI). In this case as well, there was a marked reduction of vertical interdependence but an increase in the horizontal one as manufacturers conformance to the specified standard was crucial to provide a clear base of understanding to the marketplace.

These examples illustrate how standards reduce vertical tying arrangements. This decrease in the rigidity of the seller-buyer link permits specialization among manufacturers and a corresponding increase in horizontal interdependence between them. Standards, it could thus be argued, rather than the great equalizers as put forth by economists, tend to be coordinating mechanisms in a society where technological turbulence and specialization of output are inherent. A key differentiating factor between the economic framework and the institutional-

238 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. EM-34, NO. 4, NOVEMBER 1987

ization arguments put forth in this section is the amount of new knowledge introduced into the marketplace. The institu­tional framework would argue that the process of standard setting brings together competing individuals and organiza­tions with reservoirs of proprietary and nonproprietary knowledge. The cooperative action in formulation of a standard under these conditions of "conflict resolution" represents consolidation and formalization of non-proprietary knowledge bases. Ensuing competitive action thus taking place around the proprietary information owned by individual organizations.

In addition, customer involvement introduces a "hierar­chy" issue [12]. Taken collectively, the technical needs of customers may also be classified as common and unique. Thus, by bringing together differing knowledge bases and customer requirements, the standard setting process evolves a standard that establishes an acceptable base on which to base competitive action and specify differing needs [27]. Fig. 1 illustrates this contention. The institutionalization argument is supported by the fact that very few standards completely satisfy the specification requirements of industrial customers. More often, they tend to be used as the basis for further refinement of technical requirements. This represents a more balanced and realistic interpretation.

As very little new information is introduced into the marketplace, it could further be argued that buyer behavior remains unaffected when a formulated standard is used as the basis for specifying procurement requirements.

CHOICE CRITERIA AND USE OF STANDARDS

The empirical part of this research is designed to answer: Is the perceived importance of choice criteria in industrial procurement related to the use of industry standards? In other words, does the relative importance of economic and noneco-nomic choice criteria in evaluating a product vary between users and nonusers of an industry standard? Fig. 2 shows a listing of choice criteria classified along product/vendor and economic/noneconomic dimensions. This is an extensive listing; therefore, not all will be applicable to every product. The attributes in cells 1 and 3 add up to represent what has been termed economic value to the customer [8] or value-in-use [18]. The basis of evaluating competing offerings are the relevant choice criteria in Fig. 2. Depending on the nature of the product, the relative importance of the criteria in each cell would vary.

The economic arguments presented earlier contend that in the absence of an industry standard there is technical uncer­tainty associated with a product with each cell contributing its share to the evaluation process. The presence of an industry­wide standard tends to equalize vendors along the technical dimensions of the product (cell 1) shifting the evaluation criteria to the remaining three cells (2, 3, and 4). The criteria in cells 2 and 4 tend to be perceptual measures of subjective criteria often used as surrogates for product quality. The presence of a standard implies more information and reduced uncertainty concerning product performance and reliability. Thus, among users of an industry standard, the importance of criteria in cells 2 and 4 for product evaluation may decrease as

Buyer-Seller Interface

Industry Standards

C1-C3: Knowledge bases of competitors (technology)

Non-Proprietary v2/A technical Knowledge

U1-U3*. Technical Requirements of users

Η .Common ' Requirements

Fig. 1. Public good conception of voluntary product standardization.

Economic Non-Economic

Product

- Performance

- Reliability

©

- Preference of user - Brand name - Appearance - Ease of operation and

maintenance - Features ^-^ (D

Vendor

- Price - Financing terms - Training offered - Training time - Oel ivery - Warranty - Installation and post

purchase costs

- Reputation of supplier - Supplier flexibility - Technical service - Confidence In salesmen - Reliability of delivery terms - After sales service - Reciprocity

Θ Fig. 2. A classification of product choice criteria.

well, leaving the choice criteria of cell 3 as the primary evaluative criteria. The institutional approach contests this viewpoint suggesting that there would be no difference in the relative importance of choice criteria between users and nonusers of an industry standard.

METHODOLOGY

The hypotheses to be tested relate specifically to under­standing the differences, if any, between those purchasers who use an industry standard as the basis for their technical specification and those who do not. Two different products were used for data collection, and for each product the two most important purchasing influences (one technical and one nontechnical) were surveyed.

EXPERIMENTAL DESIGN

Generalizability concerns dictated the use of multiple products, settings, and situations. Two different products were combined with three market settings. The first product chosen was a fluid power component (Ball Valve), as an initial survey indicated a good split between users and nonusers of an industry wide standard. This standard was formulated in 1972 and revised in 1980. Two O E M industries were chosen for in-depth survey: 1) machine tool manufacturers and 2) food machinery manufacturers. This product is viewed as much more important to operations by the food machinery manufac­turers as compared to machine tool manufacturers due to a greater degree of product liability concern. Hence it was felt

REDD Y: VOLUNTARY PRODUCT STANDARDS 239

the choice of two industries would permit the research to factor in the overall importance of the product as well, in respondent's evaluation of choice criteria.

For the second product a prospective situation was desirable with no currently existing standard in use. This would enable comparison and validation of results controlling for learning associated with a standard that had been around for some time (as is the case with the Ball Valve Standard). In addition the choice of a product class different from a component (Ball Valve) would broaden the scope of the research findings. A review of standards currently being written for equipment and materials uncovered a standard for uninterruptible power systems (UPS) in the final stages of formulation. UPS was chosen as the second product as it conformed to the require­ment of a different product class (equipment), adequate sample size availability, readily identifiable buying influences (partic­ipants), and the availability of a draft standard to forward to survey respondents.

The choice of the experimental vehicles thus satisfied the objectives of looking across:

a) product class (component versus system), b) product complexity (machine tools versus food machin­

ery), c) industries, d) technical versus nontechnical buying influences, and e) prospective versus retrospective situations.

The experimental design used was cross-sectional to enable comparison of users versus nonusers. The determination of users versus nonusers varied by the product as described earlier. For the Ball Valve (BV), a classificatory question was included to determine whether an industry standard was currently being followed. Response to this question (yes/no) formed the two groups. For the UPS, on the other hand, the author randomly assigned half the sample group to receive a standard, requesting that they make a decision using the information enclosed; the other half, constituting the control group, were not exposed to any mention of the standard.

SAMPLE CHARACTERISTICS

Dun and Bradstreet market information indicated the following population for the two industries chosen for the BV: machine tool manufacturers (SIC3541), 557 plants, and food machinery manufacturers (SIC3551), 491 plants. The two primary buying influences identified in the pretests for both industries were Purchasing Managers and Chief Engineers.

The primary buying influences for UPS were identified to be Managers of Computer Operations (nontechnical) and Electrical Engineering Consultants (technical). The Directory of Top Computer Executives indicated a population of over 7000, and the Directory of Consultants and Consulting Organizations showed an Electrical Engineering Consultant population of 121 with prior UPS experience.

Identification of buying influences (participants) followed an iterative procedure starting with the Sales Managers for each product [27]. They were requested to generate a list of buying influences, this initial list being used to poll the buyers. Five member organizations for each user industry were

contacted and each buying influence was asked to name other functions that would be involved in the product evaluation function. In addition each member was requested to rank the importance of the influences named (including themselves). The total number of identified influences for the BV was three, with the Purchasing Manager and the Chief Engineer being the most frequently mentioned and ranked. For the UPS a total of seven influences were identified with the Data Processing Manager and the Electrical Engineering Consultant topping the list in terms of frequency of mention and rank.

A mail survey was chosen to administer the instrument with personal contact via telephone as a follow-up. The mailing for the BV went out to the entire population in both industries. This complete mailing included Purchasing Managers as well as Chief Engineers. For the UPS study, the entire population of identified Electrical Engineering Consultants (121) was surveyed. A random sample of 220 Managers of Computer Operations was surveyed so as to provide minimum cell sizes.

INSTRUMENTATION

Identification of choice criteria followed the snowball procedure used for identifying the primary buying influences. Pretest respondents in unstructured interviews were asked to list applicable choice criteria and react to those generated by other participants. All choice criteria that were deemed relevant were included. Pretests with choice criteria generated above were undertaken before the mail survey was adminis­tered. Respondents in the survey were requested to indicate the importance of each of these criteria in procurement decision­making. A combination of constant sum and seven point semantic differential scales were used for measurement of these characteristics.

DATA COLLECTION AND ANALYSIS

The first mailing resulted in a response of 69 percent for UPS and 34 percent for the BV. The higher response rate for UPS was expected as the chosen sample was qualified before the survey was mailed requesting their participation. A second mailing was undertaken only for the BV study resulting in a final response rate of 54 percent. For both studies, a provision was made on the questionnaires to indicate unfamiliarity with the product. Nonrespondents were compared to respondents on structural factors to address nonrespondent bias. These structural factors included size of facility, level of education, number of years in the functional area, and frequency of reorders.

The data analysis dealt with three separate data sets, one each for the two BV industries and one for the UPS study. For each data set a two-factor fixed-effects factorial design was used. The two factors defined functional membership of the participants and use versus nonuse of a standard. The dependent variable set for this model is the self-reported importance scores of choice criteria.

The issue under investigation is differences in the relative importance of choice criteria. Α ΜΑΝΟ VA model was considered the most applicable, as it enables consideration of multiple dependent variables that are not mutually exclusive

240 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. EM-34, NO. 4, NOVEMBER 1987

TABLE I RELATIVE IMPORTANCE OF CHOICE CRITERIA

BALL VALVE MACHINE TOOL MANUFACTURERS

P u r c h a s i n g M a n a g e r s C h i e f E n g i n e e r s

C h o i c e 1

i n n = Ά& C h o i c e 1 Use S T D . Do N o t Use S T D . Do Not

C r i t e r i a Use S T D . Use S T D . Ν = 50 Ν = 50 Ν s 32 Ν = 52

P r i c e 3 4 . 8 0 * 4 2 . 6 0 * 2 9 . 6 9 34.81

Range o f * O f f e r i n g 16.64 1 2 . 7 2 * 2 0 . 0 0 20.38

M a n u f a c t u r e r ' s R e p u t a t i o n 12 .84 * 8 . 2 4 * 8 . 4 4 * 1 3 . 2 7 *

O n - t i m e D e l i v e r y 24 .80 21 .24 2 0 . 6 3 19.23

A b i l i t y t o Con fo rm t o

T e c h n i c a l S p e c i f i c a t i o n 6 . 8 0 * 7 . 2 0 * 1 8 . 1 3 * 8 . 0 8 *

A b i l i t y t o Customi z e P r o d u c t 4 .12 6 .92 1.88 3 . 4 6

TOTAL 100 100 100 100

* S i g n i f i c a n t - A N O V A ' s a t 0 . 0 5 l e v e l

1 C h o i c e C r i t e r i a Measured on C o n s t a n t Sum S c a l e s

(the ranking on price, for example, is not independent of the ranking on delivery reliability), thus enabling acknowledge­ment of tradeoffs being made by the respondents. In the presence of significant MANOVA findings, ANOVA and multiple discriminant analysis (MDA) have been used to determine the best linear combination of variables (in this case choice criteria) that discriminate among groups [2]. The group membership in this study being defined a priori as use/nonuse of a standard.

The objective of the data analysis is evaluation of the relative importance of choice criteria with an industry standard introduced as an intervening variable. Six separate compara­tive tests (shown below) were conducted with use versus nonuse of a standard as the classificatory variable:

1) machine tools—purchasing managers, 2) machine tools—chief engineers, 3) food machinery—purchasing managers, 4) food machinery—chief engineers, 5) UPS—DP managers, 6) UPS—electrical engineering contractors.

Statistical comparison tests did not take place across categories of buying influences (technical versus nontechnical) or across industries, as this information would have no interpretive value. Results of statistical analysis are presented in Tables I, Π, and ffl.

RESULTS AND DISCUSSION

The BV study did not uncover any significant differences between users and nonusers of a standard, holding true under

different industries and different functional classifications. As stated earlier comparison across functional groups and across industries was not deemed relevant.

In the UPS study, managers of computer operations showed no significant difference in their evaluation of choice criteria with the standard introduced as an intervening variable. Electrical engineering consultants, however, differed on four attributes. Those who received a standard and were asked to base their responses assuming that it would be available to use, ranked manufacturer's reputation, training, after sales service, and ease of installation as more important than those who did not use a standard. As these findings were counter to the equalization contention, personal and telephone interviews were conducted with five members of each classification chosen at random (standard and nonstandard). Respondents were asked what effect that standard had or would have on their ranking of choice criteria. The responses of both groups were consistent. They felt a standard, rather than decreasing dependence on the vendor, tended to increase reliance on them. A standard, it was suggested, represents a broad-based listing of technical characteristics that is rarely applicable in its existing form for an individual buying organization. Procure­ment influences use this broad base that a standard represents to build their individual requirements on, thus deferring technical knowledge of the base that the standard represents to the potential supplier. This dependence on the supplier's information base in turn creates dependence on the aforemen­tioned criteria.

Taken together, these two studies (BV and UPS) raise serious questions about some popular contentions regarding

REDDY: VOLUNTARY PRODUCT STANDARDS 241

TABLE II RELATIVE IMPORTANCE OF CHOICE CRITERIA

BALL VALVE FOOD MACHINERY MANUFACTURERS

Purchasing Managers Chief Engineers 1 Ν • 12 8 Ν « 96

Choice 1 Use STD. Oo Not Use STD. Do Not Criteria Use STD. Use STD.

Ν « 74 Ν « 54 Ν « 46 Ν * 50

Price 37.97 37.22 36.96 30.40

Range of * * Offering 12.70 8.74 14.13 21.00

Manufacturer's * ·* Reputation 10.14 12.48 16.52 10.80

On-Time Delivery 23.65 22.41 19.35 21.00

Ability to Conform to Technical * * Specification 12.30 12.87 6.09 15.04

Ability to Customize * * Product 3.24 6.82 6.96 1.76

TOTAL 100 100 100 100

* Significant - ANOVA's at 0.05 level

Choice Criteria Measured on Constant Sunr Scales

standards. Price and delivery, the two attributes consistently mentioned by the equalization theorists, did not show any significant difference. This finding holds under differing conditions of product complexity (machine tools and food machinery), product class (component and equipment), and test situations (prospective and retrospective).

The findings of this study indicate that most attributes did not differ significantly and those that did (in the one instance described above) tended to move in a direction opposite to that hypothesized by the economic theorists, i.e., subjective vendor-related attributes tended to become more important with the use of an industry standard. Thus, the use of a standard, rather than being the great equalizer, may well create more dependence on nonproduct factors or criteria of the vendor, as a certain amount of expertise is referred to the supplier organization rather than being internalized by the buying organization.

The results of research and arguments presented strongly question the economic contentions on the role of standards in the marketplace. Not only does the importance of subjective criteria move in a manner counter to the equalization hypotheses, but rapidly changing technologies impose a costly lesson on suppliers who engage in typing. A radical break­through by a competitor may reduce demand for the entire "t ied" system. Kurdle's [16] research into the farm imple­ment industry illustrates the volatility under these conditions. Standards are an important stabilizing factor in richly coupled systems and are finding increased acceptance in such tradition­ally " t ied" industries as data processing [13], [24].

Marketers and managers by and large have subscribed to the notion that standards in one form or the other tend to reduce the importance of subjective criteria in the marketplace. This has resulted in active resistance to the adoption of standards (i.e., IBM's handling of COBOL and ASCII are well documented), and attempts being made to engage in tying arrangements wherever possible.

From the market perspective the issue is not whether to subscribe to standards or not; it is more an issue of what and how to deal with this growing awareness and use by the consuming industries. A look at the standardization activity in the United States may reinforce this. The number of voluntary product standards is growing at an increasing rate, doubling to 30 000 in the last 15 years. Another noteworthy development is the approval of the OMB Circular A-119 in 1982 which encourages federal agencies to use voluntary product stand­ards.

Marketers' reaction to this whole area has ranged from total neglect to attempts at managing the system in their favor by trying to get a producer's design (design standard) approved as opposed to a functional one (performance standard). Their behavior in this situation has been along two dimensions-ignorance or illegality. At the microlevel, the notion of being "spec'd in" [15], [31] still remains a major concern, without an adequate understanding of what it means.

In conclusion, the recommendations to marketers are rather simple. Understand the standardization environment as it invariably affects your product strategy. Learn to monitor it and actively participate in it, coordinating involvement with

242 IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. EM-34, NO. 4, NOVEMBER 1987

TABLE III RELATIVE IMPORTANCE OF CHOICE CRITERIA

UNINTERRUPTIBLE POWER SYSTEM

Choice 1 Data Processing Managers

Ν « 126 Electrical Engineering Consultants

Ν e 60 Criteria Use STD.

Ν « 54

Do Not Use STD.

Ν « 72 Use S T D : " Ν - 28

uo Not use STD.

Ν « 32 Mfr's. Reputation 5.82 5.78 6.75* 6.00*

Warranty 6.00 5.94 6.75* 5.75*

Ability to Conform to Technical Specification 6.33 6.17 7.00* 6.13*

Life Cycle Costs 5.44 5.56 4.50 4.63

After Sales Support 6.07 6.17 6.50* 5.88*

Training 4.93 5.11 6.00* 4.25*

Delivery 5.22 5.14 5.25* 5.63

Size of UPS 5.33 5.31 4.00 4.38

Ease of Installation 5.11 5.06 5.75* 4.13*

Ability to Upgrade 5.04 5.50 6.00 4.00

Reference Letters 4.00 4.00 3.50 3.16

Prior Experience 3.93 4.33 5.25 5.00

Recommendations of Computer Vendor

4.00 4.21 5.75* 4.50*

Significant ANOVA's at 0.05 level

Choice Criteria Measured on 7 point Scales (1 • Not Important, 7 * Very Important)

the technical and the purchasing function. Standardization in no way reduces the importance of marketing. It in fact expects more of it by broadening the scope of operations and demanding it to be just as deft at cooperative activity in addition to competitive activity. Understanding standardization is understanding how the components of the marketing system (core, publics, and the macro environment) interact.

The technical function within organizations can play a key role in dispelling some of the misconceptions about standard­ization. Engineers, though the primary impetus for technologi­cal breakthroughs, have often had to rely on nontechnical marketers and managers to make their projects commercially viable. It is this inability on our part to engage in meaningful collective action (within and between organizations) early in a technology life cycle that has created fragmented industry positions in new technologies [4], [23], [32].

SUGGESTIONS FOR FUTURE RESEARCH

The research opportunities in this relatively unexplored area are rich. What is presented in this section is a listing of topics that seem to address current concerns. A recently concluded study sponsored by the National Bureau of Standards [26] showed a definite relationship between standards and product and process innovations. The ongoing work on regulation and

innovation could form the basis for exploring the relationship between self regulation (standardization) and innovation [9].

The empirical part of this research dealt with standards for interchangeability and performance. Work on issues related to certification and testing, and creation of nomenclature and symbols for emerging technologies will provide a broader understanding.

A recent study [17] discussed determinants of use of standards and involvement in standards setting. Additional work in this area will clarify the structural aspects of standardization.

Trade associations, professional societies, and institutions that mediate marketplace behavior have not been studied. In the present era of change and growing uncertainty, these institutions are likely to play an increasing role in the marketplace.

Voluntary standards, though widespread in industrial mar­kets, have found limited application in consumer markets, mandatory standards being the primary mode of product regulation. Voluntary standards are being increasingly used as the basis for government procurement specifications, be they for medical devices or military applications. This voluntary-mandatory' standards link needs ftirther exploration.

The international arena suffers from total neglect. Greater

REDD Y: VOLUNTARY PRODUCT STANDARDS

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understanding should be sought on issues related to standard­ization activity and export performance, and the role of standards in overseas trade. If one subscribes to Levitt's argument that technology drives everything relentlessly to­wards global convergence [20], then industrial markets will increasingly take on a global dimension. Construction of the Itaipu Dam on the Brazilian Paraguayan border may be an example of things to come. This, the largest hydroelectric system in the world—a complex of turbines, generators, switch and control gears, transformers, and conductors of a power system—must work safely and effectively to form a fully integrated complex from the power stations to the consumers. The interdependency this creates on suppliers of various components and systems is rather evident. What managers may wish to note is that the equipment came from hundreds of different manufacturers representing 43 coun­tries—all speaking the same standard.

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