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| Competitor's Involvemnet in or Hosting of Standard Formulation and the Quality of Enterprise Innovation |
| WAND XiongYuan, WANG HuiXian, WANG ZiPing
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School of Accounting, Zhongnan University of Economics and Law;
School of Business Administration, South China University of Technology |
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Abstract Existing literature primarily studies the homogeneous impact of standard implementation on enterprise innovation behavior based on the standard release time. However, enterprises succeed in the competition for standard-setting rights often voluntarily disclose their participation in standard formulation in the core competitiveness section of their annual reports, well before the official standard release time. In contrast, other enterprises in the same industry—those that did not participate in standard formulation, the de facto failed enterprises—are likely to make competitive responses upon learning of their rivals' involvement in the formulation of standards. Modern innovation economics holds that the feedback effect among standards, innovation and markets leave room for counterattack opportunities for enterprises that fail in standard competition. These failed enterprises can turn defeat into victory through high-quality innovation. Therefore, enterprises that fail in the competition for standard-setting rights may use high-quality innovation to counterattack successful enterprises, preventing them from being marginalized in the market or preparing them for victory in the next stage of competition through high-quality innovation.
This article identifies enterprises that publicly disclose information on participating in standard formulation as successful enterprises in the competition for standard formulation rights, that is, competitors, while identifying other enterprises in the industry as failed competitors. Based on the theory of standard competition, it explores how enterprises can cope with the failure of the competition for standard formulation rights by improving the quality of innovation. The research findings are as follows: (1) The innovation breakthrough degree of enterprises that fail in the competition for standard-setting rights is significantly positively correlated with that of successful enterprises. This conclusion still holds true after excluding the influence of the simple peer effect, the simple disclosure effect, and strategic information disclosure, indicating that failed enterprises actively respond to the failure in the competition for standard-setting rights by significantly improving the quality of innovation.(2) The competitive innovation response of enterprises mainly occurs in the group with more intense industry innovation competition, the group with weaker innovation capabilities of successful enterprises, and the group with stronger innovation capabilities of failed enterprises. This indicates that when industry innovation competition is intense, failed enterprises have stronger innovation capabilities, and successful enterprises have weaker innovation capabilities, Failed enterprises are more likely to significantly enhance the quality of their innovation to cope with the failure in the competition for the right to set standards. (3) When successful enterprises only participate in the formulation of standards —or are involved in the formulation of industry, local and enterprise-level standards, and the cumulative number of industry standards, the number of newly added standards and the degree of marketization of standards are higher, failed enterprises are more likely to significantly improve the quality of innovation to cope with the failure in the competition for the right to formulate standards. (4) The proactive response of failed enterprises has enhanced the strength of the real economy and reduced the risk of stock price crashes, indicating that the positive response of enterprises to the failure of the competition for the right to set standards in terms of innovation quality is conducive to their future long-term development.
There are two marginal contributions in this study. Existing literature focuses on how standards affect enterprise innovation, but fails to pay attention to the heterogeneous manifestations of the impact of standard implementation on the innovation behaviors of enterprises that do not participate in standard formulation and those that do. It also fails to explore based on the standard competition theory how enterprises adjust their innovation strategies to cope with the results of the previous competitive rounds. This article explores how enterprises that have not participated in standard setting can utilize high-quality innovation to make competitive responses to their competitors' participation in standard setting, which can make up for the above-mentioned deficiencies in such literature. Second, although existing literature focuses on the impact of innovation competition on enterprise innovation, it neglects the feedback dynamics between innovation, standards, and the product market. The failure of enterprises in the competition for the right to set standards is likely due to their failure in the innovation competition. The fundamental measure for enterprises to deal with the failure in the competition for the right to set standards is to improve the quality of innovation to gain an innovation competitive advantage. Therefore, this paper studies how enterprises adjust the quality of innovation to cope with the failure in the competition for standard-setting rights, which can make up for the above-mentioned deficiencies of such literature. In conclusion, the research in this paper contributes to a deeper understanding of the relationship between standards and enterprise innovation from the perspective of standard competition.
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Received: 26 November 2024
Published: 14 August 2025
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