The Business Effects of Standardization for SMEs

Standardization activity is a type of open innovation, specifically an outbound-revealing open innovation. Through standardization activities, a given technology spreads, its effects extend to the market, and the market expands. However, in many cases, competition intensifies, and price competition occurs. To succeed as global businesses, SMEs should take a strategy known as “Niche Top” in Japan. Standardization activities are more likely to constitute a risk for SMEs. However, the Japanese government has established a system that actively encourages SMEs to standardize. The authors of this manuscript conducted interviews with companies that are targets of this standardization system and investigated how these companies expand their businesses through standardization activities while still securing profits. The results show that standardization by SMEs does not cause the dissemination of technology and the expansion of markets; rather, it helps such SMEs erect barriers to market entry through the creation of standards and plays a large role in securing shares in niche markets.