PDPRIETI Policy Discussion Paper Series 13-P-018

Who Participates in the De Jure Standard Setting in Japan?

TAMURA Suguru
RIETI

The Research Institute of Economy, Trade and Industry

http://www.rieti.go.jp/en/

RIETI Policy Discussion Paper Series 13-P-018
October 2013

Who Participates in the De Jure Standard Setting in Japan?

TAMURA Suguru
Research Institute of Economy, Trade and Industry

Abstract
This research examines the participants in the de jure standard setting in Japan, so as tounderstand the benefits and costs that corporations receive from participation. In particular, theresearch and development (R&D) expenditure to sales (R/S) ratio is used to examine
corporations’ relative R&D position in their industry sector, in the following four sectors: (1)production machinery, (2) transportation machinery, (3) non-ferrous metals, and (4) informationand communications technology. In addition, an analytical framework for the cost and benefit
structure of corporate participation in standard development organizations is described. We havefound that in R&D-intensive industries, there is less participation from high R/S corporations.
This result is in accordance with previous research into European Union (EU) de jurestandardization, but not with the case of the United States.
Keywords: Standardization, De jure standard, De facto standard, R&D
JEL classification: O30

RIETI Policy Discussion Papers Series is created as part of RIETI research and aims to contribute topolicy discussions in a timely fashion. The views expressed in these papers are solely those of theauthor(s), and do not represent those of the Research Institute of Economy, Trade and Industry.

This study is conducted as a part of the Project “Standard Policy for Innovation” undertaken at Research Institute of Economy,
Trade and Industry (RIETI). The author appreciates the variable comments of Professor Nagaoka..

1. Introduction
This research examines who participates in the de jure standard setting in Japan, so as tounderstand the benefit and the cost that corporations receive from participation in the Japan
Industrial Standard Committee (JISC). In particular, the R&D expenditure to sales (R/S) ratio isused for examining the company’s relative R&D position in its industrial sector, in the following
four sectors: (1) production machinery, (2) transportation machinery, (3) non-ferrous metals, and(4) information and communications technology (ICT). In the formation of Japan Industrial
Standards (JIS), agreement among relevant parties is viewed as essential. The draft standard iscrafted in a group whose members consist of producers, neutral parties, and users, with an equalshare of each, according to the rules. After a draft is agreed upon by the drafting group, it is sent
to the JISC, which is in charge of establishing JIS. In the JISC, the draft is investigated andauthorized to become a JIS. In the authorization process, equal treatment of the three member
groups—producers, neutral parties, and users—is necessary.

In the JIS authorization process, members from corporations are meant to behave in the public
interest rather than for the profit of the corporation. However, there is no incentive for the
corporation to participate in the JISC if the cost of participation is greater than the benefit. In
that case, corporations would not serve as committee members even if nominated. Such asituation is not appropriate from the viewpoint of industrial policy. Hence, the cost and benefit
structure of participation in JISC committees is worth studying for the corporate side as well as
the JISC.

What kinds of benefits can a corporation obtain through JISC membership? What kinds of costs
does a corporation incur through participation in the JISC? While answering these fundamental
questions is beyond the scope of this research, this paper presents original data shedding lighton a cost-benefit model for participation and this will be useful for corporations when theydecide whether to participate in the committee. Such decisions are assumed to be made using
the inside knowledge of individual corporations unknown to the outsiders. Consequently, theadministration side of the JISC is not aware of the merits and demerits from the corporations’perspective. It is useful for the JISC to be aware of them in the policy design for the JISC so as
to strengthen the JIS system as part of national industrial policy. To this end, this study focuseson the research activities of corporations, since technology standards are the result of R&D
activities. The R/S ratio is used to gauge the R&D intensity of corporations participating in the
JISC. Comparative analysis is conducted across four industrial areas and corporation members
in terms of R&D. Through the comparison, the costs and benefits of participation in the JISC
committee for corporations are elucidated.

The organizational format of de jure standardization committees has been found to have a great
influence on the standard creation process, and thus is a key focus of standardization policy(West 2007). It is generally understood that standards are substantively affected by theframework of decision making in which they are developed. In a sense, the results or outcomesof a committee are ultimately controlled by the process by which the committee was formed.
Thus, the study of the process is as important as the study of the end result itself. In the case ofstandards, the process of creating standards through standard development organizations(SDOs) is as important as the actual drafting of standards themselves.

Standardization by committees or SDOs has not adequately been examined from a research
perspective (Steinfield et al. 2007). Generally, research conducted to date has focused on twoareas: how standard committees operate in practice (the structure of decision making) and how
strategic behavior of the participants influences the nature of agreed upon standards. In theprevious research on standardization activities, the role and effect of the standard formationbody or committee of each nation, generally referred to as SDOs, have been the primary focus.
For example, the effect of standardization activities by manufacturers in SDOs has been thesubject of research and analysis in regards to the American National Standard Institute (ANSI)

(Gandal et al. 2007).

The de jure standard-setting body in Japan is the JISC. In the JISC, there are technicalcommittees, which are in charge of deliberating on the original draft of a JIS. The draft of a JIS
is usually prepared by the relevant parties and submitted to the JISC for formal deliberation.
During the drafting process, consensus among the relevant parties is essential. When the draft
standard is submitted to the JISC technical committees, necessary modifications are madeaccording to the opinions of JISC committee members. The JISC is in charge of authorizationand confirmation, but the role is limited since a substantial part of the original draft is made by
the relevant parties. In sum, it could be said that the role of the JISC technical committee is toauthorize submitted draft proposals rather than substantial discussion (Figure 1). As formodifications, it is not generally observed that committee members from a specific group are
more active in revisions. It seems that opinions are based on the personal knowledge ofcommittee members rather than their belonging to a particular group. The JISC’s equivalent in
the United States is ANSI. The roles of the two organizations are generally similar in that they
are both responsible for setting de jure standards, which are used as national standards. On theother hand, de facto standards and consortium standards are typically formulated by interested
producers, typically private corporations. De jure standards are public standards, usually set bygovernmental or quasi-governmental agencies such as the JISC and ANSI, whereas de facto
standards, including consortium standards, are set through market mechanisms. Needless to say,the latter types of standards are strongly production-oriented and the objective is promoting
corporate innovativeness and increasing profitability. De jure standards, however, have abroader perspective than production, and may also aim to maintain public safety and promotesocial welfare.
[Figure 1]
Nevertheless, the general understanding that de facto standards are innovation-oriented and dejure standards are focused primarily on social infrastructure is changing rapidly and dramatically.
It is recognized in academic circles that developed nations such as Germany, France, the United
Kingdom, and Japan have begun to strengthen national SDOs to pursue standards as part ofnational industrial policy (Cargill and Bolin 2007). Considering this policy transition, thequestion arises as to what happens in these SDO activities. The membership and participants ofde jure standard bodies most certainly influences the setting of de jure standards.

A notable difference between Japan and the United States in de jure standard setting is that SDO
membership is not necessarily allocated evenly among producers, users, and neutral parties in
ANSI; hence, US corporations are thought to participate in SDO activities for pursuing theirown profit, whereas in the JISC representation is supposed to be equally allocated among theseparties under the Industrial Standardization Act of Japan. Gandal et al. (2007) note that, in thecase of standard setting in ANSI for communication modems, participants were mainlycompanies from the electronics industry in the United States. Participating corporations in ANSI
standard development receive the benefit of increased numbers of patents obtained pertaining to
new standards. This means that the process of de jure standard formation in the United States
provides participants on the committee with information that is beneficial for corporate
innovation.

However, in the case of the Japan, the membership of de jure standard committees has not beenreviewed to date. Especially in terms of R&D and corporate participation, numerical analysis of
the actual situation in JISC technical committee activities has not been studied, unlike theprevious study of ANSI. In particular, the degree of R&D-intensiveness and composition
breakdown between leading members and follower members by industry sector has not beenshown. In addition, the corporate size of JISC members has not been discussed before. Unlike
for ANSI, basic analysis and data on the actual situation and participation in JSIC have not beendeveloped.

JIS are the de jure standards formulated by the JISC, primarily concerning industrial products
and management systems. The JISC is part of the Japanese government. In other counties suchas the United States and in the European Union, the standard committee is typically set up notwithin a governmental agency, but within a quasi-public agency such as ANSI. Therefore, dejure standards are formulated by committees apart from the market mechanisms and competitionof corporations. De facto and de jure standards differ both in the nature of the standards and in
the formation process.

De facto standards change according to the power and influence of each corporation, andchanges are usually related to product innovation. Therefore, de facto standards are often viewed
as being important because they are decided in the market. Needless to say, however, de jurestandards provided by ANIS, JISC, ISO, and the International Telecommunication Union are asimportant as de facto standards. Particularly in the field of ICT, product innovation is impossible
without the de jure standard, as shown in the case of ANSI modem standards. Indeed, in the caseof Finland, growth in national innovation is attributable to the development of the mobile
telecommunication industry (Tokumasu and Watanabe 2008). Standardization plays animportant role in this industry because communication between new mobile telecommunication
devices requires a standardized communication protocol.

De facto standards are inevitably influenced by corporations’ behavior in the market, so it
likewise should be asked how de jure standards activities affect corporations. This question ties
back to the fundamental research interest of this paper: What is the corporate benefit of JISC
participation?

JIS standards are formulated by the JISC, a governmental committee in the Japanese Ministry of
Economy, Trade and Industry (METI). Its activities are publicly oriented. The stated goal of the
JISC is to improve economic activities through the formation of standards that improve productinteroperability, that make production more efficient by reducing the use of different parts, andthat benefit users in terms of safety and health.

In this research, a literature review is conducted from a theoretical perspective, the results ofwhich are interpreted in the model equations to identify the costs and benefits of committee
participation for corporations in terms of R&D level. In addition, participating members are
categorized as either leading corporations or following corporations. Where the R/S ratio of acorporation is above the average R/S ratio of its industry, it is categorized as a leading
corporation and when the R/S ratio is lower than the industry average, the corporation iscategorized as a following corporation. Policies are then examined to identify methodologies toimprove participation by industry sectors on de jure standard committees and make committee
activities more oriented toward corporate innovation. In addition, especially for high-technology
industries, it is noted that establishing guidelines for the protection of R&D trade secrets
promotes participation by corporations. Because product innovation in the ICT industry has
made standardization an essential activity, a safety system for corporations to protect trade
secrets while pursing the formation of standards is a necessary component of the corporate
intellectual property (IP) management system.

In sum, the objectives of this study are as follows:
To examine who participates in the de jure standard setting in Japan, so as to understand what
benefits corporations receive through participation in the de jure standard formation.

This research is of an introductory nature and aims to facilitate future inquiry. The results will be
an initial step toward further development and, as a basic reference, will be beneficial toacademic scholars. The results will also be useful for the improvement of the de jure standard
formation process. Ultimately, the knowledge and information obtained through this study will
be valuable to countries around the world, as de jure standards are prepared in both developedand developing countries, although de facto standards are generated primarily from market
competitive corporations in developed countries.

2. Literature Review
In the past research, standardization organizations have been the target of investigation because
information on SDOs is more easily obtainable. One research topic on SDOs is the coordination
cost among participants. Delays in standard setting may result in the loss of market opportunity.
Large membership of SDOs is associated with longer standard development time, as having
more members on SDO committees can result in delays in the processing time for new
standards (Simcoe 2007). According to Farrell (1996), the average duration to formulate astandard is five to seven years in the case of de jure standards setting developed by the ISO andthe International Electrotechnical Commission.

Changes in membership may occur according to the benefit that each corporation receives since
the standards are formed through the agreement of the participating members. A membershipchange was observed in the Internet Engineering Task Force (IETF), which is a consortium
standard-setting organization. On the IETF, corporate members increased from 20% to 60%
from 1986 to 2002, while representatives from the governmental sector decreased dramaticallyfrom 80% to 10% (Simcoe 2007). This finding may suggest that the benefit of participation in
SDO is increasing rapidly. Further, membership issues are certainly associated with standard
formation efficiency.

i) De jure standard formation in Japan and the United States
In the case of Japan, the de jure standard-setting organization is the JISC and participants ontechnical committees of the JISC are appointed by affiliation, with members from industry,
academia, and consumer groups. Participants represent three affiliation types on the committee:(1) neutral parties, (2) producers or manufacturer, and (3) users. In the process, the role ofproducers is mainly in authorization and deliberation, but when technology intensity is high,these corporations will benefit from making their own technology into technology standards.
This situation is different from the case of ANSI in the United States, for which membership
quotas seem not to have been adopted. The important parts of the general guidelines for ANSI
membership are as follows:

participation is open to all affected parties; and

decisions are reached through consensus among those affected (Cargill and Bolin 2007).

These differences suggest that standard setting can be affected by the formation process indifferent ways in Japan and the United States.

ii) R&D orientation and participation
As for the motivation to participate in SDO activities, it is reported that R&D-oriented
corporations and organizations are less likely to participate in the activities because of the fearthat the technology information of the corporation will unintentionally spillover. Instead,
R&D-oriented corporations are more likely to use their energy on patent applications to protect
their intellectual property assets and the results of their technological developments (Blind &Jungmittag 2008). In particular, high-technology industries are often unwilling to participate in
SDO activities. In contrast, corporations and manufacturers that are not R&D-oriented mayview SDO meeting attendance as useful for the collection of technology information (Blind2006).

In addition, research of the standardization effect on economic growth has also been conducted.
For industry sectors with a low and medium R&D level, investment in standard development
has an impact on economic growth, whereas in industry sectors with a high R&D level,
investment in patents has more impact (Blind and Jungmittag 2008). That research result
implies that, for corporations in low- and medium-technology industry sectors, the activities in
the SDOs are viewed more favorably and that the participation from such industry sectors on thestandard formation committee will be higher.

Unlike the previous research on the ANSI modem case, research on the relationship between the
JISC committee member affiliation and industry sector in terms of R&D level has not been
examined in past research. In the case of ANSI, the industry sector of the participant is notnecessarily decided from the viewpoint of affiliation diversity; indeed, committee construction
seems to have nothing to do with affiliation. However, in the case of the Japan, the structure of
the committee seeks balance between producers, users, and neutral parties. This difference may
affect the nature of the standards developed.

As for the role of government and the public, they are essential members in de jure standard
setting, as the formed standards are often used as part of the regulatory structure. De jurestandards are also used sometimes for governmental procurement since, from a technologicaland industrial policy perspective, governmental authority is highly influential in the de jurestandard setting. These authorities are sometimes particularly influential in high-technology
R&D areas (Hemenway 1975). For example, the National Bureau of Standards in the UnitedStates (now renamed the National Institute of Standards and Technology; NIST) asked theindustry not to create computer interface standards. In this case, the standard authority feared

the lock-in effect of the standard and that an interface standard could become an obstacle totechnological development.

3. Hypothesis
Corporations participating in the JISC responded to a request for participation, and the decision
to participate is considered to be made rationally. In the study, corporations are assumed todecide participation by calculating the benefits and costs of participation comprehensively andrationally. If the cost is very high and the benefit is low, a corporation will avoid becoming amember. Hence, in the model, members are those corporations which will profit fromparticipation. In the case of participation of leading corporations with high R/S ratios, it isassumed they receive a benefit by participating in the activities.
By considering Blind’s (2006) perspective, high-technology industry sectors would have anegative attitude towards participating in de jure standards formation processes, since theywould be concerned about unintentional technology spillovers. However, considering theincreasing influence of standards on R&D and innovation, the relationship between industrial
participants and standard formation might be different in the United States as seen in the
research results of Gandal et al. (2007), where participation in ANSI activities is beneficial inregard to corporate patents. In particular, in the United States, the incentive for a corporation toincorporate its own technology into standards from participating industries is high, since thestandards organizations are more willing to develop standards which use patented technologies,
as long as the firms commit to RAND licensing.

Hence, the hypothesis examined is as follows.
Hypothesis: For the de jure standard formation committee in Japan, the profit that corporations
receive from their participations is not necessarily high in technology-oriented industry sectors.

If the hypothesis is correct, the case of de jure standard setting in the JISC will be in line withwhat happens in the European Union rather than the United States.

4. Methodology
4.1 Data preparation
In this research, four large technology business sectors are selected since the participant list of
corporations is publicly available (JISC 2012). These industry areas are (1) production
machinery, (2) transportation machinery, (3) non-ferrous metals, and (4) ICT. The average R/Sratio of each sector is calculated, as well as the R/S ratio of participating corporations, the mean
R/S ratio of participating corporations, and the number of leading corporations. Here, a leadingcorporation is one which has a higher R/S ratio than the average for its industry sector. In
addition, to examine corporate size, the number of small- and medium-sized enterprises (SMEs)
is counted in each industry area.

4.2 Data sources
InTable1, the data were obtained from the Basic Survey of Japanese Business Structures andActivities (METI 2012) and the securities reports of individual firm. For the “Average R/S ineach technology area” and the “Sales growth in each technology area” in Table 1, data from the“Basic Survey of Japanese Business Structures and Activities” are used. For the preparation of
the R/S of participating corporations, the numbers of “R&D expenditure” and “Sales” in thefirm’s securities report are used and calculated unless the R/S ratio is directly noted in thesection on the R&D activities in the firm’s securities report. When R&D expenditure is notnoted in the securities report, these corporations are not counted in the category “Number ofcorporations reporting R&D expenditure”.

5. Analytical framework
On the basis of the literature review above the following cost equation can be formulated:

Costrisk of unintentional spillover

f R&D orientation

g kind of industry ×h corporate size ,where g (kind of industry) is positive when the industry is R&D-oriented and f (corporate size)
is positive when the corporate size becomes larger.

The benefit equation is expressed as

Benefitinformation of R&D

benefit of standardization of own or complementary

technology.
(In “ benefit of standardization of own technology ” , “ technology ” includes the maintechnology and complementary technology)
Thus, utility of participation can be shown by subtracting the costs from the benefits, for which
the equation becomesUtility of participation

benefit ‐ cost

information of R&D

benefit of standardizationof own or complementary technology – g kind of industry × h corporate size .
In the benefit of standardization, the expectation to set own technology as the next-generation
standards is included.)Here, if utility of participation

0, then participation in the SDOs will be beneficial for the

corporation. In that case, there will be corporate members if the membership is formed without
any external intervention from the SDO governing body. In the case of ANSI, there seems tohave been no such intervention. On the other hand, for the JISC, there is intervention andcoordination in membership formation.

The cost of becoming a committee member needs to be considered. Initially there is atransaction cost for participants (Transaction cost of membership) to become a member. This
cost, which is a sunk cost if membership is not obtained, can be expressed asTransaction cost of membership

information gathering of SDOs

transaction cost of

nomination.
In the case of free membership without intervention from the governmental authority, entrance
and exit incur no cost. Thus, the equation is reduced toTransaction cost of membership information gathering of SDOs.
In the case of restricted membership such as in JISC, where entrance and exit are coordinatedand there is intervention from the governmental authority, the cost becomes

Transaction cost of membership

information gathering of SDOs

transaction cost of

nomination.

Thus, by substituting the transaction cost of membership into the original utility of participation
equation, the following can be written:

Utility of participation

benefit ‐ cost

information of R&D benefit of standardizationof own or complementary technology – risk of knowledge spillover – transaction costof membership
information of R&D benefit of standardization of own or complementary– g kind of industry × h corporate size–

technology

information gathering of SDOs

transaction cost of nomination .
However, for corporate participants there is incomplete current information, which results in thebenefits of participation (e.g., information on R&D) being undervalued or neglected bycorporations. Hence, in the participation decision, the determinative factor would be entrance
cost (transaction cost of membership) and risk of knowledge spillover. Thus, low entrance costis estimated to be more important than the information benefit of R&D. Therefore, to promoteparticipation of a specific sector, the government can choose to decrease the transaction cost ofmembership to corporations administratively.

6. Results and Discussion
6.1 Hypothesis validation
The R/S ratios of the four industry sectors are presented in Table 1.Among these sectors, ICT
shows the highest value of 7; however, the average R/S ratio of the ICT corporations

participating in the JISC technical committees is about 4. In addition, no participants have an
R/S ratio above the sector average of 7. This result suggests that in the ICT sector, no leading
corporation is a member of the JISC. In other words, all participants are following corporations.
This seems to reflect a typical characteristic of this industry’s standardization activities. A
review of the literature suggests this result is in line with the case of EU de jure standard
formation (Blind 2006). Thus, the hypothesis is almost supported.
[Table1]
In the production machinery sector, the R/S ratio is about 3.19 and the average for theparticipating corporations is 4.00; the participant average is above the sector average. In
addition, four leading companies participate in the technical committees. This means that in thisindustry sector the JISC member corporations are leading corporations. This result shows thesame tendency as SDOs in the European Union. In the industrial sector where the leading
corporations participate, the participants can benefit from activities such as amending standards
and technology information gathering. This group is centered on leading corporations (Table 2).
[Table 2]
The other industry sectors can be said to be between the previous two. The sector of non-ferrous
metals has an R/S ratio of about 1.67 and the average R/S ratio of participating corporations is1.12. There are two leading corporations. The transportation machinery sector has asector-average R/S ratio of 5.9 and participants’ R/S ratio is below the sector average. However,among the participants, there is one corporation that has a higher R/S ratio than the sector
average; that is, there is one leading corporation in the sector. In these groups, the participating
corporations are a mixture of leading corporations and following corporations.

6.2 Corporate size
The participants are mainly from large corporations. The result is different from the literature
review showing that low-technology industries are more oriented toward standardization since
the technology level of SMEs is low. Almost no SMEs are found among the members of JISC.
The only example is in the ICT sector; however, that corporation is a consulting services
provider for ubiquitous information technology, not a vendor. So, SMEs are not involved in the
JISC de jure formation process. One reason why SMEs are passive with regard to
standardization formation is that they are in the position of using the formed standards.
Because compliance with JIS is used to promote products quality, SMEs are, at the least, expect
to play the role of standards users. In addition, from the technology level argument, thelow-technology SMEs will benefit from participation in SDOs (Blind 2006). The obstacle
hindering participation seems to be the cost accompanying participation. For example, corporate
employees are required to attend the JISC meetings; if there are no employees able to attend, it

is difficult for the corporation to participate. This is a human resource problem.

6. 3 Policy perspectivei) R&D perspective
For high-intensity R&D sectors, the committees where high R/S corporations participate are lessoriented toward standard setting. In such technology-oriented industry sectors, there are few
leading corporations that participate. This could be interpreted to mean that there is competition
between de jure standards and de facto standards and that market-oriented standards areprepared and maintained in consortium standard forums. For consideration of the situation, theutility of participation is described as below.

Utility of participation

information of R&D

benefit of standardization of own orcomplementary technology – risk of knowledge spillover –transaction cost of membership.
Then, to increase the utility of participation, what policy options are there for reducing the costof R&D information spillover and increasing the possibility of making corporations’ own
technology into standards? To increase the chances of making companies’ own technology into
standards, the role of the JISC committee needs to be reviewed. Currently, the role is thought tobe a passive one of authorization and deliberation. One improvement would entail that theopinions of the corporations themselves are positively expressed in the JISC for the purpose of
making their own (or complementary) technology standards.

ii) Intellectual property management perspective
In JIS there are standards that use proprietary technologies ( essential patents). This means thatthe development of the standards may involve disclosure of information which can influence
patentability and who gets patents. Hence, for corporate participants, special attention to the
management of such R&D proprietary information is essential. So far, this point has not been
considered from the corporate policy perspective, but seen more as personal issues forparticipants. However, information leaks often happen during the informal occasions
accompanying the official meetings. Corporate participants know the standards that involve
patentable knowledge, so there is the risk of R&D information spillover. Such risk cannot bedenied just because standardization of technology is not directly related to patenting. In thisregard, the JISC can send signals to private corporations and consortium standards forums to
attract attention to such issues by developing guidelines for JISC participants as well as JIS draft
committees for protection of such information. This is an issue which is not discussed in current
JISC activities. For this purpose, internal guidelines for SDO participants may help corporations
from the high-technology industry sectors in standard-setting activities. Such guidelines forparticipants may cover the protection of trade secrets during participation in SDO activities. The
guidelines will decrease the risk of knowledge spillover and thus increase the utility ofparticipation at the corporate level, promote participation, and benefit the internal control
process of corporations. As standardization activities are becoming more essential, especiallyfor corporations in ICT industries, a good balance between participation in standardization
activities and the protection of trade secrets must be achieved. In other words, a balance
between open innovation and closed innovation is essential. The risk of unintentional leaks of
R&D information may be implied by the research results showing that participation on ANSI
modem standardization committees is related to an increase in the number of patents obtained(Gandal et al. 2007). The worst case is if information revealed in the SDO is patented by otherparticipants. Unfortunately, while this is an important policy issue relating to SDOs, it has notbeen addressed at this point, even though the public policy instruments to protect trade secrets
and prevent unfair competition are being actively pursued in efforts to improve corporate
innovativeness in many countries through intellectual property management.

iii) Corporate size
It is found that almost all the corporations in the JISC committee are large firms. An increase inparticipation from a wide range of corporations would cover a wide range of policy needs. Tothis end, a pooling of the candidates or an introduction of pre-entry registration system ofparticipation is considered useful. The pooling system registers and makes a roster ofcorporations interested in JISC committee activities. The JISC bureau can nominate JISC
members from the list. This system will reduce the cost to the JISC of nominating corporations
as well as the costs for the corporations themselves. In addition, for the promotion ofparticipation in standardization, observer participation may be used as a method to increase thecorporate understanding of standard activities. In this case, observers do not have the right tovote but information about standard setting becomes available to them.

Needless to say, all standards are not required to be industry-oriented or innovation-oriented.
There are standards needed that focus on aspects beyond innovation. Ultimately, it is up to thepolicy authority to decide whether to adopt the methodology.

7. Conclusion
As stated in the goals of this study, the present research has revealed that among JISC
committee members, the average R/S ratio of participating corporations is lower than
the industry average in high R/S industries. For example, in the ICT industry there areno participating corporations that have a higher R/S than the sector average. This is notthe case for the other industries.

First, the previous research on standardization activities in Europe has shown that de jurestandardization activities are ineffective in promoting innovation in high-technology industry
sectors in the case of de jure standard formation in the European Union (Blind 2006). In Japan,
the result for de jure standard setting revealed the same tendency. The result suggests thatstandards for these industries are more formulated in the de facto or consortium standard
formation organizations. To improve the participation of the high R/S ratio corporations or
sectors in the de jure standard, the benefit of participation should be increased and the costshould be reduced. To this end, the guidelines for protecting propriety information in in the dejure standard development process are useful for the improvement of risk control.

Second, almost all participants are large corporations. This is due to the high transaction cost ofmembership. It is important to let a variety of firms participate in the JISC committees so as toincorporate the policy needs of a variety of corporations. To this end, a pre-registration systemof the candidate firms seems effective.

Third, on the basis of previous research results, equations on costs and benefits fromparticipation in SDO activities were described from the perspective of R&D and membership
restrictions. Under the restricted membership case, the analysis suggested that the transaction
cost of participation should be lowered administratively in order to improve the participation of
corporate sectors, as can be seen from the following equation:

Utility of participation

information of R&D

benefit of standardization of own orcomplementary technology – risk of knowledge spillover –transaction cost of membership
information of R&D

benefit of standardization of own orcomplementary

technology

h corporate size––

g kindofindustry ×

information gathering of SDOs

transaction cost of membership .
From the equation, the reason why high R/S corporations are not participating is that the benefit
of information on R&D is low in the sector.

In general, the observed result is in line with the general understanding of SDO activities. In thehigh-technology industry sector, leading corporations are making consortium standards outside
JIS, and in the JIS, following corporations participate. As the JIS is a domestic standard, theconsortium standard development and JIS is more and more necessary from an international
perspective.

References
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Figure 1. Roles of the JISC Technical Committees and drafting committees
JISC
Drafting committees
1.Main function:
Deliberation on andauthorization of draft

1.Main function:
Preparation of draft

2.Participants:
Producers, users,
neutral parties

2.Participant:Producers, users,
neutral parties

3.Possible role ofparticipants:
Subjective review of
each technology area

Submission to JISC

3.Possible role ofparticipant:Pursuing own
technology advantage
in the draft

（1.00）7.25（0.23）

1.67（0.82）

5.29（0.44）

3.19(where ICT =1.00)
1)

Average R/Sin each technology
area‐45.9%‐19.4%

3.5%

24%

Sales
growth ineachtechnology
area(2011‐
2012)
1)

4.08

1.12

2.61

4.00

Average R/S
among
participating
corporations
2)

4.456

0.815

3.306

4.958

Median R/S ofparticipating
corporations
2)

6.63

2.062

6.539

6.63

Maximum value of R/Samong participating
corporations
2)

0

2

1

4

Number ofcorporations forwhich R/S isabove sector
average
2)

Data sources:
1)Basic Survey of Japanese Business Structures and Activities, 2)Securities report of each corporation, 3)JISC HP

ICT

Non‐ferrous metals

Transportation
machinery

Production machinery

Industry sector

8

5

17

7

Number ofcorporations
reporting R&D
expenditure
3)

Table 1. R&D tendency by industry sector

10

5

20

9

Number ofcorporations
participating
3)

1

0

0

0

Number of SMEs
3)

Table 2. Leading firms and R/S in terms of participation

Average R/S of participants
less than sector average

Average R/S of participants
greater than sector average

Sector without
participation fromleading corporations

ICT(None)

Sector withparticipation fromleading corporations

Transportation machinery
Non‐ferrous metals

Production machinery