Economic Benefits Standardization

Economic benefits of standardization

Summary of results

Final report and practical examples

Part A: Benefits for businessPart B: Benefits for the economy as a whole

Published byDIN German Institute for Standardization e. V.

Beuth Verlag

Page 2 Economic benefits of standardization: Summary

Economic benefits of standardization: Summary Page 3

Contents

Foreword 4

Preface 6

Part A: Benefits for businessThe effects of standardization: Results of the company survey andinterviews with experts (with references to examples) 8

Technical University Dresden, Faculty of Economics and Business ManagementProf. Dr. Armin Töpfer, Chair of Coorporate Management and MarketingProf. Dr. Ulrich Blum, Chair of Economic Policy and Economic ResearchDipl.-Vw. Gisela EickhoffDipl.-Vw. Isabelle Junginger

1. Strategic significance of standardization 92. Potential competitive advantage through standards 103. Standards in global markets 114. Cost reduction through standardization 135. Effects of standards on the supplier-client relationship 146. Standards and the formation of strategic alliances 147. Standards and research and development 158. Reaction time of standardization 169. Product safety and liability 1710. Public interest 1711. Standards work 1812. Standards bodies 19

Part B: Benefits for the economy as a wholeStandardization and technological change, the effects of standardization onthe German economy and foreign trade 20

Fraunhofer Institute for Systems and Innovation Research (FhG-ISI),KarlsruheDr. Knut BlindPD Dr. Hariolf GruppDipl.-Vw. Angela HullmannDr. Andre Jungmittag

1. Approaches and objectives 202. Results of the analysis of the connection between standardization and

technological change 203. Significance of standardization for the economy as a whole 224. Significance of standards for foreign trade 235. Comparison of the results of the macroeconomic analyses with those

of the company survey 26

Conclusion by the participating research institutes 30

Practical examples Dr.-Ing. Bernd Hartlieb (DIN) 31


Foreword

In recent years, technical standardization has been the subject of numerous aca-demic research projects. Although these projects did not ignore economic aspects,they lacked the theoretical background necessary for a detailed analysis. Industryhas become increasingly interested in assessing its economic efficiency, and thus ismore interested in the role of standardization.

Systematic and reliable results can only be attained on a common basis. Becausethere is greater pressure on industry to rationalize, the costs and benefits of stan-dardization must be examined from both a microeconomic and a macroeconomicviewpoint. The Presidial Board of DIN therefore asked research institutes to initiateresearch into the economic efficiency of standardization, with the aim of making thecosts and benefits of standardization transparent from both economic perspectives.

DIN, the German Institute for Standardization, contracted the Fraunhofer Institutefor Systems and Innovation Research Karlsruhe (ISI Karlsruhe) and the Depart-ments of Market-Oriented Business Management and of Political Economics andEconomic Research at the Technical University Dresden to jointly carry out thisresearch project in Germany, Austria and Switzerland.

This final report on "The economic benefits of standardization" presents the conclu-sions of the research carried out in these three nations, with the following conclu-sions:

As expected, company standards have the greatest positive effect on businesses, forthey help improve processes. When it comes to the relationship with suppliers andcustomers, however, industry-wide standards are the main instruments used tolower transaction costs and assert market power over suppliers and customers. Infact, industry-wide standards play a vital role in our increasingly globalized world.84% of the companies surveyed1 use European and International Standards as partof their export strategy, in order to conform to foreign standards.

From a macroeconomic perspective, it is significant that standards make a greatercontribution to economic growth than patents or licences, that export-oriented sec-tors of industry make use of standards as a strategy in opening up new markets, andthat standards help technological change.

This research project shows that industry-wide standards not only have a positiveeffect on the economy as a whole, but also provide benefits for individual busi-nesses who use them as strategic market instruments.

We would like to express our gratitude to the following companies and institutionsfor their financial support and willingness to provide a forum for discussion duringthe research project:

– the German Federal Ministry of Economics and Technology (BMWi),– DaimlerChrysler AG,– the German Electrotechnical Commission of DIN and VDE,

1 In the company survey carried out by the TU Dresden and presented in Part A of this document.


– Hans L. Merkle-Stiftung im Stifterverband für die Deutsche Wissenschaft(Bosch),

– Siemens AG,– ThyssenKrupp AG,– the Austrian Standards Institute (ON),– the Swiss Association for Standardization (SNV).

In addition to the present summary of research results, the Beuth Verlag has pub-lished the full reports of the participating institutes2.

Dr.-Ing. Torsten BahkeDirector of DIN

2 Gesamtwirtschaftlicher Nutzen der Normung, Unternehmerischer Nutzen 1, Wirkungen vonNormen: Ergebnisse der Unternehmensbefragung und der Experteninterviews(in German)

Gesamtwirtschaftlicher Nutzen der Normung, Unternehmerischer Nutzen 2, Statistisches Mate-rial und Auswertung (in German)

Gesamtwirtschaftlicher Nutzen der Normung, Volkswirtschaftlicher Nutzen, Zusammenhangzwischen Normung und technischem Wandel, ihr Einfluss auf die Gesamtwirtschaft und den Au-ßenhandel der Bundesrepublik Deutschland (in German)


Preface

The development of standards and technical rules by institutions given authority todo so by both the private and public sectors is an essential element of the tech-nological and economic infrastructure of a nation, and greatly influences its com-petitive ability and the strategies of companies. Increasing globalization has dra-matically changed the international business environment. This fact, together withthe changing role of standardization within the European and international contexts,make it necessary to examine both the form and content of standardization proce-dures in order to identify the economic implications of standards and technicalrules.

The joint research project "Economic benefits of standardization" was carried outsimultaneously in Germany, Austria and Switzerland, having been initiated by DIN,the German Institute for Standardization. DIN contracted the Department of Mar-ket-Oriented Business Management and the Department of Political Economics andEconomic Research at the TU Dresden and the Fraunhofer Institute for Systems andInnovation Research, Karlsruhe to carry out the project. Part A, "The effects ofstandardization: Results of the company survey and interviews with experts" wascarried out by the TU Dresden, and Part B, "Standardization and technologicalchange, the effects of standardization on the German economy and foreign trade"was researched by the Fraunhofer Institute. Due to technical and organizationallimitations, the study only dealt with selected aspects of the economic implicationsof standardization.

This analysis of the economic benefits of standardization takes as its starting pointthe four main partners in standardization: businesses, private households, the stateand the standards body; the latter acts as an intermediary between the other three.These three are affected by standardization in different ways. Their reactions andtheir motivation to become involved in standardization work form the basis of theresearch by the TU Dresden. In contrast, the Fraunhofer Institute adopted a macro-economic approach, concentrating on the link between standardization and techno-logical change, and the relationships between standardization, economic growth andexports. Together, the two parts of this study provide an interdependent analysis ofthe microeconomic and macroeconomic effects of standardization.

The research undertaken by the TU Dresden aimed to identify the economic effectsof standardization. Starting with a theoretical framework, the effects of standards onindividual businesses, particular sectors, and the economy as a whole were exam-ined. Of particular interest were the sources of motivation for participating in thestandardization process. The hypothetical framework was tested in a company sur-vey carried out in Germany, Austria and Switzerland. In addition, interviews wereheld with German and Austrian experts who represent the interests of privatehouseholds and the state.


The Fraunhofer Institute concentrated its research on the link between standardiza-tion and technological change. The question here was to find our whether the formand content of standards have a positive influence on technological change in Ger-many, and whether the standardization process responds to this change enough togive Germany an advantageous position in the global market. In conclusion, theimplications of these factors for economic growth and export are assessed, and theresults compared with the responses to the company survey.

Dresden and Karlsruhe, April 2000 The Authors


Part A: Benefits for business

The effects of standardization: Results of thecompany survey and interviews with experts

The four partners in the standardization process arelinked in a number of ways. A framework of hy-potheses was established on the basis of the litera-ture and the principles of industrial economics. Acompany survey was then carried out in Germany,Austria and Switzerland to check the validity ofthese hypotheses. Module 4,3 which includes theresults of the company survey, examines in detailwhether there were any fundamental differencesbetween the responses from the three countries.

In close cooperation with the national standardsbodies, ten sectors of industry were selected, in eightof which standardization activity is particularly in-tense. For control purposes, two sectors in whichthere is less activity were also selected. Over 4,000companies were selected at random and sent aprinted questionnaire. The response rate was over17%, giving 707 completed questionnaires forevaluation. The questionnaire contained 49 ques-tions covering more than 340 details.

The other partners in standardization, private house-holds and the state, were represented in interviewscarried out with ten experts each in Germany andAustria.

The present summary presents the most significantempirical results of the company survey and the ex-pert interviews, which are compared with the above-mentioned hypotheses. A more extensive discussionof these results is presented in module 5.

3 The results of this study are divided into five modules.Module 3 contains theoretical details, module 4 presentsempirical results, and module 5 presents the fusion of the-ory and practice. (These modules are published as a seriesof reports, see page 5, footnote 2.)

Hypotheses werechecked for validity ina company survey andinterviews with experts

A survey of over 4,000companies in Germany,Austria and Switzer-land was carried out

Response rate over17%

Expert interviews wereheld with representa-tives of public interestgroups, private house-holds and the state


This study focuses on the effects of standards on acompany, as well as on that company's interactionwith its immediate business environment. Theseeffects have a direct influence on company strategy.In particular, the study concentrates on the effects ofstandards on costs in general, on research and devel-opment, and safety. The effects on the company'sown business sector include potential competitiveadvantages over other companies, and the formationof strategic alliances. Finally, the relationship be-tween the company and its national standards bodywas examined.

1. Strategic significance of standardization

In a situation analysis initiated by DaimlerChryslerAG, experts from business, research, industrial or-ganizations and standards institutes established thatthe relevance of standards could be demonstrated in"numerous arguments, illustrations and examples"4.However, although this information is well-knownto standardizers, decision-makers within companiesseem hardly aware of it. This inadequate informationmeans that the strategic potential of standards is notfully appreciated, and the decision to participate inthe standardization process is made only on the basisof how time-consuming and costly this will be.

The company survey revealed that even thoughsome companies are not sufficiently well-informed,they are at least partly aware of the strategic poten-tial of standardization and can benefit from it.

An example of this can be seen in the fact that 75%of the businesses surveyed confirmed that they areinvolved in activities at the German Institute forStandardization (DIN), the Austrian Standards In-stitute (ON) or the Swiss Association for Standardi-zation (SNV). Because these companies want tohave an influence on international standardization,60% of their national involvement is at the Europeanor international level.

4 Cf. the lecture by Dr. Ing. Ghiladi: Strategic uses of stand-ardization for businesses. Report on the 31st conference onstandards in practice: Using knowledge to shape the future,Essen 1999.

A three-part report:– Effects of stand-

ardization within acompany

– Effects of stand-ardization on thecompany and itsbusiness environ-ment

– Relationship be-tween the companyand its nationalstandards body

Companies are gener-ally unaware of thestrategic significance ofstandards

National involvementin standardization inorder to influenceEuropean and Interna-tional Standards

Example Page

– ISOfix system 31– Geometric

product specification 31– Digital field protection 31


The survey showed further that businesses which areactively involved in standards work more frequentlyreap short- and long-term benefits with regard tocosts and competitive status than those which do notparticipate. Participating companies have more of asay in the adoption of a national standard as a Euro-pean or International Standard. In this case, thecompany gains a competitive edge because it willnot need to make extensive modifications in order toconform with a European or International Standard.

When a legislative body requires a technical rule, itwill frequently turn to standards. If a company hasbeen actively involved in developing these stand-ards, it can adopt the standard before it becomes law,avoiding costs which would otherwise be incurred ata later stage. 25% of the businesses surveyed hadalready chosen such a strategy at least once. Ofthese, 36% had been able to make large to very largesavings (on a rating scale of five ranging from verylittle to very large).

2. Potential competitive advantage throughstandards

The businesses surveyed rated the positive effect ofcompany standards on competitive status as slightlygreater than that of industry-wide standards (+10.4over +8.1 on a scale from –50 = very negative to+50 = very positive). The variance among theseevaluations is large enough to be statistically signifi-cant5. This suggests that company standards are seento have a more positive effect on competitive statusthan industry-wide standards (e.g. DIN Standards)and private industry standards (e.g. IBM standards,rated +8.2 on the scale).

5 Statistically significant: There is a lower than 5% probabil-ity that the results of a statistical inverstigation contradict aparticular hypothesis, although it is correct.

Where national stand-ards are adopted asEuropean and Interna-tional Standards, par-ticipation in standardswork more frequentlyresults in advantagesregarding costs andcompetitive status

Example Page

– ISO fix system 31– Geometric

product specification 31– Digital field protection 31

Involvement in stan-dardization in order toanticipate new legisla-tion and so avoid costs

Examples Page

– Construction products 32

Competitive advantagemore through companystandards than throughindustry-wide or pri-vate industry standards

Example Page

– Repair costs 32– Standardized VW

components 32� Standardized DASA

components 1 33� Standardized DASA

components 2 33


A major motivation for those businesses which par-ticipate in the standardization process (52 % of thosesurveyed) is their edge over non-participating com-panies in terms of insider knowledge. Early access toinformation is considered to be more important thanthe time advantage (60 over 55.5 on a scale from 0 =extremely unimportant to 100 = very important). Forthose companies which improve their competitivestatus through participating, the advantages of in-sider knowledge are significantly more importantthan those of time.

The survey shows that companies are able to asserttheir interests in the standardization process. Morethan 50 % are able to exert a great to very great in-fluence on the substance of standards, 46 % are ableto prevent undesired contents being included, and48 % are able to get desired contents included.

Thus, having an influence on the content of a stan-dard is an important factor in gaining competitiveadvantage.

3. Standards in global markets

Companies are confronted by different standards inforeign markets. 84 %6 of the businesses surveyeduse European and International Standards in order toconform to other national standards. A third of allbusinesses surveyed achieve their position in theexport market with products that conform to theirown national standards, and 27 % of them adapttheir products and services to foreign standards.

Asked about the costs incurred by adapting produc-tion to conform to foreign standards7, 80 % of thosesurveyed could provide no figures. 10 % of corre-spondents knew the costs involved, but did not wantto divulge the figures for security reasons. Thosewho did provide figures gave the costs of adapting toforeign standards as averaging DM 350,000 per

6 More than one response possible.

7 By "foreign standards" we mean all standards which do notcorrespond to European or International Standards, butwhich differ from national standards.

The advantage of in-sider knowledge

Example Page

– Insider knowledge 33– Geometric product

specification 31

Insider knowledgemore important thantime advantage

Example Page

– Insider knowledge 33– Valves 33

Competitive advantagethrough influencingcontents of standards

Example Page

– Digital image compression 33– Lasers 34– Valves 33– Spectacle lenses 34– Geometric product

specification 31� Food technology 34

Export strategy ofbusinesses: Conform-ing to European andInternational Stand-ards

Examples Page

– Masonry units 34– Construction products 32

80 % of the businessessurveyed do not knowthe exact cost ofadapting to foreignstandards (figuresgiven ranged from DM2,500 to DM 6 million)


year. The figures given ranged from DM 2,500 toover DM 6 million.

Harmonized European and International Standardsresult in businesses reducing their trading costs.62 %8 of the businesses surveyed stated that Euro-pean and International Standards simplified con-tractual agreements. 54 % of the businesses sur-veyed stated that European and International Stand-ards had lowered trade barriers in their sector. Na-tional standards can be used as non-tariff trade barri-ers against economic regions with different stan-dards. With the globalization of the marketplace,there are increasing demands for a worldwide sys-tem of standards (ISO/IEC Standards). At a Euro-pean level, this demand is met by European Stan-dards.

61%9 of the businesses surveyed stated that there arecosts involved in conforming with European andInternational Standards. In 37 % of the companiesthese costs are incurred because staff involved instandardization work have an increased workloadthrough travel, using foreign languages, etc. 37% ofthe businesses surveyed feel increased pressure fromtheir rivals because of the existence of European andInternational Standards. 46 % of them were able tosave money because they did not need to adapt theirproducts for export markets. 39 % of the businessessurveyed saw improved opportunities for coopera-tion, and 36 % benefited from a greater choice ofsuppliers.

The businesses surveyed claimed to have saved atotal of DM 31 million per year as a result of Euro-pean and international standardization. However,only 9.3 % of them provided actual figures, givingaverage savings of DM 466,000 per year. The fig-ures given costs of range from DM 4 million to costsavings of DM 13 million.



Advantages of harmo-nized European andInternational Stand-ards– Lower trading costs– Simplification of

contractual agree-ments

– Lowering tradebarriers

Example Page

– Laser pointers 35– Manufacturer's declaration 35

Costs and savings dueto the application ofEuropean and Interna-tional Standards

Examples Page

– Laser pointers 35

Only 9 % of the busi-nesses surveyed wereprepared to give actualfigures for costs andsavings


4. Cost reduction through standardization

Standardization can lead to lower transaction costs10

in the economy as a whole, as well as to savings forindividual businesses.

The results of the survey reflect this. The businessessurveyed rate the effects of standardization on trans-action costs as positive (mean value of +21.8 on ascale of –50 = very negative to +50 = very positive),indicating that transaction costs drop considerably asa result of standards, for they make informationavailable and are accessible to all interested parties.They are therefore a factor in reducing transactioncosts.

The interviews with experts, which were carried outwith representatives of major firms as well as ofsmall- and medium-sized enterprises, revealed thatthe costs of developing company standards and in-dustry-wide standards are not easily quantified. Thecompany survey took account of this by askingabout the effects of company standardization andindustry-wide standardization on production costsand on the amount of communication necessarybetween departments. The businesses surveyed ratedthe reduction in production costs through companystandards as considerable, i.e. as statistically signifi-cant, and greater than that through industry-widestandards (+17.2 over +3.9 on a scale of –50 = verynegative to +50 = very positive).

The effect on interdepartmental communication israted considerably higher for both company stan-dards and industry-wide standards (+23 over +14.5).For both types of standard, the positive effect oninterdepartmental communication is rated signifi-cantly higher than the effect on production costs.

10 In a market context, transaction costs include the cost ofgathering information, negotiating, market positioning, etc.

Reducing transactioncosts through stand-ards

Examples Page

– Waste water engineering 35– The International System of

units 35– Lasers 34– Maintenance costs 35

Costs of developingcompany standardsand industry-widestandards are not easilyquantified

Company standardshelp lower productioncosts more than do in-dustry-wide standards

Examples Page

– Repair costs 32– Standardized VW

components 32– Corrosion protection 36– Standardized DASA

components 1 33– Standardized DASA

components 2 33

Positive effect of com-pany and industry-wide standards on in-terdepartmental com-munication

Example Page

– Efficiency 36


5. Effects of standards on the supplier-clientrelationship

The survey revealed that standardization was ratedpositively in its effect on buying power over suppli-ers (+13,8 on a scale of –50= very negative to +50=very positive). The application of standards and par-ticipation in standards work relevant to the suppliermarket can therefore enable a company to exertmarket pressure on their suppliers. Thus, we mayconclude: The dependence of a business on a singlesupplier can be reduced by standardization.

Standards can help businesses avoid dependence ona single supplier because the availability of stan-dards opens up the market. The result is a broaderchoice for businesses and increased competitionamong suppliers. Companies will also have in-creased confidence in the quality and reliability ofsuppliers who use standards.

Standards are also used by businesses to exert mar-ket pressure on companies further down the valueadded chain, i.e. their clients. Those surveyed ratedthe effect of these standards in this context asslightly positive (mean value +11.6). Businesses arethus able to use standards to broaden their potentialmarkets. However, this also exposes them to morecompetition.

The effect of standardization on the market influenceon suppliers is considerably - that is, statisticallysignificantly - higher than that on clients.

6. Standards and the formation of strategicalliances

Industry-wide standards form a collection of harmo-nized technical rules. This "coding" of knowledgecan help businesses cooperate and create strategicalliances. In the company survey, respondents ratedthe effect of standardization on cooperation withcompetitors as rather positive (+14.2 on a scale from–50 = very negative to +50 = very positive). Stand-ardization therefore encourages cooperation between

Standards have a posi-tive effect on the buy-ing power of companies

Examples Page

– Masonry units 34– High tech door locks 36

Standards offer a widerchoice of suppliers withthe same degree ofquality

Examples Page

– Masonry units 34– Food technology 34

Standards are used toexert market pressureon clients

Standards effect rela-tionship with suppliersmore than that withclients

Examples Page

– High tech door locks 36

Industry-wide stand-ards have a positiveeffect on cooperationbetween businesses


businesses at the same stage in the value chain.

The surveyed companies rated the effect of privateindustry standardization on cooperation with com-petitors as positive (+13.4). Private industry stand-ards are characteristically developed by businesseswith a common goal, without consensus or publicparticipation, but with the involvement of other in-terested parties. For this reason we expected the rat-ing to be clearly higher than that for industry-widestandards. Respondents rated industry-wide stand-ardization (+14.2) slightly more positively than pri-vate industry standards, but the difference is not sta-tistically significant. There is no great differencebetween the effect of private industry standards andindustry-wide standards on forming strategic alli-ances with businesses at the same valued addedlevel.

In any case, it is clear that cooperation betweencompanies in matters of standardization is advanta-geous, for the resulting synergy can help reducecosts and increase profits. There may, however alsobe negative economic effects. For instance, overlyclose cooperation can lead to a monopolistic struc-ture, with all the resulting disadvantages for the con-sumer. It should be noted, however, that this studyonly compared businesses which are at the samestage in the value added chain, and it cannot be usedto assess the effects on businesses which are notimmediate competitors.

7. Standards and research and development

The results of the company survey show that indus-try-wide standards present less of a hindrance toinnovative projects than do other factors (34.8 wherestandards are available, 32.9 where they are notavailable, on a scale from 0=no hindrance to100=great hindrance). In comparison, long adminis-trative and bureaucratic procedures were rated at61.2 and the economic risk of innovative projectswas rated at 61.1 on the same scale.

Similar use of privateindustry standards andindustry-wide stan-dards when formingstrategic alliances

Cooperation betweenbusinesses can result incost reduction but alsoin monopolization

Standards are not agreat factor in hinder-ing innovative projects


Businesses can reduce the economic risk of theirR&D activities by participating in standardization.Those businesses which do participate rated the riskof investing in non-competitive technology as low(mean value 29.8 on a scale from 0=very low to100=very high). When a company can influence thecontent of standards to its advantage, the risk islower.

Businesses not only reduce the economic risk oftheir R&D activities by participating in standardiza-tion, but can also lower their own R&D costs. Thebusinesses surveyed responded that these costs in-crease at a considerably slower rate when they par-ticipate in standardization than if they do not (meanvalue +0.7 as opposed to +3.4, on a scale of –50=fall greatly to +50= increase greatly). The expense ofR&D can be reduced when the participants in stand-ards work make their results generally available, andresearch need not be duplicated.

8. Reaction time of standardization

Since it takes an average of five years to completean industry-wide standard, such standards are par-ticularly relevant in markets where product lifespansare longer than five years. This was confirmed sta-tistically by the responses to the company survey.Where the product lifespan is longer than five years,businesses rate the relevance of industry-wide stand-ardization considerably higher than where it is twoto five years, or less than two years (mean value+74.5 with + 60.1 and + 45.8, on a scale of 0 = ir-relevant to 100 = very important).

Both private industry standards and industry-widestandards were rated similarly here, with industrystandards being most relevant for product lives ofover five years (+70.5), statistically significantly lessfor product lives of two to five years (+59.5) andlowest for product lives of less than two years(+47.5).

Industry-wide standards work is open to all inter-ested parties, whereas private industry standards arecreated by business alliances formed to gain a com-petitive advantage. We therefore assumed that in-

Reducing R&D risk byparticipating in stand-ards work

Reducing R&D costsby participating instandards work

Relevance of both in-dustry-wide standardsand private industrystandards increaseswith product lifespans

Where productlifespans are short,there is little differencein the significance of


dustry standards would be more popular whereproducts have short life cycles. However, the surveydid not confirm this. The rating for product lifespansof less than two years was higher for private industrystandards than for industry-wide standards (+47.5over +45.8), but this difference is not statisticallysignificant. With product lifespans over five years,industry-wide standards become much more impor-tant than private industry standards.

9. Product safety and liability

The results of the interviews revealed that standardscontribute to lower accident rates. Accident insurers,such as the Allgemeine Unfallsversicherungsanstalt,see standards primarily as a factor in accident pre-vention. However, all of the interview partners onlygave standards partial credit for lower accident rates.In Germany, for instance, the accident preventionregulations of the employers' liability insurance as-sociations have also contributed to improved safetyrecords. Even where it is possible to determine theactual contribution of standards to lowering accidentrates, our interview partners could not evaluate thisin monetary terms.

Representatives of consumer organizations generallyparticipate in the standardization process when thereare questions of product safety. They see their in-volvement as having increased industry's awarenessof the importance of product safety, and safety re-quirements are now more likely to be included instandards.

10. Public interest

Because standards reflect the current state of tech-nology, they can help businesses reduce their liabil-ity risk. In questions of liability, legislators often fallback on a general clause which specifies that techni-cal products are to be designed to recognized techni-cal rules, such as standards.

private industry stand-ards and industry-widestandards

Where productlifespans are long, in-dustry-wide standardsare more significantthan private industrystandards

Lower accident ratesare partly due to stand-ards

Examples Page

– Dust explosions 37– Street lighting 37– Laser pointers 35

Participation in thestandardization processincreases awareness ofproduct safety

Examples Page

– The Internet 37

Reducing liability riskthrough standards

Examples Page

– Salmonella 37– Biotechnology 38– Construction products 32


Current legislation refers to approximately 20 % ofthe DIN standards collection. Because they are for-mulated by experts, standards are of great use to thestate in drawing up legislation, for it can refer tothem. If the state feels that the requirements set outin a standard are not sufficiently stringent, modifi-cations can be made.

11. Standards work

The company survey showed that approximately70 % of respondents support a system of majoritydecisions, and 66% of them want the standardizationprocess to be shorter. 40% of the respondents prefermajority voting with veto rights for their own inter-est group, i.e. for companies, experts and industrialorganizations. We expected that participants in thestandardization process would be more in favour ofdecisions by consensus than non-participants, and sowe examined the difference between their responses.However, no differences emerged between the twogroups, majority decision-making being supportedequally by both.

Seen in the context of all possible changes to thestandardization process, a switch from consensus tomajority voting plays a minor role. 28 % of thoseparticipating in standards work supported the idea,and 15 % of the non-participants.

When companies were asked about which changesto the standardization process they would welcome,majority decision-making emerged as an even lessimportant factor. For the companies who participatein standardization, the use of electronic media andimproved project management were of primary con-cern. Non-participating companies would be moti-vated to participate if they received more informa-tion on relevant standards projects.

A majority of the interviewees supported the idea ofconsensus rather than majority votes. According tothem, anything other than the consensus principlewould mean that minority interest groups wouldhave only limited influence and could be ultimatelyoverruled by majority votes.

Standards assist the stateExamples Page

– Computer workplaces 38– Laser pointers 35– Bathing water 38– Sound insulation 38– Biotechnology 38– Wood preservatives 39– Military equipment 39

Companies prefermajority voting

A switch to majorityvoting is less importantthan other desiredchanges to the stand-ardization process

Possible changes to thestandardization process– more project man-

agement– more information

for non-participants– increased use of

electronic media

Representatives of mi-nority interest groups,such as consumers, arelargely in favour ofconsensus


The most frequently given reason for supportingconsensus was that standardization depends onknowledgeable discussion and should a politicalvote.

12. Standards bodies

DIN, ON and SNV – the German, Austrian andSwiss national standards bodies, respectively – areoften seen as being bureaucratic. The companiessurveyed agreed with this viewpoint (mean value58.6 on a scale from 0 = not at all to 100 = in com-plete agreement). They also agreed that DIN, ONand SNV are overly expensive in relation to theservices they provide (59.8). However, they do notconsider the standards institutes to be superfluous(16.8), but rather as necessary instruments in creat-ing technical rules (79.5).

80 % of the companies believed they would faceadditional costs, estimated at about DM 540,000 percompany per year, if DIN, ON and SNV ceased toexist. 30 % of the companies thought they wouldsave about DM 150,000 per year without the stand-ards bodies

The interviews produced similar results. Organiza-tions such as the Stiftung Warentest (which repre-sents German consumer interests) would face addi-tional annual costs of around DM 1.2 million with-out DIN because in-house standardizers would haveto work alone without input from other participantsin standards work. Stiftung Warentest estimates thatfour to five times as much work would be requiredto complete standards work independently.

Industrial employers' liability insurance associationscould produce their own safety regulations withoutthe help of DIN, but they would then be at a disad-vantage at the European and international levels, forthe accident insurers would have insufficient influ-ence. An accident insurer's representative said in theinterview that "cooperation with DIN is the onlyfeasible approach to standardization at the Europeanlevel".11

11 See the interview with the industrial employers' liabilityinsurance association.

DIN, ON and SNV arenecessary. but too bu-reaucratic and too ex-pensive

All partners in stand-ardization would incurmore costs without thehelp of DIN, ON andSNV

Even in sectors wherenational regulationsare valid, cooperationwith DIN is necessaryto have an impact onEuropean and interna-tional standards work


Part B: Benefits for the economy as a whole

Standardization and technological change, theeffects of standardization on the German econ-omy and foreign trade

1. Approaches and objectives

The potential for innovation is an important factor inmaintaining competitiveness and economic growthin a high tech economy. However, innovation is onlya necessity and not in itself sufficient for an econ-omy to remain competitive in a global context in theface of high labour costs. New products and im-proved methods of production must quickly assertthemselves as broadly as possible for a positive eco-nomic development. This means that national policyshould not only stimulate innovation, but must alsoensure its efficient diffusion. In addition to privatesector marketing strategies, state legislation andpublic procurement programmes, standardization bynon-government standards bodies, such as DIN, is asuitable instrument for disseminating new ideas,products and technologies.

This part of the study presents the first economicanalysis of the interaction between technologicalchange and standardization, and the implications forthe German economy and foreign trade.

2. Results of the analysis of the connection be-tween standardization and technological change

Technological change was assessed using as indica-tors the number of registered patents and the level ofR&D spending, while standardization was assessedby the number of published standards and technicalrules listed in PERINORM, the Beuth Verlag data-base. A first step was to examine the connectionbetween innovation in Germany and its dissemina-tion by means of standardization. Using the ICS

Innovation potentialalone is not sufficient tomaintain competitive-ness

An efficient dissemina-tion of innovation viastandards is a precon-dition for economicgrowth


subject classification of standards as a basis of study,we found a significant correlation between the num-bers of patent registrations and existing technicalrules. This confirms that more new standards arepublished in innovative sectors than in those whichare less so. A similar correlation was found usingR&D expenditure as an alternative indicator.

While the cross-section analysis did not permit anyconclusions to be drawn regarding causal relation-ships, a time series analysis was carried out to ex-amine whether changes in the degree of innovationare reflected in standards work, and whether thestandards collection has an effect on technologicalchange. Because the simple cross-correlation analy-sis provides evidence of such a connection, we ex-amined the extent to which the degree of technologi-cal change – measured by the annual number of pat-ent registrations and by R&D expenditure – has aneffect on the rate of standardization and the size ofthe standards collection. Both variables were shownto have a significantly positive influence on thenumber of standards, and at least at the greatly ag-gregated macroeconomic level, the assumptionseems to hold that German standards work respondsadequately to technological change. This conclusionis supported by the results of an analysis of the lon-gevity of standards, which showed that in most sub-ject groups the lifetime of standards was shorterwhere there was a higher degree of technologicalchange.

On the other hand, the question emerges as to howfar new standards and increasing numbers of stand-ards have a positive, or possibly a negative, effect oninnovation in Germany.

It is difficult to use statistical methods to answer thisquestion, since innovation, when measured by thenumber of patent registrations, is greatly influencedby other factors, such as R&D expenditure. How-ever, a positive influence is evident, in that the sizeof the standards collection – which in most subjectgroups is growing – has a positive influence on Ger-many's innovation potential.

New standards aremore numerous in in-novative sectors

German standardiza-tion responds ade-quately to technologicalchange

The lifetime of stand-ards is shorter wherethere is greater tech-nological change

Standards as a positivestimulus for innovation

Positive influence ofstandards on innova-tion


Because of the close link between innovation and itsdiffusion by means of standards, the selection ofsubjects for standardization must be more closelyguided by technological change and the current stateof science and technology.

In sectors characterized by very short product livesand development cycles, standardizers should sys-tematically withdraw, and not replace, standardswhich have outlived their scientific and technicalsignificance (this procedure is laid down in DIN820-4). In general, the standards collection shouldfocus on sectors which are important to the economyand society.

Because standardization is a form of technologytransfer, it is particularly important to get businessesthat are leaders in their sectors involved in newstandards projects. Further, all participating busi-nesses must be convinced that the benefits of sharingthe R&D results of other companies are greater thanthe risk involved in revealing their own results.

3. Significance of standardization for the econ-omy as a whole

Another step in the analysis was to examine the ef-fects of standardization on the economy as a whole.In a macroeconomic analysis covering the period1960 to 1996, we examined the business sector usingthe conventional production factors, capital and la-bour, as well as three output indicators of technicalprogress: the number of registered patents, Germanexpenditure on licences for foreign patents, and thenumber of standards and technical rules. The contri-bution of each production factor to overall economicgrowth was derived from a regression analysis.When the three factors were compared, it becameevident that standards were at least as important fortechnical innovation as patents. This makes it clearthat innovation potential is not the only decidingfactor in economic development, but that it mustalso be broadly disseminated by means of standardsand technical rules.

Standards should bewithdrawn as soon asthey are technicallyoutdated

Leaders in technologyshould become moreinvolved in standardi-zation

The effects of stand-ardization on the econ-omy as a whole

Indicators for techno-logical progress– Patents– Expenditure on

export licences– Number of stand-

ards

Standards are as im-portant for economicgrowth as patents. Dif-fusion of innovationthrough standards is adecisive factor


4. Significance of standards for foreign trade

While in the past, political and economic discussionsfocussed on trade barriers such as duties, afterGATT and WTO agreements, discussions concen-trated on non-tariff trade barriers. Standards andtechnical rules were often misused as such. In the1970s and 1980s, a confrontation arose from thedifference between the metric and the Americansystems of measurement for screws. This made itevident that differing national standards can be usedwittingly or unwittingly as an instrument in foreigntrade policy, thus having a generally negative effecton the economies of the trade partners, althoughthere may be a certain advantage at the nationallevel.

Despite the existence of contradictory nationalstandards, the very fact that the standards exist ispositive because they make the characteristics ofdomestic investments and consumer goods moretransparent, in particular for foreign producers andconsumers. This means that optimum investmentdecisions can be made, and products can be pur-chased and consumed to suit individual preferences.National standards and technical rules are, like pat-ents, indicators of the technological potential of anation. Not only the generation of innovation, butalso its broad dissemination by means of standardshas an effect on the economy as a whole, brings suchbenefits as at least short-term competitive advan-tages in the international marketplace. When a do-mestic business that participates in the standardiza-tion process immediately applies standards, it gainsa competitive edge with regard to costs and quality.Money can be saved as well if foreign suppliers alsoadopt the standards, because then primary and in-termediate products can be imported at a lower cost.

The aim of our analysis of the link between stand-ards and foreign trade was to find out to what extentstandards have a positive or negative effect on for-eign trade in Germany and whether particular sectorsare affected in a certain way. We have differentiatedbetween national and international or harmonizedEuropean standards to examine their different effects

In the past, standardswere misused as non-tariff trade barriers

The very existence ofstandards is positivefor trade

Cost and quality ad-vantages for businesseswho use standards


on the major trade partnerships in Germany.

A theoretical analysis revealed that it is not possibleto differentiate the effects of purely national andthose of adopted European and International Stand-ards. However, considering the high reputation andquality of German standards and assuming thatstandards are in general an indicator for innovativetechnological competitiveness, we can expect themto have a considerable influence on exports.

Economic theory supports the view that internationalstandards have a positive influence on export andcannot be misused as non-tariff trade barriers.

We initially carried out a cross-section analysis ofthe major bilateral trade relations. While the tech-nological portfolio of a nation provides a reliableexplanation for its foreign trade surplus, the numberof standards and technical rules is only a significantpositive factor in one-third of the bilateral relation-ships examined. It was not possible to identify anysystematic difference between the significance ofnational and that of international standards.

Taking into account the different functions andstructures of standards in different sectors of theeconomy and technology, we then performed a de-tailed analysis of 36 bilateral trade relations for theyear 1995.

In a majority of sectors, the positive (negative) dif-ferences in national innovative potential can explainan export surplus (or import surplus). With regard toour hypotheses on the number of standards, the re-sults are clearer. In spite of ambivalent theoreticalconsiderations, the estimates for approximately one-third of subject areas confirm that there is an exportsurplus where there is a large number of standards.However, for the majority of subject areas there areno significant results, reflecting the ambivalence ofthe theoretical approaches. There are also a fewsubject groups in which a greater specialization ofstandards actually stimulates import rather than ex-port. No general differences could be establishedbetween the collections of purely national standardsand international standards. Overall, the analysis

Positive effects of stan-dards on foreign trade

Standards are an indi-cator of innovativetechnological competi-tiveness

A cross-section analysisof the most importantbilateral trade relationswas carried out

The number of existingstandards cannot ex-plain in all cases struc-tures in bilateral traderelations

An analysis by eco-nomic and technologysectors was undertaken

In one-third of techno-logical sectors, stand-ards play a positiverole in creating exportsurpluses


showed that standards do not have a negative, butrather a positive significance for national competi-tiveness as a precondition for exports, depending onthe technology in question.

In addition to checking the hypotheses which werederived from the theory of competitive advantageand trade distortions, we carried out a separate ex-amination of the hypothesis that compatibility andquality standards generate trade, while the standardswhich reduce variety limit trade. This latter hypothe-sis was derived from the principles of intra-industrytrade within a product group. Our study on the basisof ICS subject groups confirmed the hypothesis thatinternational standards promote intra-industry trademore than national standards do.

In addition to the cross-section analysis, a time se-ries analysis was carried out for the period between1981 and 1995 to ascertain whether there is a statis-tically significant causal relationship between thesize of the standards collection and export and im-port levels.

A first model was used to examine the influence thesize of the standards collection and technologicalspecialization have on German exports world wideand on German imports. Further, bilateral trade be-tween Germany and the UK and Germany andFrance was examined.

The increasing importance of technological compe-tition means that German exports do particularlywell in sectors in which Germany holds a large shareof patents. As opposed to other macroeconomic in-dicators, the development of the standards collectionhas no significant influence on Germany's total ex-ports. However, if we distinguish between nationaland international standards, it becomes evident thatthe former actually have a rather unfavourable influ-ence on German exports, because they tend to beoverly oriented to national needs.

Germany imports more in product groups in whichthe country has a technological advantage, bringingin intermediary products for further processing.

Standards have a gen-erally positive effect onexports

International standardsencourage intra-industrial trade morethan national standards

Time series analysis

Development of thenational standardscollection has no sig-nificant influence ontotal German exports

National Germanstandards are not tradebarriers


Neither the standards collection nor the subcollec-tion of national standards provide a significant ex-planation for the total import flow into Germany.Only the development of the number of internationalstandards has a significantly negative effect on thisflow. This means that German national standards donot present non-tariff trade barriers, and therefore donot lead to trade distortions. However, the result ofthe analysis emphasizes the fact that the Germancollection of international standards gives domesticproducers an edge over their foreign competitors.

The export surplus, defined as the difference be-tween imports and exports, is not significantly af-fected by the relative number of German patents.However, the national standards do have a negativeeffect, and international standards have a positiveinfluence on net trade figures. This would appear tosupport the hypothesis of a competitive disadvantagethrough national standards. On the other hand, theGerman export surplus benefits from internationalstandards. This confirms the assumption that do-mestic producers gain a competitive advantage byadopting international standards.

The results of the cross-section analysis empiricallyconfirm the positive role of international standards.Exports are basically determined by the technologi-cal portfolio of a nation, but international standardsin particular can act as a catalyst in rapidly diffusingnew technical knowledge and thus securing advan-tages in the international technology race, strength-ening the national innovation system.

5. Comparison of the results of the macroeco-nomic analyses with those of the company survey

As a final step, the results of the sectoral and macro-economic analyses on the basis of official statisticswere compared with the responses to the companysurvey. The responses to the survey corresponded inthe main with the analyses based on economic sta-tistics. There are only minor differences in mattersof detail, which can however be explained by theinsufficient comparability of the questions put in thesurvey and the statistical analyses.

International standardsimprove the competi-tive chances of domes-tic producers

Overall, there is empiricalsupport for the theorythat international stand-ards lead to internationalcompetitiveness

Checking consistency:Generally, the resultsof our analyses andthose of the companysurvey tally


The macroeconomic analyses revealed that standardshave a positive effect on technological change andinnovation. It was also shown that the standardscollection adapts to the rate of technological change.The companies surveyed did not regard the stand-ards collection to be out-of-date, but as being toolarge in some sectors.

As opposed to our analytical results, the results ofthe survey show that the effect of standards on re-search and development is contradictory, and evennegative in some sectors. Nevertheless, most busi-nesses benefit from participating in standards work,because they gain access to the research results ofother businesses. The responses given by the com-panies surveyed do not provide an answer to thequestion of how this advantage weighs against thedisadvantage of revealing their own R&D results instandardization processes.

However, it was shown that non-involvement instandards work generally increases the costs ofR&D. It is also evident that neither industry-widestandards nor private industry standards, when seenin the context of other barriers to innovation, aresignificant hurdles.

The contradictory effects of technical standards onexports, predicted by both economic foreign tradetheory and the analyses carried out on the basis ofthat theory are only partly corroborated by the re-sults of the company survey.

Standards affect competitiveness in two ways: Onthe one hand, their high international reputationleads to greater competitiveness when they are used.On the other hand, they also benefit foreign suppli-ers, because they make technical specifications moretransparent. For this reason, more than one-third ofthe companies surveyed faced increased competitionbecause of European and International Standards.

A German standards collection which has Europeanand International standards as its basis has a positiveeffect on exports and imports. Most businesses in thesurvey make use of European and InternationalStandards because of their positive effect on exports.

Businesses do not re-gard standards as out-dated

Contradictory effectsof standards on R&D

Most businesses benefitfrom participating instandards work

Standards do not hin-der innovation

Standards are interna-tionally respected

Standards make tech-nical specificationsmore transparent

The majority of busi-nesses use European andinternational standardsbecause of their positiveeffect on exports


In consequence, an increase in the number of thesestandards leads to an increase in export and importvolumes. This corresponds to the positive link be-tween intra-industry trade and technical rules whichare identical to European and International Stand-ards. A large majority of the surveyed companiesidentified positive effects as including a simplifica-tion of contractual affairs and a lowering of tradebarriers.

From the macroeconomic analyses and the companysurvey we can conclude that International and Euro-pean Standards have a much more positive effect onexports than German national standards do. Compa-nies should therefore be encouraged to take an evenmore active role in European and international stan-dards work. Furthermore, European and Interna-tional Standards should be quickly incorporated intothe national standards collections. A prerequisite forinternational involvement is active participation instandards work at a national level, and businessesmust be convinced of the benefits of this as an ef-fective export strategy.

International as well as national standards can pro-vide support for technology transfer from techno-logical leaders to developing nations. Although thisis conducive to development policy, these nationsmay present a threat to our own competitiveness,because standards enable them to imitate our prod-ucts and production processes. Technology transferalso reveals the preferences of domestic consumers,making them transparent to competitors worldwide.These threats should be countered by concentratingstandards work in those sectors in which nationalinnovation potential is greater than elsewhere in theworld. Further, the interested parties should decidewhether a well thought-out standards proposalshould be presented at the international level in or-der to improve the chances of establishing an ad-vantage for their own technology.

The results of our macroeconomic analyses basicallyconfirm those of previous analyses using othermethods. Our study shows the economic benefits ofstandardization as being about 1% of the gross na-tional product (1998: DM 31.5 bn). However, theassessment by an earlier study that the benefits of

International standardsencourage trade

International andEuropean Standardsare more significant forGerman exports thanare national standards

Increased participationin European and inter-national standardswork is necessary

Standards encouragetechnology transfer

Standards make it eas-ier for foreign competi-tors to imitate productsand processes

Standards should be con-centrated in sectors inwhich there is the greatestnational innovationpotential

Results of the macroeco-nomic analysis show theeconomic benefits ofstandardization to beapproximately 1% of thegross national product


standardization were 1 % of business sales must becorrected downwards. The positive macroeconomiceffects, which far exceed the sum of individual bene-fits for the economy, and the relief of the statethrough technical standards, justify public financialsupport for standards work and give standardizationa firm place in economic policy and research andinnovation policies. In particular, the latter shouldtake a more integral approach, taking full account ofthe relationship between innovation and its diffusionby means of standards.

Macroeconomic bene-fits of standardizationare greater than thesum of individual ad-vantages

Innovation policiesshould support stand-ardization


Conclusion by the participating research institutes

With its broad-based dual approach, this study produced numerous new insightsinto the economic effects of standardization, giving results which are unique in theinternational context. However, despite the fact that we gained a clearer under-standing of the significance of standardization, a number of questions remain unan-swered. Because of restrictions in time and funding, it was not possible to examinespecific branches in the necessary detail. Although the comparisons with Austriaand Switzerland added a European dimension to our study, further research outsideCentral Europe would be an important extension of the work begun here. To sum-marize, this study has made considerable progress in a fundamental analysis of theeconomic significance of standardization, while at the same time opening the doorfor future research.

Our results can be used as the basis for a strategic discussion regarding the future ofstandards work. All those who are directly or indirectly affected by standards nowhave access to information which can help them define their future standardizationstrategies. First, DIN and other standards bodies can use our results to identify areaswhich could be improved in order to respond to current developments, and thoseareas with which their customers are satisfied. Furthermore, the interested partiesnow have a broad overview of the different effects of standardization, and can usethis knowledge to shape their strategies. Overall, the study can act as long-termmotivation for a strategic discussion of the future of standardization.


Practical examples

The German carmaker Volkswagen developed asystem for securing child car seats that fulfilledmodern traffic safety requirements. Their systemserved as a model for other companies, and formedthe basis of the International Standard ISO 13216-1.The system is now known on the market as the"ISOfix system".(Source: "Gut in Norm", VOLKSWAGEN magazin1/2000, pp. 82–85)

German experts have been greatly involved in ISOwork on geometric product specification (GPS) (e.g.DIN EN ISO 3274, DIN EN ISO 4287, DIN EN ISO4288...). German standardization in this area hadalready reached an advanced stage, and could beadopted by the corresponding ISO committees with-out major changes. This meant that the costs foradapting production processes to conform with In-ternational Standards could be kept to a minimum inGermany.(Source: "Quality Engineering", 10/99, pp. 58 – 60)

An example of good timing for standardization canbe seen in the cooperation between VDEW andZVEI from 1990 to 1993 in working on a technicalrecommendation for an integrated substation controlsystem, particularly for interfaces with digital pro-tection equipment. This German recommendation,which was submitted as a proposal to IEC TechnicalCommittee 57, set out the following aims:– to establish a standardized framework for devel-

opments in substation control systems;– to achieve compatibility of products at the high-

est possible level;– to enable small- and medium-sized businesses to

have easier access to this technology;– to promote competition;– to encourage innovation;– to ensure the rapid diffusion and application of

substation control technology.

ISOfix system

Geometric productspecification

Digital field protection


These goals have now been realized and thisachievement is a prime example of active businessparticipation in standardization.(Source: VIK-Mitt. 4-1995, pp. 74–80, H.-W.Riemer, "Normung als Instrument der Unterneh-mensführung"

Construction products can be placed on the marketonly if they conform to the European Council's Con-struction Products Directive (i.e. by applying har-monized European standards), for instance by ob-taining a "European Technical Approval" (ETA).ETAs, however, are only awarded for one productand one manufacturer at a time, which means addi-tional expenses in the range of DM 5,000 to DM30,000 (where harmonized standards exist), and DM10,000 to DM 70,000 (where there are no harmo-nized standards). It is therefore evident that manu-facturers of construction products for which no har-monized standards exist face considerably highercosts before approval.(Source: Building and Civil Engineering StandardsCommittee)

Volkswagen AG developed a design standard for"Maintenance oriented design". By considerablyreducing the repair costs of accident damage, thisstandard has contributed to a reduction in insurancepremiums. Almost all VW models were rated best intheir insurance class after the standard was applied.(Source: "Gut in Norm", VOLKSWAGEN magazin1/2000, pp. 82–85)

The basic model of a VW Golf is made up of 4,786different parts, with a total of 16,897 individual partsfor one car. 4,219, almost a quarter of these, arestandardized components. Standardized componentsare 20% to 60% cheaper than customized compo-nents, and this contributes greatly to reducing thecost of the product. Standard parts are systematicallydocumented and maintained in the company's stand-ards department. Standards ensure that complextechnical systems function correctly and that legalrequirements are fulfilled.(Source: "Gut in Norm", VOLKSWAGEN magazin1/2000, pp. 82–85)

Construction products

Repair costs

Standardized VWcomponents


DASA-Airbus estimated the price ratio betweencustomized and standardized components as being15:1, with half of the customized components beingsuitable for standardization. By switching to stand-ardardized components the company could reduceits purchases by 10%.(Source: DIN Aerospace Standards Committee)

The new Airbus A330/A340 models require consid-erably fewer different parts than the olderA300/A310 models, because Airbus now uses Euro-pean standards in place of the company standards ofits suppliers. Result: DM 18 million savings, due toless required storage space.(Source: DIN Aerospace Standards Committee)

Standards work will influence future development,enabling significant tendencies and market opportu-nities to be recognized early enough to be taken intoconsideration at the product development stage. Par-ticipation in standards committees provides access tovaluable information, and can be used to foster use-ful business contacts. The heterogeneous characterof the committees provide an ideal forum for identi-fying and discussing tomorrow's trends and markets.(Source: ZVEI-Schrift, Rüsch, 1999)

In the case of valves, European standardizers arecurrently (Spring 2000) negotiating the standardiza-tion of calculation methods. If this results in majorchanges to the current German methods, Germanmanufacturers will be forced to undertake expensivechanges in production. A strong German presence inthe committees concerned can avoid excessive ex-penses.(Source: DIN Valves Standards Committee)

International standards now cover procedures for thecompressed transmission and storage of digital im-ages and videos. This means that innovative meth-ods of digital image and video processing, storageand transmission can be developed. The groundworkhas been done for new applications, services andmarkets.(Source: DIN Information Technology StandardsCommittee)

Standardized DASAcomponents 1

Standardized DASAcomponents 2

Insider knowledge

Valves

Digital image compres-sion


Intensive standards work at the national, Europeanand international levels has resulted in a collectionof International Standards on laser technology.These standards are indispensable for calculatingand characterizing laser beams and laser optics, fordetermining beam propagation, for designing sys-tems, for quality management (documentation) andbenchmarking, and for marketing purposes.The new market for laser technology is defined bythese technical parameters. Without this information,market comparisons would not be possible.(Source: DIN Commission on Laser Technology)

The optics company Zeiss Augenoptik was able touse its expertise to ensure that tolerances for specta-cle lenses were set internationally at +/– 0.12 diop-ters, values which have been proven in practice.There was an ISO proposal to reduce the tolerance to+/– 0.08 diopters, which would have increased an-nual production costs for Zeiss by approximatelyDM 5 million.(Source: DIN Optics and Precision MechanicsStandards Committee)

Lubricants are used in the food, pharmaceutical andcosmetic industries in machines so that products arenot contaminated with dangerous substances. Oncethe DIN standards project on this subject has beenadopted, as is expected, as an ISO standard, it willensure the export and safe operation of machinesworldwide.(Source: DIN Foodstuffs and Agricultural ProductsStandards Committee)

The Ancient Egyptians manufactured clay brickswith very similar dimensions to modern bricks. Thedimensions of bricks are of major importance, butother aspects must also be standardized, such as theirproperties (e.g. strength, durability, dimensionalaccuracy), as must test methods, rationalization ofthe production process, rationalization of planningand processing (e.g. structural analysis, fire protec-tion, ensuring strength and stability). Non-standardized procedures would lead to additionalcosts.(Source: DIN Building and Civil Engineering Stand-dards Committee)

Lasers

Spectacle lenses

Food technology

Masonry units


Laser pointers with a maximum power output of1 mW and designated as "class 2 lasers" as in DINEN 60825-1 may be placed on the market, and cus-tomers can assume that they are safe when used asintended.(Source: DIN Commission for Laser Technology)

European standardization has improved the exportopportunities for German businesses because har-monized standards ensure that no modifications haveto be made to products for export to other Europeancountries. In most cases, a manufacturer's declara-tion suffices for the approval of products and con-formity assessment.(Source: BDI, Dr. Scheel, Interview 20.03.2000, TUDresden)

The entire waste water engineering sector could notfunction without standardization. The range ofstandardized subjects extends from kitchen sinks,hand basins, drain pipes, road gullies, waste waterpump stations to sewage works and waste waterlaboratory analysis. Of course, all DIN standards onthese subjects conform with the German WaterManagement Act.(Source: DIN-Mitteilungen, January 2000, p. 76)

Scientists and engineers share a common languageof physical, chemical, mathematical and technicalunits. Without the standards in the DIN 1301 series,which covers the International System of Units (SI),it would not be possible for them to communicateeffectively in an international and intercultural envi-ronment. Diagrams and graphic presentations usingthe system of coordinates would be difficult or im-possible to read without DIN 461.(Source: DIN Fundamentals in TechnologyStandards Committee)

The buyers of a 100 year old house were warned notto undertake repairs using modern plaster, which isnot chemically compatible with the original plaster.An analysis of the original plaster would be neces-sary (at a cost of approximately DM 4,000). A his-torical standard was able to solve the problem byproviding details of the composition of plaster at thetime in question.(Source: DIN)

Laser pointers

Manufacturer's decla-ration

Waste water engineer-ing

The International Sys-tem of Units

Maintenance costs


According to British and American research, thedamage caused by corrosion costs 3.5% to 4.2% ofthe gross national product in the industrialized na-tions. In the case of Germany, this would have beenDM 100 bn in 1997. Experts believe 70 % to 80 %of this damage to be preventable. The MaterialsTesting Standards Committee and the correspondingEuropean committees are responsible for 110 stand-ards covering corrosion protection. The potentialsavings could be as high as several billions, not onlyaffecting the economy as a whole, but also helpingbusiness to reduce maintenance and compensationcosts.(Source: DIN Materials Testing Standards Commit-tee)

The efficient production of goods requires the acces-sibility of technical knowledge. A manufacturermust adapt a product to suit the requirements of themarket. This product must meet the expectations ofthe customer with regard to durability, suitability forthe intended purpose, compatibility with other prod-ucts, and environmental requirements. It must alsofulfil legal requirements and keep the risk of legalliability at a minimum. Finally, production must becost-effective, as must storage, distribution and dis-posal. Standards are an instrument which makes thenecessary technical knowledge available for all theseaspects.(Source: Dissertation Scheel, 1998)

At one of the large German automobile manufactur-ers, production was stopped for three days – 8,000workers had to stay at home, and 10,000 cars couldnot be built – because the company was dependenton a single supplier for "high tech" door locks. Acompatibility standard or a Publicly AvailableSpecification could have prevented this situationfrom occurring, because such documents would haveopened up the market and abolished dependencies.(Source: J. Steinhoff, Stern, 43/15.10.1998, p. 276)

Corrosion protection

Efficiency

High-tech door locks


Work on a national technical rule titled "Dust firesand dust explosions – Hazards, assessment, protec-tive measures" cost a total of DM 20 million. Ex-perts believe that the risks in this sector have beenconsiderably reduced. If we balance this total costagainst the costs of a single avoidable accident (e.g.a flour dust explosion in the Bremen Rolandmühleon 6.2.1979, which caused 14 deaths with 17 in-jured, and damages of about DM 130 million), thecost-benefit ratio is convincing.(Source: DIN Commission on Air Quality)

By implementing standards for street lighting andtraffic signals, the building and traffic authorities atboth the regional and the national level have beenable to reduce the risks of road use by creating goodvisibility and clear signals. Standards have helpedreduce the number of accidents with serious conse-quences for the individuals involved, and lower theresulting costs for the economy. Traffic routing andflow control by means of signal systems can preventtraffic jams and detours. Less energy is required forstreet lighting systems designed in accordance withthese standards.(Source: DIN Lighting Technology StandardsCommittee)

Standards for IT security provide the prerequisitesfor confidential transactions to be carried out on theInternet (e.g. ISO/IEC 14888-1-3 on digital signa-tures). Internet services such as e-commerce, tele-working and telebanking are supported by suchstandards, creating new sectors and job markets.(Source: DIN Information Technology StandardsCommittee)

Salmonella is a daily concern of the food industry,and can be the cause of call-back campaigns, whichoccur again and again. They involve the followingcosts: Public call-back: DM 5 million; internal call-back: DM 500,000; reimbursing customers: DM50,000. In addition to the traditional time-consumingtest, a new, faster test has been standardized in DIN10135. The test uses a polymerase chain reactionduring the actual production process as an indicator.(Source: DIN Foodstuffs and Agricultural ProduceStandards Committee)

Dust explosions

Street lighting

The Internet

Salmonella


Biotechnology laboratories require safety cabinetswhich provide protection from pathogens and pre-vent contamination within the laboratory. DIN EN12469 sets out the requirements for this equipment,preventing cross-contamination and disease, reduc-ing liability risks and improving export opportunitiesfor manufacturers of safety cabinets.(Source: DIN Foodstuffs and Agricultural ProduceStandards Committee)

The DIN EN ISO/IEC 9241 series of standards setsout the requirements for the ergonomic design ofcomputer workplaces. These standards serve to pro-vide workplaces which will not generate healthproblems and which encourage efficiency and crea-tivity at work.(Source: DIN Information Technology StandardsCommittee)

Paragraph 11 of the German Communicable Dis-eases Act states that the operator of a public bathingpool must provide guests with water that will notdamage their health, particularly not through patho-gens.Public bathing pools are subject to inspection by thehealth authorities. The DIN 19643 series of stan-dards comply with the above-mentioned Act as wellas the German Regulation on Pool Water.(Source: DIN Water Practice Standards Committee)

Noise can cause considerable damage to health. Ap-propriate measures should be taken to reduce or pre-vent this, such as fitting sound-insulating windowsand doors. Standard test methods which producecomparable results are used to assess building com-ponents for their sound insulating properties. Effec-tive insulation also reduces the costs for the healthauthorities.(Source: DIN Materials Testing Standards Commit-tee)

Biotechnology

Computer workplaces

Bathing water

Sound insulation


Standards work on testing wood preservatives hasbeen well-received at both the European and thenational level. These standards, which are regularlyapplied throughout Europe, ensure repeatability andreproducibility of data. They have thus proven to beinvaluable for the development of wood preserva-tives and for the conservation and use of wood.(Source: DIN Materials Testing Standards Commit-tee)

Following a fire on the destroyer Mölders, a newsafety system for military vessels was tested andintroduced, increasing savings by a factor of 3. Thesubstance of these military standards has now beenadopted by DIN and ISO, making the same safetytechnology available for civilian purposes.(Source: DIN Shipbuilding and Marine TechnologyStandards Committee)

Wood preservatives

Military equipment

Economic Benefits Standardization

Documents

volkswagen

forming strategic

liability

tariff trade

lower accident

minority interest

geometric

technical