The typical economic account of standards involves a coordination problem. When several parties realize that they can all gain, but only if they are all doing things the same way, they will get together and coordinate a method. For instance, a nut needs to be able to connect to a bolt, which means they need approximately the same threading, and so machinists got together and settled on a few different standard threadings. A similar method was followed by electricians and plumbers to settle on threads for pipes and conduits. A similar story exists for container shipping. Standardizing the size of a container for shipping allowed all of the various players in international shipping, the ship-makers, ports, railways, truckers to develop ways to efficiently move a C-Can, importantly without the need for repacking when changing transport modes, it turned containers into a commodity, allowing them to be efficiently produced, and it allowed designers to design their products to fit efficiently into the standardized size, which has contributed to the post war explosion in international trade. While that story is fine as far as it goes, there are three more major drivers of standardization, not all of which are well understood. The first, and most obvious, is the encouragement of regulatory regimes. The second is to enable the development of engineering, as distinct from scientific, knowledge. The third is the development of standards to limit legal liability.
The first option does not require much explanation. Building codes, electrical codes and so one were developed to establish a minimum baseline for acceptable construction. While the stated basis is consumer protection and public safety – building fires are one of the oldest recognized externalities amenable to public solutions, and most people are poor judges of craftsmanship in trades they do not understand, especially where the construction is hidden by other features – basically all codes contain some capture, where a component is overbuilt to the benefit of the service providers, or a provision is stated in way that only a single product, sold by a well connected supplier, can fulfill it. In addition the trade-offs between cost and risk can be made in a socially sub-optimal manner.
The second, and less well understood involves the creation of engineering knowledge. The naive layperson often considers engineering to be a branch of applied science. In many ways it is that, and certainly many advances in engineering practice have been preceded by advances in the physical sciences, however it is also the case that knowledge can flow both ways. The second law of thermodynamics was recognized by engineers to be a property of steam engines long before physicists determined it had wider validity. However standardization has allowed us to understand certain classes of products far better than that allowed by an examination of first principles. For example, a common type of electrical cable, called Teck90, is specified by CSA C22.2 No 131-14. While the relevant parameters for for a cable can be determined scientifically, plugging the appropriate constants into the appropriate formulas, and thus generalizing, in practice this is never done. Instead the relevant parameters are determined statistically, by building a large amount of cable and subjecting it to rigorous testing. There is no attempt to use any sort of inductive principle, to generalize from that cable to any cable in any configuration, or from that size to a different one. Instead we can determine, with the error bands, exactly what the electrical and mechanical characteristics of that particular cable are. This is supplemented by practical experience. The cable is sold and installed, and the company will aggregate the data generated in this manner, allowing them to adjust their tolerances and numbers based on the typical as installated data, instead of just the lab data. While the principles of electrical induction machines are fairly well understood scientifically, we understand far more about a IEC 60034-1 575V 40hp Wound Rotor Squirrel Cage Three Phase Induction Motor, even without knowing who built it, than we ever could given a single motor with perfect knowledge of it’s components and construction.
The final reason for the development of standards is for the protection of the person applying them. Tort law in most of the world requires the proof of negligence when awarding damages from products. In proving negligence following the correct standard is an acceptable defence, even when the standard is inadequate and you could have known that had you done testing to prove it. In general it is the case that you will only be held to account for decisions that deviate from the prevailing standards. This allows professionals to devote their cognitive resources to decisions without standard answers, and allows every practitioner access to the accumulated wisdom of the profession, however it results, in practice in the foreclosing of better, but non-standard solutions. If the standard is wrong, and something catastrophic happens, everyone has a valuable learning moment. If you are wrong, and something catastrophic happens, your career is over, and you might be going to jail. This provides a large incentive for designers to push for standards, even in application to which standardization is poorly suited, and hope to shape the standards in ways that facilitate their work.