WHO COOPERATES IN STANDARDS CONSORTIA – RIVALS OR COMPLEMENTORS?

Justus Baron, Northwestern University, Searle Center on Law, Regulation, and Economic Growth; Sciences Po Paris, Department of Economics, and Tim Pohlmann, Mines ParisTech, Cerna, Centre d'économie industrielle; and Berlin University of Technology, Chair of Innovation Economics

9/09/2015
(Original Publish Date: 11/13/2013)

Formal standard development is increasingly supplemented by standards consortia: informal and less inclusive alliances, in which firms coordinate standard-related research and development (“R&D”) and streamline standard development. In order to cast light on the economic function of these consortia, this article provides empirical evidence on the standards related to informal consortia, and on the R&D contributions of members and outsiders. We find that standards related to consortia are characterized by a more fragmented ownership of intellectual property rights (“IPR”) and a strong degree of technological rivalry. We also find that among the firms contributing to a standard, technological specialists are less likely to be member of a consortium. Companies are more likely to be members of the same consortium with companies specializing in R&D that is substitutable rather than complementary to their own patent portfolio. One possible interpretation of these findings is that a main benefit of standards consortia is to reduce the cost of standard development by eliminating wasteful R&D duplication and settling conflicts of interest upfront to formal standardization.