Standardization and Patent Portfolios: Understanding Firms’ Choices in Standard Projects

Abstract

This paper studies the relationship between the participation decision of firms in standardization and the fit between the firm’s technical knowledge and the standard’s position in the technology space. Focusing on a set of firms that declare to own essential patents for several standards issued by different organizations, I study how firms allocate their contributions across standards, depending on a firm-standard similarity measure and the intensity of competition among participating firms. My findings suggest that the match between the technological fields of a standard and the firm’s technical knowledge is positively related to the firm’s decision to participate in standards development. In particular, I find empirical evidence that for a 1 percentage point increase in the technological fit between a firm and a standard, the probability that the firm participates in the technological development of the standard increases by 0.05 percentage points. Furthermore, my results support the hypothesis of a competition effect among participating firms. For a one-unit increase in the intensity of competition among firms in the same standard, either driven by an increase in the number of firms contributing to the standard or in the knowledge similarity among existing firms, the number of SEPs declared decreases by 32.7% on average.