Do Firm R&D Investments Drive Decisions to Join? On the Value of Standard-Setting Organizations in the Consumer Electronics Industry

Academic research does not yet have a precise understanding of what drives firms´ decisions to participate in standard- setting organizations (SSO). We explore the relationship among consortium participation decisions, firm-level R&D investment intensity and production efficiency. We develop theoretical arguments that capture the tradeoffs for joining. They include benefits from steering the future direction of standards, and R&D and knowledge spillovers from other members. Also present are costs from membership fees and risks of free-riding through information disclosures on intellectual property. We develop hypotheses for empirical analysis. We use a logic model to evaluate managerial decisions to join SSOs involving a large data set of publicly-traded consumer electronics firms. The data cover five SSOs in the consumer electronics industry that joined SSOs by 2006. Our results provide evidence that the likelihood of joining an SSO increases with a firm´s R&D investment intensity. More efficient firms are more likely to join too.