Why Do R&D-Intensive Firms Participate in Standards Organizations? The Role of Patents and Product-Market Position

44 Pages Posted: 12 Dec 2018 Last revised: 20 May 2019

See all articles by Justus Baron

Justus Baron

Northwestern University - Center on Law, Business, and Economics

Cher Li

Nottingham University Business School; University of Nottingham

Shukhrat Nasirov

University of Manchester - Alliance Manchester Business School

Date Written: April 1, 2019

Abstract

This paper examines the determinants of participation of R&D-intensive firms in standards development. Using data on R&D spending, patent, and trademark activities of the world's largest corporate R&D investors and their membership of standards organizations, we find a highly robust positive association between a firm's R&D spending and its participation in standards development. However, the causal effect of R&D spending on membership of standards organizations is conditional upon the firm's patent and/or product-market position, and varies across different types of standards organizations. More specifically, a strong patent position amplifies the effect of R&D spending on participation in standards-developing organizations, while a strong product-market position strengthens the impact of R&D spending on participation in the organizations that promote established standards. Finally, we also show that policy changes that increase the value of patents, such as variations in the preferential tax treatment of patent-related revenue, induce R&D-intensive firms to intensify their participation in standards organizations.

Keywords: standards organizations, R&D expenditures, patents, trademarks

JEL Classification: L24, O34

Suggested Citation

Baron, Justus and Li, Qian Cher and Nasirov, Shukhrat, Why Do R&D-Intensive Firms Participate in Standards Organizations? The Role of Patents and Product-Market Position (April 1, 2019). Available at SSRN: https://ssrn.com/abstract=3287475 or http://dx.doi.org/10.2139/ssrn.3287475

Justus Baron (Contact Author)

Northwestern University - Center on Law, Business, and Economics ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

HOME PAGE: http://justusbaron.org/

Qian Cher Li

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Shukhrat Nasirov

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, N/A M15 6PB
United Kingdom

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