Standards, consortia, and innovation

Justus Baron, Yann Ménière*, Tim Pohlmann

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    22 Scopus citations

    Abstract

    The development of formal ICT standards is a challenging form of collaborative innovation, combining consensus decision making and R&D rivalry. To supplement this formal standard setting process, it has thus become frequent that part of the involved firms creates ad hoc consortia to better align positions on a common technology roadmap. This paper aims to assess whether such consortia can effectively mitigate R&D coordination failure through enhanced cooperation. We first develop a theoretical model showing that depending on the nature of firms' incentives to contribute proprietary technology, different types of R&D coordination failure - namely a Public Good or Rent Seeking problem - may occur in equilibrium. Using a large panel of standards, we then confirm empirically the prediction that consortia have different effects on innovation under a Public Good or Rent Seeking regime. Overall, we observe an increase in innovation after a firm joined a consortium. However, this effect is significantly weakened or even reversed for standards characterized by a strong Rent Seeking regime.

    Original languageEnglish (US)
    Pages (from-to)22-35
    Number of pages14
    JournalInternational Journal of Industrial Organization
    Volume36
    DOIs
    StatePublished - 2014

    Keywords

    • Consortia
    • Essential patent
    • ICT
    • Innovation
    • Patent
    • Standard

    ASJC Scopus subject areas

    • Industrial relations
    • Aerospace Engineering
    • Economics and Econometrics
    • Economics, Econometrics and Finance (miscellaneous)
    • Strategy and Management
    • Industrial and Manufacturing Engineering

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