Participation in Standards Organizations: The Role of R&D Expenditures, Patents, and the Product-Market Position

This paper examines the determinants of firms’ participation in the standard- ization process. Using information about R&D, patent, and trademark activities of the world’s largest R&D corporate investors and their membership in standards organizations, we find a highly robust positive association between a firm’s R&D expenditures and its involvement in standardization. Our results indicate that a causal effect of R&D on membership in standards organizations is conditional upon the firm’s patenting and/or product-market position and varies across distinct types of organizations. A strong patenting position amplifies the effect of R&D in upstream organizations whereas the product-market position strengthens the role of R&D in downstream organizations. We corroborate the existence of a positive causal effect of the patent position using variations in the preferential tax treatment of patent-related revenue. Finally, our findings also underscore the role of the product- market position – reflected in trademarking intensity, brand value, and the number of standards-compliant end products – in incentivizing R&D-intensive firms to join standards organizations.