Innovating Standards Through Informal Consortia: The Case of Wireless Telecommunications

Innovating Standards Through Informal Consortia: The Case of Wireless Telecommunications

Henry Delcamp, Cerna, Mines ParisTech, and Aija Leiponen, Imperial College Business School and Cornell University

10/25/2011
(Original Publish Date: 9/1/2011)

We conduct an empirical analysis of the effects of technical industry consortia on the coordination of R&D strategies of the participants. Our analyses utilize membership data from 32 consortia in a variety of wireless telecommunications technology subfields from 2000 to 2005 and cross-citations between essential patents declared by the consortium participants in the context of the third-generation wireless telecommunication system UMTS and the members' earlier patents. Our results shed new light on the role of consortia in enabling the coordination of innovation. We find that co-membership of two firms in an informal technical consortium significantly increases the likelihood that they cite each other's patents in subsequent UMTS essential patents. In other words, inventions that are likely to become part of the UMTS telecommunication system tend to build on inventions by peers that were members in the same consortia, controlling for patent or firm fixed effects, technology class, patent quality, and other characteristics. Thus, on one hand, consortia may increase incentives to invest in R&D by internalizing potential innovation externalities. On the other hand, our results highlight the growing role of consortia in the standardization process which could be viewed as problematic, because the process may not be truly accessible for all the interested parties. Policymakers thus need to balance these two effects. For managers, the results show that participation in a variety of technical consortia enables influencing not only standard specifications, as shown in earlier research, but also peers' innovation strategies.