Complementary technologies and returns to disclosure during standard setting

In industries with many technological components that need to be interoperable, coordination is increasingly achieved via firms disclosure to Standard Setting Organizations. We study whether and how disclosure generates returns to the firm during standard setting. Departing from the convention of focusing on disclosed standard essential patents (SEPs), we examine the role of the firms non-disclosed complementary technologies in generating returns. Main results show that firms with more non-disclosed complementary technologies experience greater returns to stock prices over disclosure events, and these technologies gain more in value (indicated by patent citations) over disclosure, at rates higher than even that of the disclosed SEPs. Our findings suggest that, in these systems, a firm is using its larger technological portfolio to appropriate value from coordinating a smaller part of it with others via standard setting, and that a systemic view of the firms portfolio is important in understanding strategy within these systems.