Pawn to Save a Chariot, or Drawbridge Into the Fort? Firms' Disclosure During Standard Setting and Complementary Technologies Within Ecosystems

Puay Khoon Toh, Cameron Miller

Research output: Contribution to journalArticlepeer-review

14 Scopus citations

Abstract

Research summary: Within an ecosystem, standard setting coordinates development of complementary technologies across firms. But each firm can itself own multiple of these complementary technologies. We study how a firm's own complementary technologies influence its disclosure inclination during standard setting. We identify a tradeoff: disclosure increases value-creation of the firm's non-disclosed complementary technologies, but also heightens expropriation risk. Using data on the U.S. communications equipment industry 1991-2008, we show that the firm's complementary technologies increase its disclosure inclination when its technological areas are less crowded, but decrease such inclination when there are SSO members with strong expropriation abilities. Findings stress that disclosure involves but a piece of the firm's portfolio; a systemic perspective of the entire portfolio provides a more comprehensive picture of value-creation during standard setting. Managerial summary: Why should a firm disclose its key technology to participate in standard setting within an ecosystem? We urge managers to think beyond "disclosing to ensure compatibility with other firms' complementary technologies within the ecosystem" as a motivation, to also consider how disclosure affects the firm's own complementary technologies within its portfolio. Disclosure in one technological area makes the firm's nondisclosed complementary technologies in other areas more valuable to itself, especially with fewer rivals competing in these other areas. But disclosure also renders the firm susceptible to losing these complementary technologies to rivals, especially when rivals have strong expropriation abilities. Analyzing disclosure decisions by communication equipment firms, we show that this tradeoff is indeed a relevant consideration in managers' strategic calculations when participating in standard setting.

Original languageEnglish (US)
JournalStrategic Management Journal
DOIs
StateAccepted/In press - 2017
Externally publishedYes

Keywords

  • Appropriation
  • Competition
  • Complementary technologies
  • Disclosure
  • Standard setting

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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