Alliance Formation of SMEs: Empirical Evidence From Standardization Committees

This paper explores the decision of small- and medium-sized enterprises (SMEs) to participate in official standard setting alliances. Based on micro data of German firms in the electrical engineering and machinery industry, we show that innovation-related variables follow the predictions of our hypotheses. Research and development (R&D) intensity exhibits an inverse U-shaped relationship on the likelihood to join alliances. The positive relation suggests that SMEs aim to access the knowledge of larger firms whereas the negative relationship indicates that SMEs exceeding a certain threshold of R&D activity are reluctant to participate in standardization because their knowledge is too essential to disclose to competitors. The importance to access external knowledge via standardization committees is underlined by a positive correlation with the relevance of incoming knowledge spillovers and a negative correlation with the relative size of companies' patent portfolios. Besides these variables, we also explore the traditionally considered factors for alliance formation and show that firm size and export intensity are positively correlated with participation.