Effects of catch-up and incumbent firms’ SEP strategic manoeuvres

Abstract

This paper investigates the effects of standard-essential patents (SEPs) to identify strategic differences between firms in advanced countries and those in latecomer countries. By comparing the SEP data-sets of incumbent and catch-up groups of the top 10 SEP firms, this paper has discovered the following four main findings. First, SEP strategic manoeuvres work as an effective way of expanding the sphere of catch-up firms’ influence. Particularly after passing a certain threshold, catch-up firms’ technological influence increases in an exponential manner. Second, for incumbent firms, SEP strategic manoeuvres serve as a catalyst to deepen the development of self-reliant trajectories embodied in the history and future of standards. Third, catch-up firms have specialised in short cycle technologies for self-reinforcing capability. Fourth, the effects of SEP strategic manoeuvres and international protection size on the likelihood of SEP litigation are greater for catch-up firms than for incumbent firms. These findings highlight the dual role of standards-setting organisations (SSOs) for catch-up firms (i.e., knowledge-learning and knowledge-diffusion spaces). For incumbent firms, these findings stress the importance of establishing reinforcing mechanisms to align long-standing self-reliant knowledge paths with the direction of anticipatory standardisation. This discovery provides strategic insights within the context of post catch-up strategy.