Does Co-Opetition Change the Game? A Bayesian Analysis of Firm Participation Strategy in an Industry Standard-Setting Organization

Across different industries, we observe the emergence of industry standard-setting organizations (SSO) that focus on the creation of industry-specific process standards. Firms adopt a strategy of co-opetition, the combination of cooperation and competition, during standards development. We propose that a firm's co-opetition strategy is revealed to some extent by when it elects to participate in an industry SSO. Bayesian information updating offers an effective empirical modeling perspective for studying firms' participation strategies when managers' beliefs and uncertainties are factored into their decision-making. We analyze a panel data set of 73 U.S. public firms over a 20-year period. These firms are members of the TeleManagement Forum, an information, communications and entertainment industries SSO. We study organizational characteristics of member firms to understand how they relate to a firm's SSO participation strategy, thus capturing the co-opetition dynamics of firms in the presence of process standardization. SSO participation strategies of firms do change as an industry SSO matures and as more information is gradually revealed. Additionally, there is a positive relationship between a firm's likelihood to participate and announcements of key process-related events. The participation dynamics show more change in the beginning, but eventually stabilize over time.