What drives the choice of the type of partner in R&D cooperation? Evidence for Spanish manufactures and services

We analyse the heterogeneity in firms’ decisions to engage in R&D cooperation, taking into account the type of partner (competitors, suppliers or customers, and research institutions) and the sector to which the firm belongs (manufactures or services). We use information from the Technological Innovation Panel (PITEC) for Spanish firms and estimate multivariate probit models corrected for endogeneity which explicitly consider the interrelations between the different R&D cooperation strategies. We find that placing a higher importance to publicly available information (incoming spillovers), receiving public funding and firm size increase the probability of cooperation with all kind of partners but the role is much stronger in the case of cooperative agreements with research institutions and universities. Our results also suggest that R&D intensity and the importance attributed to the lack of qualified personnel as a factor hampering innovation are key factors influencing positively R&D cooperation activities in the service sector but not in manufactures.     

Product innovation: testing the relative influence of industry,institutional context and firm factors

This article analyses the influence of industry characteristics (concentration and technological opportunity), the institutional framework (social capital and spillovers from the public sector) and some firm factors (external and internal R&D) on product innovation in a unique integrated framework. Based on a sample of Spanish industrial firms, these variables were found to be positively related to firms’ product innovation. Also, results show that in institutional environments with significant levels of social capital and spillovers, firms change their innovation strategy focusing on external R&D.     

Absorptive capacity, efficiency effect and competitors�� spillovers

Standard innovation surveys do not consider incoming spillovers for non-innovative firms. As a consequence, empirical works may overestimate the absorptive capacity effect, particularly among competitors. The Swiss innovation surveys presented here measure the importance of knowledge for both innovating and non-innovating firms. This original feature enables us to show that knowledge from rivals actually deters manufacturing firms from engaging in R&D activities. We therefore provide stronger evidence that the efficiency effect due to intra-industry spillovers is larger than that generally estimated by data from standard surveys. The R&D based absorptive capacity is weaker than expected, and non-innovative firms as well as non-R&D firms heavily rely on their rivals’ knowledge to maintain their technological capacities.     

Spillovers,product innovation and R&D cooperation: a theoretical model

ABSTRACT

We analyze the impact of post-innovation knowledge spillovers on firms’ decisions to invest and cooperate in R&D, forming a research joint venture (RJV). We study the case of two potential investors involved in a non-tournament stochastic competition for developing a new but imitable product. We propose a theoretical model where cooperation may emerge as a subgame perfect Nash equilibrium of a three-stage game. In the first stage, firms decide whether to cooperate; in the second, they decide whether to invest; and in the third, they compete. We show that firms cooperate in R&D when the spillovers are high enough and the fixed costs associated with R&D activities are low enough; however, our analysis suggests that forming an RJV may not always be socially optimal, and subsidizing R&D cooperation may not be efficient. We propose an optimal scheme of subsidies, which should be designed according to the intensity of the spillovers, the level of the R&D costs, and the probability of innovation success. Finally, we show that in the case of mergers the private incentive to invest is maximized, and firms may not need public subsidies to cooperate. When subsidies are costly, not hindering mergers may be the second-best solution.     

A model of innovation and learning with involuntary spillovers and absorptive capacity

We develop a model of innovation and learning that incorporates explicitly the need for a firm to conduct its own research and development (R&D) in order to realize involuntary spillovers from other firms’ R&D activity and the development of absorptive capacity of research firms over time. The conclusions of the model follow directly from the functional forms that are used to describe the generation and absorption of technological knowledge. The first proposition formally characterizes the steady-state rate of growth of technology for the model. The analysis also shows how some of the key features of two distinct, pure modes of organization of the production of new knowledge, the R&D model and the new localized knowledge model, are implied by our model by simply drastically changing the relative magnitude of two exogenous parameters: the ease of learning and the pace of knowledge advance. The second proposition formally characterizes the connections implied by the model between involuntary spillovers and absorptive capacity. Analysis of the long-term interactions between involuntary spillovers of knowledge and absorptive capacity provides the essential insights into an understanding of the elements of a self-sustained process of endogenous growth. The third and last formal proposition of this paper accommodates firm-level arguments and the crucial role of a firm's absorptive capacity in taking advantage of its location in clusters, as implied by the theoretical model.     

R&D and foreign direct investment with asymmetric spillovers

This paper analyzes how firms’ R&D investment decisions are affected by asymmetries in knowledge transmission, considering different sources of asymmetry such as unequal know-how management capabilities and spillovers localization within an international oligopoly. We show that a better ability to manage knowledge flows incentivizes the firm to invest more in R&D. By introducing geographically bounded spillovers, we also find that one-way foreign direct investment (FDI) stimulates the multinational enterprise to raise its own R&D and that an FDI equilibrium is more likely to occur. Finally, spillovers localization leading to two-way FDI is welfare improving when compared with non-localized spillovers.     

Innovation and productivity in the food vs. the high-tech manufacturing sector

ABSTRACT

The food sector is considered a mature industry characterized by low research and development (R&D) intensity. Nevertheless, food companies face numerous challenges and cannot do without innovation activity if they want to keep their competitiveness. In this study, we examine the impact of innovation on labor productivity in European food companies and compare it to results for firms operating in high-tech sectors. The central motivation of our study is that the low R&D intensity observed in the food sector should be mirrored in different productivity effects of innovation when compared to the high-tech sector. We use microdata from the European Union's ‘Community Innovation Survey’ (CIS) and apply an endogeneity-robust multi-stage model that has been applied by various recent studies. Our results point out major differences between the examined subsectors. While we find strong positive effects of innovation on labor productivity for food firms, we find insignificant effects in the high-tech sector. This might suggest that the returns to innovation might be best evaluated separately by sector rather than for the manufacturing sector as a whole.     

Knowledge spillovers,absorptive capacity and total factor productivity in China’s manufacturing firms

Applying the stochastic frontier framework, this study explores the diffusion and absorption of technological knowledge in China’s manufacturing firms, based on a panel of more than 10,000 local and foreign-invested firms over the period 1998–2001. Our empirical approach allows us to distinguish between technological progress (TP) and technical efficiency (TE) in analysing whether R&D, exports and the presence of foreign direct investment simultaneously enhance TP through knowledge spillovers in a single framework and whether different types of domestic absorptive capacity moderate external knowledge spillovers in relation to TE. The results show that there are positive inter-industry productivity spillovers from R&D and foreign presence, whereas evidence of intra-industry productivity spillovers from FDI to Chinese firms is less robust. We find evidence that absorptive capacity is one of the key determinants to quantitatively explain intra-industry differences in productivity of local Chinese firms. The findings have important policy implications.     

Role of human resource practices in absorptive capacity and R&D cooperation

This paper reconceptualises absorptive capacity as a strategic human resource construct and analyses its role in determining R&D cooperation and innovation in firms. In spite of widespread consensus on the role of absorptive capacity in innovation, the literature has so far concentrated only on traditional R&D and human capital based indicators of absorptive capacity. Furthermore, most firm-level studies investigating this relationship are cross-sectional in nature and there is need for longitudinal evidence. Employing the IAB Establishment Panel Survey on about 1200 private sector establishments in Germany during 2007–2011, we apply a structural model that links firms’ human resource practices, R&D collaboration strategies and finally their innovation outcome. Findings from the first stage of the empirical analysis suggest that adoption of employment practices positively affects horizontal, institutional and consulting-based R&D cooperation, while compensation programs positively affect only horizontal R&D cooperation. In the second stage, the effect of cooperative R&D conditioned upon human resource practices on innovation performance is examined. Results indicate that firms having institutional and consulting-based R&D cooperation relationships are more often associated with higher incremental product, process and new-to-market innovation, whereas the effect is relatively weaker in case of horizontal R&D cooperation.     

The two ways of FDI R&D spillovers: evidence from the French manufacturing industry

Using French firm-level panel data, this study investigates R&D spillovers from inward foreign direct investment (FDI) with respect to both horizontal and vertical linkages (backward and forward). Using a Crepon, Duguet and Mairesse (CDM) model, we estimate an R&D-augmented Cobb–Douglas production function to assess the impact of R&D spillovers on firm performance. The results emphasize that international spillovers (from foreign affiliates to local firms) have a greater effect on firm performance than reverse spillovers (from local firms to foreign affiliates) and are more likely to be backward than forward. Moreover, the effect of backward spillovers depends on a firm’s absorptive capacity and is amplified in the case of outsourcing relationships.     

Interdependence and spillovers: is firm performance affected by others’ innovation activities?

The creation of new knowledge is a case in which agents' behaviour can affect the performance of other actors positively, given that new knowledge creates positive externalities in the market. In this context, we investigate the existence of performance spillovers associated with innovation activities by quantifying the innovation produced in surrounding firms and controlling for the fact that a firm is itself an innovation producer. We use data from the Third Community Innovation Survey (CIS III) that measures innovation in a broad way, not reducing it to R&D and patents, which departs from previous literature on spillovers. Furthermore, to tackle the endogeneity of the innovation variables on the firm production decision, we resort to the firm intellectual property protection methods as an instrument. We found a positive spillover of innovation on firm value added. The results also show that process innovation spillovers are more prevalent than product innovation spillovers.     

Infra-industry spillovers and R&D cooperation: Theory and evidence

We analyse both the theoretical and the empirical side of the issue of R&D spillovers. Each firm's R&D costs are increasing in the amount of information transmitted to other firms, and we account for the possibility that firms control spillovers. We consider both Cournot-Nash and Cournot-Stackelberg behavior. The empirical analysis suggests that (i) firms' control on spillovers is relatively low; (ii) the cost-saving effect associated to joint ventures or R&D cartels is confirmed for industries where firms rely mainly upon own R&D as a source of innovation; (iii) R&D cooperation may increase information sharing, thereby enhancing spillovers.     

In-house R&D,external R&D and cooperation breadth in Spanish manufacturing firms: is there a synergistic effect on innovation outputs?

ABSTRACT

This study explores the nature of relationship between in-house R&D, external R&D and cooperation breadth and their joint impact on patent counts as well as technological, product and process, innovations in Spanish manufacturing firms. With regards to patent counts, empirical findings from a Generalized Method of Moments (GMM) estimator suggest a complementarity effect of internal and external R&D activities conditional on the breadth of R&D cooperation. Concerning technological innovation, results from dynamic random-effects probit models indicate no synergistic effects. In addition, we find evidence of persistence of all three innovation output measures. Our results suggest policy implications in relation to strengthening firms’ absorptive capacity that could have long-run effects.     

R&D activities in start-up firms: What can we learn from founding resources?

Research and development is critical in promoting innovation and firm development. While many studies have been discussing how firms’ R&D behaviour is affected by the internal factors and external factors, little has been done to link it to firms’ founding conditions. Using resource-based view theory, this study suggests the firms’ R&D activities in their later stages are partly determined by firms’ starting resource bundle. We propose that the financing structure, entrepreneurs’ education background and intellectual property of the new firms will affect their R&D behaviour. The study examines the performance of a random sample of firms established in 2004 using data from the Kauffman Firm Survey. The result shows a mixing impact of firms’ starting resources. The founders’ education and the ownership of intellectual property have a positive and long-lasting impact, while firms’ financial capital matters mostly in the short term. The study also finds subsequent resource development is highly reliant on the initial resource bundle.     

Firms’ productivity growth and R&D spillovers: An analysis of alternative technological proximity measures

This paper aim at assessing the impact of R&D spillovers on firms’ economic performance as measured by productivity growth. The construction of R&D spillovers is based on Jaffe's methodology (1988, 1996) which associates econometrics and data analysis. The main objective of the paper is to extend Jaffe's methodology by examining alternative methods for measuring R&D spillovers and to test their impacts in terms of the robustness of results. In particular, the method used to classify firms into technological clusters as well as the metrics implemented to appreciate firms’ technological proximities which enter the construction of spillovers are further investigated. In addition to R&D spillovers, firms’ own R&D capital, labour and physical capital are estimated by means of a Cobb–Douglas production function. The data set consists of a representative sample of 625 worldwide R&D intensive firms over the period 1987–1994.     

The impact of technology intermediaries on firm cognitive capacity additionality

Whereas the provision of R&D subsidies has been central to public policy for many years, governments have recently become increasingly involved in stimulating cooperation for innovation and R&D. In many countries, financial support for technology intermediaries has become one of the key measures of indirect public support. However, little research has assessed the impact of indirect policy measures. In this paper, we shed light on the conditions under which technology intermediaries contribute to knowledge and networking outcomes generated by the firms that call upon them. We hereby focus on firm network and competence additionality as measures for cognitive capacity additionality and study the impact of technology intermediaries on firms. In doing so, we distinguish between R&D and R&D related activity technology intermediaries engage in. The results indicate that absorptive capacity of the technology intermediary does not affect cognitive capacity additionality generated by firms in R&D activities, while the results for R&D related activities are mixed and depending on the type of cognitive capacity additionality studied. The absorptive capacity of firms does not directly affect cognitive capacity additionality, but the results of mediation analysis show that firms with higher levels of absorptive capacity use the services of the technology intermediary more intensively, and subsequently generate higher levels of cognitive capacity additionality.     

Strategic timing in R&D agreements

We study the endogenous formation of R&D agreements in a R&D/Cournot duopoly model with spillovers where also the timing of R&D investments is endogenous. This allows us to consider the incentives for firms to sign R&D agreements over time. It is shown that, when both R&D spillovers and investment costs are sufficiently low, firms may find difficult to maintain a stable agreement due to the strong incentive to invest noncooperatively as leaders. In this case, the stability of an agreement requires that the joint investment occurs at the initial stage, thus avoiding any delay. When spillovers are sufficiently high, the coordination of R&D efforts becomes a profitable option, although firms may also have an incentive to sequence noncooperatively their investment over time. Finally, when spillovers are asymmetric and knowledge mainly leaks from the leader to the follower, investing as follower may become extremely profitable, making R&D agreements hard to sustain unless firms strategically delay their joint investment in R&D.     

Founders’ human capital and external knowledge sourcing: Exploring the absorptive capacity of start-up firms

ABSTRACT

This study highlights the importance of founders’ human capital on firms’ absorptive capacity for explaining the external knowledge sourcing (licensing-in and joint R&D) of start-up firms, using panel data from original questionnaire surveys conducted in Japan. The results of a probit model with an endogenous regressor show that firms managed by founders with a high level of specific human capital, measured as prior innovation experience and industry-specific work experience, tend to engage in external knowledge sourcing because of their superior absorptive capacity. The findings indicate that this type of human capital also promotes research and development (R&D) investment. Contrariwise, this study finds that firms managed by founders with a high level of general human capital, measured as educational attainment, tend to invest more in R&D, which enhances their absorptive capacity and thereby promotes external knowledge sourcing. Finally, the implications of these findings are discussed from the perspective of public policy.     

Technology flows between sectors and their impact on large-scale firms

In this article we highlight the importance of technology flows between sectors and their impact on the labour productivity of large-scale corporations. Based on theoretical considerations, we explore technological spillovers between the sectors of an economy. Large-scale corporations usually focus on certain sectors but make use of a wide range of technological knowledge from other sectors. Thereby, technological knowledge built up in sectors by continuous R&D activities does not spill over without bounds but is directed by firms’ absorptive capacities. We use firms’ patent portfolio to empirically calculate the sector affiliation and therewith the firms’ absorptive capacities in order to estimate the impact of technology diffusion on labour productivity. Fortune 500 firms serve as data base.     

Entry of foreign firms and the R&D behaviour: a panel data study of domestic and foreign firms in China's manufacturing sector

Rapid globalization has resulted in increased competitive pressures. The entry of foreign firms in a host economy increases the level of competition faced by not only the domestic firms but also the existing foreign firms. We argue that domestic firms, especially in developing countries, respond to this situation by increasing their research and development (R&D) spending, whereas the foreign firms decrease their R&D spending. By making use of firm-level panel data from China's manufacturing sector, over the period 2005–2007, this paper investigates the impact of the entry of foreign firms on R&D behaviour of domestic and foreign firms. Empirical analysis, based on Tobit and Instrumental Variables Tobit regression, reveals that foreign entry increases the R&D intensity of domestic firms but its impact on R&D intensity of foreign firms is negative. The estimated results are found to be robust across balanced and unbalanced panels.