The Impact of Revised Recommended Accounting Practices on R&D Reporting by UK Firms

The R&D reporting practices of UK quoted companies are analysed and the impact of the introduction of a revised Statement of Standard Accounting Practices in 1989, SSAP13 (Revised), recommending separate R&D disclosure for companies meeting certain size thresholds, explored. Using hazard rate models the preferred results indicate that the hazard of a firm reporting its R&D in its annual accounts shows positive time dependence and that large firms, by sales, are more likely to announce than small firms. It is also found that the introduction of SSAP13 impacted considerably upon the extent of reporting by all firms (whatever their size) with an anticipation effect in 1988, and large positive impacts in 1989 and 1990. Post-1989 those firms that exceeded the size thresholds embodied in the new standard also had a higher hazard of reporting their R&D.     

R&D Policy Involving Consumer-Friendly Strategy: Cooperative and Non-Cooperative R&D

In a highly globalized economy, foreign exporting firms have initiatives to be consumer friendly for many reasons. The aim of the present paper is to endogenize consumer-friendly actions by the exporting firms, and explore how government’s industrial policy and firm’s R&D investment are affected by the strategy of foreign exporting firms under cooperative and non-cooperative R&D commitments in an international rivalry market. It finds that consumer-friendly action is a dominant strategy equilibrium, and no matter whether under cooperative or non-cooperative R&D, a consumer-friendly firm tends to invest less than does the purely profit-maximizing firm on R&D under symmetrical decisions. In the case of firms cooperating in R&D and involving consumer-friendliness in action, their governments need not intervene. On the other hand, governments always subsidize non-cooperative R&D activities, or cooperative but unfriendly firms. Furthermore, the consumer-friendly action will result in more (less) R&D subsidies by the exporting government when both firms non-cooperate (cooperate) in R&D. Finally, it is robust to indicate that the government of an importing country prefers friendly foreign firms in any circumstances. Above all, the equilibrium outcomes explain the crucial role of consumer-friendly strategy for industrial policies and R&D activities.     

Internal Versus External R&D: A Study of R&D Choice with Sample Selection

This paper extends previous analyses of the choice between internal and external R&D to consider the costs of internal R&D. The Heckman two-stage estimator is used to estimate the determinants of internal R&D unit cost (i.e. cost per product innovation) allowing for sample selection effects. Theory indicates that R&D unit cost will be influenced by scale issues and by the technological opportunities faced by the firm. Transaction costs encountered in research activities are allowed for and, in addition, consideration is given to issues of market structure which influence the choice of R&D mode without affecting the unit cost of internal or external R&D. The model is tested on data from a sample of over 500 UK manufacturing plants which have engaged in product innovation. The key determinants of R&D mode are the scale of plant and R&D input, and market structure conditions. In terms of the R&D cost equation, scale factors are again important and have a non-linear relationship with R&D unit cost. Specificities in physical and human capital also affect unit cost, but have no clear impact on the choice of R&D mode. There is no evidence of technological opportunity affecting either R&D cost or the internal/external decision.     

Feasibility of Effective Public–Private R&D Collaboration: the Case of Cooperative R&D Agreements

Since the mid–1980s, the federal government has supported collaborative R&D in private consortia and between industry and national research laboratories. One justification for these activities is that they can solve ‘public goods’ problems associated with producing non–appropriable, technology–base research. However, these efforts also create formidable contracting problems similar to those experienced in defense weapons systems development. We examine the early history of collaborations with the national laboratories, to ascertain whether or not this policy is working effectively, and find that the problems seem to be outweighing the benefits mentioned, in many cases.     

Multilateral R&D alliances by new ventures

We examine the antecedents and outcomes of new ventures' formation of multilateral R&D alliances. Our results show an inverted U-shaped relationship between market uncertainty and a new venture's likelihood of forming multilateral R&D alliances. Top management team's social capital and ventures' technological capabilities are critical for new ventures to identify and capture alliance opportunities. Moreover, our analysis reveals value creation effects of multilateral R&D alliances for new ventures despite the challenges and difficulties associated. We further show that the value creation effect is a function of the type of exchange relationship (i.e., net- vs. chain-based) in the multilateral R&D alliance and that governance structure moderates this relationship.     

The Effects of UK Pharmaceutical Policy on Government Drug Expenditure: Cost Control and Incentives for R&D

This paper investigates the impact of UK pharmaceutical policy on the level of NHS pharmaceutical expenditure. UK pharmaceutical policy is one which has managed to control costs, but at the same time, has not sacrificed the rewards for conducting long-term R&D in the UK. The analysis provides evidence that the government policies which encourage long-term R&D and the development of new drugs actually lead to lower overall pharmaceutical expenditure by the NHS. The reason for this is attributed to the savings associated with the replacement of new drugs for other less effective drugs. Additional results show that the UK receives positive spillovers from the R&D conducted by US firms and this R&D has a cost reducing impact on NHS pharmaceutical expenditure.     

Collaboration for R&D Projects between the Industry and External Agents: Evidence from Manufacturing Companies in Peru

In this article we use the innovation survey of the manufacturing industry of Peru to identify cooperation behaviors for research and development (R&D) projects among companies and external agents in general. Likewise, we also find cooperation behaviors among the industry and the following external agents: university, technical centers, suppliers, customers, and companies of the same group, competitors, guilds, and consultants. Within the specific agents, the university is considered a cooperation agent for R&D projects. We use the survey of innovation in the manufacturing industry of Peru conducted in 2015, which resulted in 1447 Peruvian companies being surveyed. Evidence was obtained as to the degree of the tie between the industry and external agents for cooperation in R&D projects, giving relevance to variables such as investment, resources, and degree of innovation. Our results show that investment is an important factor for cooperation with external agents. Additionally, companies that have innovated at some point seek to cooperate with external agents. Finally, the importance of the university is demonstrable, thus, companies that invest in R&D seek to cooperate with the university.     

Strategic R&D Investment Under Liability Law

This paper analyzes the incentives of duopolists to invest in advanced care technology under liability law. We establish that investment incentives under strict liability are in line with the taxonomy of Fudenberg and Tirole (1984), whereas the investment incentives under negligence most likely are not. Indeed, investment incentives under negligence are dependent on the timing of the policy maker’s regulations, whether or not due care is firm specific, and whether or not precautionary measures are durable.     

客户关系与企业研发投资决策

从企业商业关系网络视角, 探讨客户关系对企业研发投资强度的影响. 研究发现, 客户集中度与企业研发投资强度呈现倒 U 型关系. 进一步从企业的集团属性和地区金融发展水平研究发现, 在非集团企业样本中, 客户集中度与企业研发投资的倒U 型关系依然存在, 而在集团企业样本中, 客户集中度与企业研发投资则显著负相关;同样地, 在地区金融发展水平较高样本中, 客户集中度与企业研发投资的倒 U 型关系依然存在, 而在地区金融发展水平较低样本中, 客户集中度与企业研发投资则显著负相关. 研究表明企业的研发投资作为一种专用性资产投入, 既具有在客户集中度方面的信号传递价值, 还会在不同的融资约束情景下体现不同的投入强度, 彰显其显著的环境调节功能, 有助于企业多角度考量研发投资决策.     

R&D policies, trade and process innovation

We set up a simple trade model with two countries hosting one firm each. The firms invest in cost-reducing R&D, and each government may grant R&D subsidies to the domestic firm. We show that it is optimal for a government to provide higher R&D subsidies the lower the level of trade costs, even if the firms are independent monopolies. If firms produce imperfect substitutes, policy competition may become so fierce that only one of the firms survives. International policy harmonization eliminates policy competition and ensures a symmetric outcome. However, it is shown that harmonization is not necessarily welfare maximizing. The optimal coordinated policies may imply an asymmetric outcome with R&D subsidies to only one of the firms.     

Cooperative and non-cooperative R&D and trade costs

We examine the effect of trade liberalization on the level and mode of R&D in an international duopoly setting. Firms have the choice to invest in R&D either independently or cooperatively. A reduction in trade cost increases R&D irrespective of the mode of R&D. However, an increase in spillovers has ambiguous effects on R&D. More precisely, we find that an increase in spillover leads to higher R&D activity under cooperation but lower R&D activity under non-cooperation. Concerning cooperation versus non-cooperation, we find that firms prefer cooperation only if trade costs are low. Consumers are better off under cooperation if spillovers are high. We find that there can be a mismatch between private and social incentives. If spillovers are low and trade costs are low then cooperation might be privately profitable but socially undesirable. On the other hand, if there are large spillovers and high trade costs then cooperation may be socially desirable but not privately profitable.     

R&D Investments in Markets with Network Effects

We consider process R&D investments of firms in markets with network effects and incomplete product compatibility. Our results indicate that network effects increase the firms’ individual investments in R&D. The presence of network effects weakens the positive impact of R&D cooperation on firms’ R&D investments. Further, we show that R&D competition can bring socially optimal level of investment, and this is not possible in markets without network effects. Finally, our results suggest that innovation policy oriented at promoting R&D cooperation between enterprises can be counterproductive in markets with network effects and incomplete product compatibility.

     

Ownership as R&D incentive in business groups

Small and medium-sized enterprises (SMEs) are supposed to be less likely to conduct formal R&D because of the lack of financial resources, weaker competencies, and the absence of scale and scope economies. These limitations may be overcome when an SME belongs to a business group. Empirical studies have shown that firms belonging to business groups have a higher propensity to engage in R&D. We demonstrate that this higher propensity depends on the ownership of controlled companies, besides the presence of coordination mechanisms. We develop a model, and we empirically test its predictions using a data set of Italian SMEs operating in the manufacturing sector. From the model we derive three main implications: (1) there is no difference in R&D propensity between standalone firms and firms at the bottom of groups; (2) head and intermediate firms have a higher R&D propensity than standalone firms and firms at the bottom of the group; (3) the intensity of R&D depends on the ownership of controlled firms and on their size. Overall, the results of the empirical analysis are in accordance with the implications of the model.     

Corporate motivation and performance in R&D alliances

In the face of the global challenges of rapid transitions in technologies and markets, R&D activity has become one of the main ways for companies to engage in innovation. In addition, minimizing transaction cost is no longer sufficient to ensure a company's survival; therefore, companies must investigate and acquire resources to facilitate innovation within the organization. This study investigates corporate motivation and the performance of R&D alliances among machinery manufacturers in Taiwan. To explore the relationships between motivation and performance, this study adopts two distinct but complementary perspectives on R&D alliances: transaction-cost economics (TCE) and resource-based theory (RBT). This study includes the administration of a survey to explore the issues of motivation of companies participating in R&D alliances, types of governance structure in alliances, relationships between governance structure and performance, and relationships between motivation and performance of an R&D alliance in Taiwan's machinery industry (the TMI). The results in this study assert that corporate motivation as derived from both TCE and RBT perspectives has a significant positive relationship with the performance of R&D alliances; however, the other moderating variables, such as types of governance structure and corporate attributes, do not have a significant impact on the performance of R&D alliances in the TMI.     

Country Relational Distance,Organizational Power and R&D Managers: Understanding Environmental Challenges for Foreign R&D in China

This study examines the challenges of foreign research and development (R&D) in China, based on interviews with 32 senior R&D managers. It confirms the findings from previous research that many barriers still exist in China for foreign R&D, and such barriers include institutional environment, infrastructure and labour management. Among the three categories, issues related labour management, such as increasing labour cost and mobility, lack of experience and creativity and cultural differences among the research staff, prove to be most challenging for management, while China's institutions and infrastructure do not seem to pose big problems for foreign companies. This study also finds that responses from R&D managers are not consistent, and the differences could be largely explained by three types of factors: relational distance between the parent country and China, the strength and experience of foreign companies, and the manager's personal experience and closeness with China. Further research is needed to explore these issues due to the small sample size of this study.     

Globalization, R&D and the iPod Cycle

This paper constructs a dynamic scale-free North-South model of trade with endogenous innovation. In the North a local-sourcing-targeted race and an outsourcing-targeted R&D race take place simultaneously within each industry. The former results in the winner firm manufacturing in the North, while the latter culminates in the winner firm's immediate outsourcing to the South, generating the iPod cycle. We study three aspects of globalization: reductions in the resource-requirement in outsourcing-targeted R&D, increased subsidies to outsourced production, and reduced Southern imitation due to TRIPs. Each event boosts outsourcing-targeted R&D and increases the frequency of iPod cycles. The aggregate innovation rate rises despite a possible fall in local-sourcing-targeted R&D, and the North-South relative wage decreases.     

Size,R&D productivity and Decision Styles

We extend the size–innovation debate by incorporating decision-making style as a relevant factor in the innovation process. We propose that the size of firms affects the scale and quality of product innovation through the adoption of different decision-making styles. Using the literature on cognition, we conceptualize decision-making style as the degree to which firms rely on analytical information for decision making during the R&D process. Using longitudinal data of Spanish firms, we show that, as firms increase in size, they rely more extensively on analytical decision tools for the innovation activity. Additionally, we show that the size of firms is negatively related to product innovation productivity in terms of scale and positively related to the quality, and that these relationships are mediated by firms’ reliance on analytical decision-making style. We discuss theoretical and managerial implications for innovation research and practice.     

The dynamics of exports and R&D in SMEs

A growing body of literature is exploring firm export and R&D activities. However, most studies examine the first one, whilst considering the second as an explanatory variable or vice versa. This paper contributes to this literature by exploring the joint dynamics of exports and R&D using data from a representative sample of small and medium-sized enterprises in Spanish manufacturing over the 1990–2006 period. The results confirm the existence of a strong interdependence between export and R&D activities. Indeed, engaging in export (R&D) activities will increase a firm’s chances of also engaging in R&D (export) activities. This, in turn, increases firms’ chances of succeeding in export (R&D) activities. Additionally, once we control for firm heterogeneity, strong persistence still remains in each activity due to true state dependence. The results are robust in the use of alternative measures of internationalization (i.e. imports) and innovative activities (product and process innovation).     

Globalization of R&D and China: An Introduction

In this introduction, we discuss the recent changes in multinational corporations' (MNCs) research and development (R&D) strategies and China's rising role in this new development. Significant changes include: 1) More and more corporations have started overseas R & D operations; 2) the missions of many overseas R&D facilities have shifted from the traditional supplementing and supporting roles to become critical and strategic components of MNCs' global R&D networks; and 3) MNC overseas R&D operations have expanded their geographic reach to carefully selected developing countries. China has benefited from such changes and has become one major attraction for such R&D facilities due to its rich endowment of low-cost and well- trained scientists and engineers as well as its fast growing domestic market and burgeoning foreign investment in manufacturing. The explosion of foreign R&D investment has also been accompanied by the rapid growth of China's domestic investment in R&D. The growth in both domestic and foreign investment in R&D implies that China will improve its position in global economic and technological competition. However, it is unclear to the rest of the world about the implications of China's rising R&D and whether or not China can capture the value from the presence of foreign R&D centres. We conclude that issues related to China's science and technology development in general and foreign R&D in China in particular warrant more research in the future.