How do competitors and partners shape corporate R&D investments

Xincheng Wang (), Ye Hou (), Wan Cheng () and Jingzhou Guo ()
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Xincheng Wang: Tongji University
Ye Hou: University of Greenwich
Wan Cheng: Shanghai Jiao Tong University
Jingzhou Guo: East China University of Science and Technology

The Journal of Technology Transfer, 2023, vol. 48, issue 3, No 9, 1106-1125

Abstract: Abstract Strategy management alludes to the organizational and environmental factors that shape firms’ propensities to make research and development (R&D) investments. We complement this literature by building on vicarious learning to explain how a firm determines its own R&D investment level based on the R&D investment patterns of partners and competitors. Using panel data on firms publicly traded in China, we show an inverted U-shaped relationship between a firm’s R&D investment pattern and the R&D investment patterns of its partners and competitors. Convergence is driven by imitation and legitimation while divergence is explained by risk perception. We conclude that competitors represent a more valuable reference than partners. Our findings advance research on vicarious learning and the antecedents of R&D investments, underscoring the role of interdependence in influencing firms’ R&D investment decisions.

Keywords: R&D investments; Partners’ and competitors’ R&D investments; Vicarious learning (search for similar items in EconPapers)
JEL-codes: O32 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10961-022-09942-0

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