Due Diligence, Research Joint Ventures, and Incentives to Innovate

Simona Fabrizi () and Steffen Lippert

Journal of Institutional and Theoretical Economics (JITE), 2012, vol. 168, issue 4, 588-611

Abstract: The decision to cooperate within R&D joint ventures is often based on expert advice. Such advice typically originates in a due-diligence process, which assesses the R&D joint venture's profitability, for example, by appraising the achievability of synergies. We show that if the experts who advise the owners considering forming an R&D joint venture are also responsible for R&D efforts, they can have incentives to withhold information about the extent of those synergies. Owners optimally react by reducing the incentives to innovate in low-value projects developed within R&D joint ventures and in high-value projects developed within competing research organizations.

JEL-codes: D82 D86 L24 L5 O31 O32 O38 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Due diligence, research joint ventures, and incentives to innovate (2011)
Working Paper: Due diligence, research joint ventures, and incentives to innovate (2011)
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