Risk and vertical separation: the case of developing new technology

Russell Thomson () and Elizabeth Webster ()

Oxford Economic Papers, 2013, vol. 65, issue 3, 653-674

Abstract: Vertical separation between research and development, called herein 'external development', is an increasingly important route to market for new technologies. In this paper we consider why firms sometimes prefer external to in-house development for their inventions, despite the costs of contracting and the risks of opportunistic behaviour and expropriation. We model the determinants of firms' choice of development pathway for their inventions using survey data from over 2,600 Australian inventions. Our results indicate that firms pursue collaborative development strategies in response to perceived project-level risk about the technical feasibility of the invention. Our findings also confirm that small to medium size enterprises; highly leveraged large firms; and firms with less experience patenting are more likely to pursue an external development strategy. Copyright 2013 Oxford University Press 2013 All rights reserved, Oxford University Press.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://hdl.handle.net/10.1093/oep/gpt014 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxecpp:v:65:y:2013:i:3:p:653-674

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Oxford Economic Papers is currently edited by James Forder and Francis J. Teal

More articles in Oxford Economic Papers from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().