Partner Proximity and Relationship-Specific Capital in Joint R&D Ventures

Conrad Ciccotello and Richard Fu

The American Economist, 2023, vol. 68, issue 2, 261-276

Abstract: Geographic proximity between parties increases personal interactions and enhances the exchange of tacit information vital to success in collaborative innovation. In a sample of 582 joint R&D ventures, we observe that the distance between partners varies widely. Controlling for the self-selection among partners, we find that more geographically proximate parties tend to establish longer contract duration ex ante to address contracting risks associated with the increased sharing of tacit information. We argue that partner proximity in joint R&D leads to the creation of relationship-specific capital. Thus, the operative governance mode when partners are geographically proximate is organizational in nature. JEL Classification : D23; L24

Keywords: proximity; contracting; joint R&D (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:amerec:v:68:y:2023:i:2:p:261-276

DOI: 10.1177/05694345231172167

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