From Learning To Partnership: Multinational R&D Cooperationin Developing Countries

Giorgio Harha Navaretti and Carlo Cakraro

Economics of Innovation and New Technology, 1999, vol. 8, issue 1-2, 137-173

Abstract: This paper is a first attempt to analyse the determinants of inter-firm R&D agreements between advanced and developing countries, i.e. between firms with asymmetric endowments of knowledge. It shows that international dispersion of R&D activity by multinationals also concerns developing countries, particularly the NICs. Indeed, both our theory and empirical evidence show that R&D can be carried out via aml-length agreements, even between partners with asymmetric endowments of knowledge. The paper develops a thcorelical model which brings together some of the central assutnptions of the literature on R&ll cooperation and of the literature on hierarchical transfer of technology. A niultinational has the option between setting up a subsidi;uy and competing with a local firm in a duopoly, or implementing an agreement and share monopoly profits. The two firms, if they choose the agreement, may also cooperate it1 R&D. The model shows that. K&D coopcration increases both the profitability and the stability of the agreement. the latter as far as it affects the long term relationship of trust between the partners. The niodel also shows that R&D cooperation is more likely when asymmctries in R&D efficiency between the partners are not loo large. Spillovers have an ambiguous role. They must be largc enough to induce firms to form an arm-length agreement, but if they are too large they discourage R&D cooperation. The empirical analysis is based on a data set of international arm-length agreements. By testing a dichotomous choice model it supports some of the key theoretical results and assumptions: R&D ngreenlents are particularly likely to emerge when firms have a nun-hierarchical relationship, in knowledge intensive industries and when technological asymmetries between home and host countries are not too large. Indeed most R&D agreements are concentrated in the NlCs which have relatively advanced industrial bases and capabilities.

Keywords: Multinational firm; International business; Management of technological innovation and R&D; Firm organisation and Markct structurc JEL Classification: F23; 032; L22 (search for similar items in EconPapers)
Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/10438599900000007 (text/html)
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:taf:ecinnt:v:8:y:1999:i:1-2:p:137-173

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/GEIN20

DOI: 10.1080/10438599900000007

Access Statistics for this article

Economics of Innovation and New Technology is currently edited by Professor Cristiano Antonelli

More articles in Economics of Innovation and New Technology from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().