From Learning to Partnership. Multinational R&D Cooperation in Developing Countries

Giorgio Barba Navaretti () and Carlo Carraro ()

No 1579, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 New Industrialized Countries (NICs). Indeed, both our theory and empirical evidence show that R&D can be carried out via arm’s-length agreements, even between partners with asymmetric endowments of knowledge. The paper develops a theoretical model which brings together some of the central assumptions of the literature on R&D cooperation and of the literature on hierarchical transfer of technology. A multinational has the option between setting up a subsidiary and competing with a local firm in a duopoly, or implementing an agreement and sharing monopoly profits. The two firms, if they choose the agreement option, may also cooperate in R&D. The model shows that R&D cooperation increases both the profitability and the stability of the agreement. The model also shows that R&D cooperation is more likely when asymmetries in R&D efficiency between the partners are not too large. Spillovers have an ambiguous role; they must be large enough to induce firms to form an arm’s-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’s-length agreements. By testing a dichotomous choice model, it supports some of the key theoretical results and assumptions: R&D agreements are particularly likely to emerge when firms have a non-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 NICs which have relatively advanced industrial bases and capabilities.

Keywords: Firm Organisation; International Business; Management of Technological Innovation; Market Structure; Multinational Firms; R&D (search for similar items in EconPapers)
JEL-codes: F23 L22 O32 (search for similar items in EconPapers)
Date: 1997-03
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1579 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

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:cpr:ceprdp:1579

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1579

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().