Research Joint Ventures

Abstract

Inter-firm collaboration is not new. What is new is that such collaboration has exploded during the past couple of decades, in parallel to the intensification of international competition. Moreover, the nature of collaboration has changed, shifting from peripheral interests to the very core functions of the corporation, and from equity to non-equity forms of collaboration. Importantly, cooperation focusing on the generation, exchange, and/or adaptation of new technologies has risen at very fast rates. Research joint ventures, the focus of this paper, belong in the latter category.The proliferation of RJVs has created extensive interest among economists, business analysts, and policy decision-makers and led to the profusion of literature on the topic. This paper critically reviews the literature in industrial economics and strategic management that deals with RJV partner motives and RJV outcomes. The paper categorizes the different streams of this literature and indicates the state-of-the-art, synthesizes important understandings, and suggests key nodes of a future research agenda.

Research and Development Cooperatives and Market Collusion: A Global Dynamic Approach

“…To show that no trajectory that enters R (1) 2 can be maximizing, pick an arbitrary trajectory γ such that γ (t 0 ) ∈ R (1) 2 at a given time t 0 . By the Poincaré-Bendixon theorem, γ (t) is either unbounded, or its ω-limit set is a steady state, or a limit cycle.…”

“…An important reason for allowing firms to set up research and development (R&D) cooperatives is that these "organizations, jointly controlled by at least two participating entities, whose primary purpose is to engage in cooperative R&D" [1] internalize technological spillovers-the free flow of knowledge from the knowledge creator to its competitors. Indeed, Bloom et al [2] estimate that a 10% increase in a competitor's R&D is associated with up to a 3.8% increase in a firm's own market value.…”

In Defense of Trusts: R&D Cooperation in Global Perspective

“…An important reason for allowing firms to set up R&D cooperatives is that these "organizations, jointly controlled by at least two participating entities, whose primary purpose is to engage in cooperative R&D" (Caloghirou et al, 2003) internalize technological spillovers -the free flow of knowledge from the knowledge creator to its competitors. 1 The exemption for R&D cooperatives in anti-cartel legislation is thus perceived to diminish the failure of the market for R&D. 2 However, as Scherer (1980) observes: "the most egregious price fixing schemes in American history were brought about by R&D cooperatives", an observation that constitutes the classic counterargument to a permissive antitrust treatment of R&D markets (Pfeffer and Nowak (1976), Grossman and Shapiro (1986), Brodley, 1990).…”

“…9 In case of an 'uncertain future', the third situation, it is not immediately clear whether the long-run steady state will be reached, or that it is optimal to gradually leave the market. Only time will tell.…”

“…product market collusion) remain hidden. 9 This situation resembles the 'sailing ship effect' of Cooper and Schendel (1976) (see also Howells, 2002), whereby the arrival of a new, possibly superior technology spurs the development of the old technology. In our case, there is no rival technology that induces continued investment in a technology that is bound to leave the market.…”