R&D cooperation and innovation activities of firms—evidence for the German manufacturing industry
Introduction
The importance of R&D cooperation has risen steadily as a consequence of the growing complexity, risks and costs of innovation (Coombs et al., 1996, Hagedoorn, 2002, Nooteboom, 1999). Firms engaged in the innovation process are aware of the necessity of establishing R&D cooperation to obtain expertise which cannot be generated in-house. Collaboration with other firms and institutions in R&D is a crucial way to make external resources usable. It offers possibilities of efficient knowledge transfer, resource exchange and organizational learning. Agreements in well-defined research fields, leaving aside the possibility of competition in the market (pre-competitive stage), allow the stable and comprehensive adaptation of needed resources. Complementary assets and resources can be combined and pooled, thus generating synergies and cross-fertilization effects.
In the past, the role of R&D cooperation in the innovation process has been empirically studied from different aspects. For example, Arora and Gambardella (1994) demonstrate the great importance of R&D collaboration for large US chemical and pharmaceutical companies in the biotechnology sector. Colombo (1995) provides empirical evidence of the complementary relationship between inter-firm cooperative arrangements and R&D intensity for a representative sample of international firms in the information technology industries. Veugelers (1997) identifies significant positive effects of R&D cooperation in the Flemish manufacturing industry on the level of R&D investments, but only if firms have established absorptive capacities as a full-time staffed R&D department. In this way, R&D active Flemish firms are found to be more frequently engaged in technological cooperation the more they spend on in-house R&D. Tether (2002) has studied the patterns of cooperation between innovating firms and external partners in the UK. He found that the extent of joint R&D arrangements depends on the type of partner and the technological level of innovations.
For Germany, recent studies have focused on the role of inter-organizational arrangements in specific industries and the importance of different types of R&D cooperation. For example, Peters and Becker (1999) have investigated the role of R&D cooperation with universities in the German automobile industry. Formal R&D arrangements with universities are preferred because automobile suppliers can enhance their in-house capacities and use their automobile-specific potentials more efficiently. Becker and Peters (2000) have found empirical evidence that cooperation with universities enhances the probability of R&D and increases the R&D investment of firms in the German manufacturing industry. Fritsch and Lukas, 1999, Fritsch and Lukas, 2001 identify for manufacturing enterprises in three German regions differences concerning the prospensity to collaborate with others in R&D and the kind of cooperation partners. Kaiser (2002) provides empirical evidence for the German service sector that cooperating firms invest more in research than non-cooperating firms.
A summary of the state of the art reveals two noteworthy points:
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Up to now, empirical studies have focused on the effects of R&D cooperation on the intensity of firms’ innovation input activities (e.g. R&D intensity, R&D employment intensity). The impacts of joint R&D on the realization of new products (the innovation output side) are hardly analyzed.
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In the past, the importance of different partners (types) of R&D cooperation has been widely investigated. Less attention has been dedicated to the question of how the number of R&D partners affects the innovation behaviour of firms.
This paper picks up these points and tries to enlarge the findings on the role of R&D cooperation in the innovation process. Analysis concentrates on the effects of R&D cooperation—in context with other exogenous factors—on firms’ innovation input and output. Furthermore, it examines whether the number of cooperation partners has stimulating effects on the innovation behaviour of firms.
The paper is organized as follows: in Section 2, key theoretical arguments about the relationship between the innovation behaviour of firms and joint R&D are described and main hypotheses for empirical analysis formulated. Section 3 describes the data set, variables used and estimation methods. Section 4 presents—in a simultaneous equation framework—the estimation results for firms in the German manufacturing industry. Section 5 contains a summary of the main findings.
Section snippets
Key theoretical arguments about the relationship between innovation behaviour of firms and joint R&D
In the following, the relationships between the innovation activities of firms and inter-organizational arrangements in R&D are analyzed from a theoretical perspective. A formal analysis is dispensed with since the focus is on the elaboration of the theoretically expected effects of R&D cooperation on the innovation behaviour of firms. The description focuses on the formulation of core arguments and their interdependencies.
The innovation behaviour of firms depends on the interaction of
Data set, variables and estimation methods
We start with the description of the data set and variables used in the empirical analysis. Then information about the estimation methods and the econometric specifications to explain the innovation effects of R&D cooperation—along with other exogenous variables—are given.
Results of the empirical analysis
In the following, the empirical findings for the innovation effects of R&D cooperation in the German manufacturing industry are presented. Before we point out the econometric results, descriptive information about the empirical evidence of R&D cooperation is given.
Summary
The aim of the paper was to analyze the role of R&D cooperation in the innovation process from two specific aspects. First, analysis centred on the impact of joint R&D—along with other factors—on firms’ innovation input and output. Second, analysis was undertaken as to how the number of cooperation partners affects the innovation behaviour of firms.
The estimation results for the innovation effects of joint R&D in the German manufacturing industry can be summarized as follows: R&D cooperation is
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