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Firms’ R&D cooperation strategies: Partner Selection

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1 Firms’ R&D cooperation strategies: Partner Selection
Cooperation among Firms Prof. Arrighetti Firms’ R&D cooperation strategies: Partner Selection University of Parma IBD Albiona Cokaj Silvia Idiris Tommaso Rossi

2 Cooperation the need to share costs and risks with partners
Extend technological capabilities Integrate into firm production processes technological knowledge coming from different sources; R&D alliances strategies followed starting from the late '80s 2 aspects inherent to the R&D cooperation process: the need to share costs and risks with partners to access to complementary knowledge

3 Aim of Firms’ cooperation strategies
Introduce a new product (or process) in a brief time span; Have a rapid and privileged access to new knowledge increasing the firms' understanding of scientific developments (Belderbos) The main research interest resides in four broad areas: The motives which induce firms to form these alliances; the selection of partners; the management of the alliances, the measurement of alliance performance (Bayona et al., 2001)


5 Partner selection The partner selection is one of the most critical decision for a firm when forming an alliance as the simultaneous management with multiple partners cause a rise in complexity and coordination costs use of a multinomial logit model

6 The choice among three main strategies
Three different cooperation strategies: mixed cooperation with both market and science partners. market cooperation R&D cooperation with market partners (suppliers, clients or competitors) science cooperation R&D cooperation with science partners (public research institutes and universities)

7 Theoretical Approaches in the Analysis
2 Theoretical Approaches in the Analysis The industrial organization literature (IO)has focused on incoming and outgoing spillover as the major determinants of R&D cooperation strategies. The second theoretical approach followed is grounded in the management literature. It applies transaction cost approach that may favour the sharing of costs and risks among partnership participants (e.g. Das and Tend, what determines how firms choose different partners)

8 Firms cooperating with…
Public institutions Face less cost constrains while it is not the case for firms cooperating with rivals. are targeted in order to pool complementary resources together. Universities Foreign and Domestic partners Cincera et al., (2003) found negative result on firms' productivity collaborating with foreign partners and may be affected even by international R&D cooperation Competitors Lhuillery and Pfister (2009) collaboration with competitors may induce failures differentiating among vertical partners.

9 Determinants of R&D cooperation
Incoming spillovers Appropriality Firm size Cost of innovation Subsidies Participation in a multinational group International status R&D expenditures

10 MAJOR FACTORS INCOMING SPILLOVER: external flows of knowledge that a firm may be able to grasp directly from partners or from other sources of technology such as patents, publications, meetings and so on…. COST OF INNOVATIONS: high costs for innovation induce firms to search for a partner to alleviate financial problems and reduce costs

11 Incoming spillovers If they are high:
may induce firms to collaborate and it may result more profitable than non cooperating strategy. Firms in high-tech sectors prefer horizontal cooperations especially when the costs of innovation are high . On the other hand, the possibility of knowledge leakages may increase firms' willingness to take advantage of partners R&D investments. collaborating with research organizations = higher incoming spillovers Firms attempt to minimize outgoing spillovers and maximize incoming spillovers.

“Collaboration in the field of research and development as well as knowledge transfer activities between the Community and third countries should be based on clear and uniform recommendations and practices that ensure equitable and fair access to intellectual property generated through international research collaborations, to the mutual benefit of all partners involved.”

Identification of the respective interests of the parties Participant’s knowledge transfer policy IP* strategy and exploitation model of the partner Identification of background IP Identification of personnel Identification of the partners Due diligence evaluation of new partners Freedom-to-operate Analysis of the legal system, particularly the IP framework, of a partner's country Cultural issues relating to contract negotiation and execution of contracts Drafting R & I collab.agreement *intellectual property

14 Case Studies Science Cooperation
UCB and Harvard University announce new research alliance The new alliance creates a unique drug discovery bridge between industry and academia. It pairs Harvard’s long-standing excellence in medical research with UCB’s expertise in drug development -It’s about collaboration -it’s about innovation -it’s about sharing ideas. Harvard will benefit from UCB’s strengths and industry experience in drug discovery and development; while Harvard’s exceptional research will complement UCB’s internal expertise.’’

15 Market cooperation + Matheson Tri-Gas, Inc., a global manufacturer and supplier of industrial, medical, electronics and specialty gases and welding supplies headquartered in Basking Ridge, N.J., has announced the completion of the acquisition of Continental Carbonic Products Inc., an Illinois-based manufacturer and supplier of dry ice and liquid carbon dioxide. Going forward, CCPI presents a tremendous opportunity for MATHESON by providing a new platform for growth and extension of our product offering.

16 Mixed cooperation + Prompt, Québec’s premier ICT R&D consortia, altogether with McGill University and the California Institute for Telecommunications and Information Technology has announced another key milestone towards the development and application of environmentally sound ICT-based infrastructure and networks Benefits increase energy efficiency reduce carbon emissions across university campuses, companies and government departments.

17 Continue… Focus on maximizing the positive environmental benefits of ICT Building on the results of an initial strategic planning meeting hosted in October in San Diego, California, the workshop brought together more than 35 participants from industry, academia and government. This included representatives from emerging companies across Quebec to multinational industry leaders such as Ericsson, IBM and DMR-Fujitsu that maintain a strong R&D presence in the province. Delegates identified three key priorities for the proposed consortium: green telecommunications, wireless access, intelligent transportation systems.

18 Partnerships create new opportunities
"This workshop enabled us to develop specific tactics that will help translate our vision into action, while making important progress on the implementation of our Green ICT Strategy,” Together with our partners, we will focus on technological collaboration, governance and intellectual property management support the launch this new Canada-California Consortium, and provide entrepreneurs with new opportunities to capitalize on growing market for Green ICT.” said Dr, Charles Despins, President and CEO of Prompt.

19 Continue… “The University of California recently hosted the Third Governors’ Global Climate Change Summit, which called for collaborative action that enables the development of a green economy; technology will play an important role in this equation,” said Jerry Sheehan, Chief of Staff at Calit2. “This workshop reinforced how Canada-California R&D cooperation in green ICT could help to achieve this goal and influence others around the world.” “This bilateral consortium promotes the development of a sustainable environment and global ICT industry,” said Pierre Coderre, Sr. Director of Technology with DMR-Fujitsu, which has three offices in Quebec. “It will enable multinational companies such as Fujitsu to leverage a network of Green ICT partners, optimize the development of new technology-based, climate change solutions, and demonstrate Fujitsu leadership in green ICT.”

20 References
Reading on «Firms’ R&D cooperation strategies: Partner Selection, written by Gussoni and Franco


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