Connecting the Firm to External Knowledge
Chapter 7: The Impact of Internal R & D, Strategic Appropriability and Cooperation on R & D Outsourcing
7. The impact of internal R&D, strategic appropriability and cooperation on R&D outsourcing 7.1 INTRODUCTION In the past two decades there has been a remarkable increase in the R&D outsourcing activities of firms in developed market economies. This is observed through the substantial increase in the number of R&D partnerships, through interactions between partners and through the significant growth of firm expenditure on external R&D. This has all taken place in a context of rapidly developing, elaborate R&D networks that combine different kinds of partnership, from straight licensing, consulting and arm’s-length pure subcontracting, through more profound long-term types of subcontracting, to various forms of explicit R&D cooperation. These partnerships involve different types of partners, such as competing firms, firms connected by vertical supplier–customer relations, and public research institutions such as universities and public research centres. And they tend increasingly to become international in nature, involving partners from different countries (Roijakkers et al., 1994; OECD, 2008b). These developments are somewhat puzzling in the light of transaction cost economics. According to this, the development of technology market transactions through subcontracting, and of lasting collaborative R&D agreements, is hampered by factors such as asset specificity, the uncertainty of the outcome of the R&D process, and information asymmetries between buyer and supplier (subcontractor), or between research partners, leading to free-riding behaviour (Williamson, 1981, 1985; Walker and Weber, 1984; Milgrom and Roberts, 1987; Pisano, 1990). In the same vein, papers in the field of industrial...
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