Recent analysis of R&D alliances between firms



Recent analysis of R&D alliances between firms

Introduction

Researchers have distinguished two types of R&D alliance forms by the presence or absence of equity sharing: equity-based R&D joint ventures and non-equity-based R&D cooperative agreements (Hagedoorn, 2002 and Li and Zhong, 2003). We adopt this categorization of R&D alliance forms. An equity-based R&D joint venture (RJV) involves the sharing of equity in a new organization jointly controlled by two or more partners to engage in R&D activities (Hagedoorn and Narula, 1996 and Vonortas, 1997). A non-equity-based R&D cooperative agreement (RCA) does not involve the sharing or exchange of equity. These agreements cover technology and R&D sharing between two or more companies in combination with joint research or joint development projects (Hagedoorn, 2002).

Explanation

The most widely accepted definitions for R&D activities are those of the National Science Foundation (NSF, 2002) and the OECD Frascati Manual 2002 (OECD, 2002). The NSF defines three types of R&D, basic research, applied research, and development. The Frascati Manual 2002 recognizes three categories of R&D: basic research, applied research, and experimental development.

These classifications, however, have received criticism for practical data collection because of the lack of clear boundaries between basic research and applied research. For this reason, some researchers divide the R&D activities into two groups, research-oriented and development-oriented (Li & Zhong, 2003). We adopt this two-category typology for R&D activities in international R&D alliances.

Development-oriented activities include: product/material/process adaptation or improvement, product/system testing and interoperability or compatibility testing for local markets; system integration, and product/system design and development for local and/or global markets. Research-oriented activities include both basic research and applied research aimed at gaining new scientific knowledge without or with specific commercial objectives, respectively. New scientific knowledge gained from basic research and applied research is converted into commercially viable products and processes in the development stage (Li & Zhong, 2003).

Relationship between motive and form

Previous research, from a resource perspective, has proposed that the types of resources that firms could potentially contribute constitute a key dimension in predicting the partners' structural preferences in the prospective alliance (Das & Teng, 2000). Firms are interested not only in accessing or acquiring their partners' valuable resources, but also in protecting their own valuable resources during the alliance-making process (Das & Teng, 2000). Other research has noted an underlying tension between 'trying to learn and trying to protect' in strategic alliances (Kale, Singh, & Perlmutter, 2000: 217). Alliance participants internalize complementary capabilities and skills possessed by the partner and, at the same time, work to protect some of their own core capabilities from being appropriated by the partner. Thus, alliance governance form should facilitate inter-partner learning while simultaneously protecting proprietary knowledge (Kale et al., 2000).

Previous studies show that equity-based joint ventures provide the best opportunities to acquire partners' tacit knowledge and other knowledge-based resources due to the degree that partners are exposed to each other (Kogut, 1988 and Mowery et al., 1996). Equity joint ventures are found to be the preference of firms who seek the ...