The determinants of partner choice for cooperative innovation: The effect of competition

Abstract

This study analyses the effect of competition intensity as a determinant of cooperative partner choice. To the best of our knowledge, this is the first attempt to study the relationship between research and development (R&D) cooperation and direct measures of competition intensity. Competition intensity is measured by the number of competitors in the firm's core market and the price elasticity reported by firms. Using information from German firms for 2011, our results show that competition intensity is a determinant for different types of collaborative innovation (e.g., with customers, suppliers, competitors, universities, or firms of the same group). Overall, the effect of competition is negative for cooperation with universities, customers and firms of the same group, and positive for cooperation with suppliers and competitors (and ambiguous for cooperation with consultants). Competition negatively affects partnerships with customers and universities, which look for radical innovation and involve high risks of disclosure. By contrast, competition positively influences partnerships with suppliers and competitors, which pursue incremental innovation and which involve a symmetric risk of information disclosure. Keywords: innovation; R&D cooperation; competition intensity; appropriability conditions. JEL Classification Numbers: L10; O32; O33; L60.