An Empirical Assessment *

Research and Development Joint Ventures are based on cooperative agreements where firms share the costs and results of a particular research project. While theoretical analysis of research joint ventures on profits, R&D intensity, output and prices is more developed in the existing literature, few empirical investigations exist. This paper gives a first insight into the impact of research joint ventures on firms ' profit margins. In addition, it investigates the degree to which different firm variables influence participation in research joint ventures (RJVs). For this purpose, 314 US research joint ventures registered from 1985 to 1992 are considered in the study. 2,923 unique cooperating firms and 13,186 noncooperating firms represent the basic sample. A descriptive comparison of cooperating and noncooperating firms finds that cooperating firms achieve a lower profit margin. In addition to this, larger firms are more likely to form RJV’s on average. Regression analyses show that two offsetting effects influence the profit margin and that the R&D investments of cooperating firms have a higher impact on profits. Beyond that, the firm size has a positive and significant influence on RJV participation. The author would like to thank Lars-Hendrik Röller, Mihkel Tombak, Rabah Amir and Andreas Stephan for their helpful comments and support. Support from Moody’s for providing some of the firm level data is much appreciated. ZUSAMMENFASSUNG Die Auswirkung von Forschungs-Joint Ventures auf den Unternehmenserfolg: Eine empirische Beurteilung Forschungs-Joint Ventures beruhen auf Kooperationsvereinbarungen, bei denen mehrer

ALLOCATION OF CONTROL RIGHTS TO CUSTOMISED PRODUCTS: EMPIRICAL ANALYSIS OF FINNISH SMEs

ABSTRACT: Collaborative product development plays a pertinent role in many buyer-supplier relationships. It typically involves innovative components as the outcome of customisation and related R&D activities. The allocation of intellectual property rights (IPRs, e.g., patent, copyright, and trade secret) to collaborative output is a central aspect of buyer-supplier contracts. As IPR ownership provides the right to economically exploit and further develop an intellectual asset, they involve an incentive to allocate resources in asset development. Collaborative R&D usually involves contracting under uncertainty, as the precise outcome is not known at the time of contracting. Economic theory suggests that in pursuit of the optimal outcome, contracts allocate control right to the party whose investment is more critical in increasing output value. Firms ’ relative bargaining power is another theoretical determinant of control allocation. This paper looks into Finnish buyer-supplier relationships producing IPRs as an outcome of a customisation process. With survey data on 302 suppliers, representing most industrial sectors, the importance of investment criticality and bargaining power in determining IPR allocation mode is estimated. The Finnish evidence implies that firms are concerned about the quality of project output, and thus allocate ownership rights according to relative resource contributions. Bargaining power seems to have, ye

Employee-Transfer as an Instrument of Information-Transfer through Vertical Relations?

Rita Zobel Personnel policies and strategies of Japanese companies have gathered special interest for a long time. But in a crisis like the burst of the bubble economy in the beginning of the nineties these principles are handled more and more in a flexible way. With a growing number of people in transfer to other companies in the group or to affiliated firms, the Japanese companies try to maintain their competitiveness. Since long term relations are still significant in Japanese companies, employees cannot simply be dismissed. The transfer of employees, which is known as shukkô means not to cut, but to loosen the relations to them while going in closer contact with the group companies. One side of the transfer is to gain competitiveness in reducing the surplus of employees and to cut personnel expenses. The other side is to strengthen the relations in giving technical guidance and training in affiliated companies. This means a better flow of knowledge and information to the affiliates. The aim of this study, which is based on the Kaisha-Database at the Science Center Berlin, is to figure out and analyse these two intentions of employee-transfer. The data of the shukkô-companies are examined with data relating to profitability. The study is supported by interviews with managers of the personnel department and comprises case studies to give a more detailed view on the intentions. ZUSAMMENFASSUNG Entsendungen als Instrument des Informationsaustauschs über vertikale Unternehmensbeziehungen? Personalpolitik und-strategien in japanischen Unternehmen haben lange Zeit besondere

INTELLECTUAL CAPITAL AND MAINTENANCE OF WORK ABILITY – the Wellbeing Perspective

ABSTRACT: This study shows that definitions of intellectual capital (IC) provided by the IC experts interviewed have very much in common with the maintenance of work ability (MWA) concept that is the central framework for Finnish occupational health and safety activities. Both concepts include competence, internal structures and relations. Only the emphases differ. IC has a more collective notion of competence than MWA. IC also places more emphasis on the productive aspects, whereas MWA stresses security and wellbeing. The biggest difference is in the way individual health is treated. MWA assumes that health is a very important element of productive capacity, whereas some of the IC experts interviewed ignore it. It is obvious that IC experts have much to learn from MWA experts about how psycho-social health affects people’s innovativeness and productive behaviour. In particular, the study shows how elements of occupational wellbeing are involved in the shift of emphasis from individual to collective competence. Key words: intellectual capital, knowledge creation, maintenance of work ability, employees

DIFFUSION OF DIGITAL MOBILE TELEPHONY – ARE DEVELOPING COUNTRIES DIFFERENT?**

Pekka Ylä-Anttila and the participants of the UNU/WIDER Conference on the New Economy in Development (NED) for comments and suggestions. * * Also published as UNU World Institute for Development Economics Research (UNU-WIDER) Research Paper No. 2004/13. This is a revised version of the paper originally prepared for the NED conference in 10–11 May 2002, Helsinki (Finland). Camera-ready typescript of the numbered pages prepared by Adam Swallow at UNU-WIDER

Vertical Organization, Technology Flows and R&D Incentives An Exploratory Analysis

Despite its importance, the impact of vertical organization on innovation incentives has not been investigated in depth. This paper develops a number of testable hypotheses and then provides a first exploratory empirical analysis, using cross-sectional industry-level data. Two simple stylized facts emerge from the empirical results. First, once a fragmented buyer industry is dependent on a relatively concentrated supply sector, the industry’s own R&D intensity is reduced substantially. Second, vertical technology flows appear to act as substitutes for an industry's own R&D if the receiving industry's concentration is relatively low. Both results are largely consistent with a number of case studies and with theoretical arguments discussed in the paper. ZUSAMMENFASSUNG Vertikale Organisation, Technologieflüsse und FuE-Anreize

The Stability of Information Cascades: How Herd Behavior Breaks Down

We extend the standard model of information cascades to situations where agents have to choose between switching to a new alternative or not. In particular, we add two new features to the standard model. First, agents continue to receive signals after they have chosen 'switching'; and second agents may revert their earlier decisions. The focus of the paper is to analyze how information is passed on within an information cascade, and the conditions under which breakdown occurs. We identify rules which describe the learning process and run simulations to estimate the properties of the information cascade. ZUSAMMENFASSUNG Zur Stabilität der Informationskaskade: Wann bricht Herdenverhalten ab? Wir erweitern das Standardmodel der Informationskaskade. Durch die Erweiterung lassen sich Situationen modellieren, die den Individuen die Wahl zwischen einer neuen Alternative und dem bewährten lassen. Die Erweiterung besteht aus zwei Aspekten. Erstens erhalten die Individuen weiterhin Signale, nachdem sie sich für die neue Alternative entschieden haben. Zweitens können sie ihre Entscheidung später wieder zurücknehmen. Wir untersuchen wie sich Information innerhalb der Informationskaskade ausbreitet und unter welchen Bedingungen die Informationskaskade abbricht. Wir beschreiben den Lernprozeß der Individuen und führen eine Simulation des Prozesses durch. This paper has benefited from discussions with Ulrich Kamecke, Lars-Hendrik Röller, Marti

Survival of Newly Founded Businesses: A Log-Logistic Model Approach

Based on a longitudinal data base we test the "liability of adolescence " hypothesis which states that new firm hazard rates follow an inverted U-shaped pattern. That is, the hazard rate is low for the initial period; the end of adolescence is marked by a hazard maximum, from which then rate declines monotonically. We use a log-logistic model which shows that the "liability of adolescence “ argument describes the hazard rates of new establishments for all two and three-digit industries fairly well. Further, the rate shows that the desegregation of industries matters, and considerable differences are found within and across two and three-digit low-, moderate- and high-tech industries. In assessing the effect of market environment conditions on risk we find that risk tends to be elevated in a relatively large number of two-digit low- and high-tech industries in the presence of scale economies, but it is substantially reduced in moderate-tech industries. By contrast, the hazard rate tends to be reduced for quite a large number of three-digit low-, moderate- and high-tech industries in comparison with the two-digit industries, indicating a longer adolescence. The influence of start-up size in reducing the hazard rate is apparently similar between two and three digit low-, moderate- and high-tec

Are There Financing Constraints for R&D and Investment in German Manufacturing Firms?

Using a newly constructed panel dataset of German enterprises, I estimate R&D and capital investment equations for the time period from 1990 to 1994. Simple accelerator specifications indicate considerable sensitivity of R&D and investment to cash flow for relatively small firms. Much of this effect vanishes already once error-correcting behavior is taken into account, but a significant positive relationship between cash flow and investment remains for relatively small firms. In the case of R&D, weak but significant cash flow persist both for small and large firms. The evidence from Euler equation estimates is not conclusive. The investment Euler equation for large firms appears to perform relatively well and yields results close to those expected under the null hypothesis of no financing constraints. The estimates from the Euler equation for R&D are not informative. Additional evidence from survey data suggests that the cash flow sensitivity of investment in small firms is likely to reflect financing constraints. This research has been supported by grants from the German Research Council (DFG) and th

The Consequences of Endogenous Timing for Diversification Strategies of Multimarket Firms

When firms diversify into new markets in spite of the existence of diseconomies of scope, not only firms ' profits are affected, but also potential welfare is reduced. Nevertheless, multimarket competition is the outcome of a game when players move simultaneously. A Cournot model is developped where players can choose the timing of their action before deciding over quantities. This helps firms to avoid the inefficiencies that ocur with multimarket competition. Whenever the timing game has an impact on the outcome of the basic game, the consequences for welfare are positive. ZUSAMMENFASSUNG Die Bedeutung sequentieller Angebotsentscheidungen für diversifizierte Unternehme