Policies aimed at encouraging research joint ventures (RJVs) between firms are likely
to be frustrated, according to research by Professors Lars-Hendrik Roeller, Ralph
Siebert and Mihkel Tombak, published in the July 2007 issue of the Economic
Journal. Their study shows that big firms have too many incentives not to get involved
in collaborative projects with smaller firms.
Since the mid-1980s, policy-makers on the both sides of the Atlantic have encouraged
research co-operation between firms. Examples include subsidies for co-operative
research and development (R&D) within the European Union’s framework programmes,
and the National Cooperative Research Ventures Act in the United States. In addition to
this financial encouragement of RJVs, antitrust laws have been liberalised to allow firms
to cooperate in R&D.
So why, this study asks, have so few firms actually engaged in RJVs? The authors find
evidence of big firms snubbing small firms with whom they would like to participate in
RJVs. This may be because firms of different sizes have different concerns about the
types of R&D they would like to engage in.
The authors, however, hypothesise that big firms can gain greater leverage in the
marketplace and sharing the results of the R&D would give the smaller firms a leg-up –
something they do not have an incentive to do. Given this exclusionary effect, policymakers
trying to encourage more cooperative research between firms are likely to be
frustrated.
ENDS
Notes for editors: ‘Why Firms Form (or Don’t Form) RJVs’ by Lars-Hendrik Roeller,
Ralph Siebert, and Mihkel Tombak is published in the July 2007 issue of the Economic
Journal.
Lars-Hendrik Roeller is at the European School of Management and Technology. Ralph
Siebert is at Purdue University. Mihkel Tombak is at the University of Toronto at
Mississauga.
For further information: contact Romesh Vaitilingam on 07768-661095 (email:
romesh@compuserve.com); or Ralph Siebert via email: rsiebert@purdue.edu