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Transaction costs and capabilities as determinants of the R&D boundaries of the firm: a case study of the ten largest pharmaceutical firms in Japan

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Author Info
Masao Nakamura (Faculty of Commerce, Institute of Asian Research and Faculty of Applied Science, University of British Columbia, 2053 Main Mall, Vancouver, BC, Canada, V6 T 1Z2)
Hiroyuki Odagiri
Abstract

The boundaries of the firm are an important issue in relation not just with the make-or-buy decision in production but also with research and development (R&D). Firms depend on universities to gain scientific knowledge, outsource some of their R&D works, purchase patented technologies, commission research, and participate in consortia. In this paper, we take the case of the 10 major pharmaceutical companies in Japan and show that they employ various types of research alliances with various partners, domestic or foreign. Two major theories to explain the boundaries, the transaction-cost theory and the capability theory, are discussed and we argue that the observed pattern of research alliance is more consistent with the capability theory. Discussion is also made on the consortia and national projects these firms participate. Copyright © 2003 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1083
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 24 (2003)
Issue (Month): 2-3 ()
Pages: 187-211
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:mgtdec:v:24:y:2003:i:2-3:p:187-211

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Aghion, Philippe & Tirole, Jean, 1994. "The Management of Innovation," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1185-1209, November. [Downloadable!] (restricted)
  2. Aghion, Philippe & Tirole, Jean, 1994. "On the Management of Innovation," IDEI Working Papers 36, Institut d'Économie Industrielle (IDEI), Toulouse.
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  3. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August. [Downloadable!] (restricted)
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  1. Steven Globerman & Aidan Vining, 2004. "The Outsourcing Decision: A Strategic Framework," International Trade 0404007, EconWPA. [Downloadable!]
  2. Baldwin, John R. & Beckstead, Desmond & Gellatly, Guy, 2005. "Canada's Investments in Science and Innovation: Is the Existing Concept of Research and Development Sufficient?," Economic Analysis (EA) Research Paper Series 2005032e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
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