Absorptive Capacity and Innovation: When Is It Better to Cooperate?
AbstractCooperation can benefit and hurt firms at the same time. An important question then is: when is it better to cooperate. And how can an appropriate partner be selected? In this paper we present a model of inter-firm cooperation driven by cognitive distance, appropriability conditions and external knowledge. Absorptive capacity of firms develops as an outcome of the interaction between absorptive R&D and cognitive distance from voluntary and involuntary knowledge spillovers. Thus, we offer a revision of the original model by Cohen and Levinthal (1989) accounting for recent empirical findings and explicitly modeling absorptive capacity within the framework of interactive learning. We apply that to the analysis of firms' cooperation and R&D investment preferences. While the focus of this paper is limited to a static scenario, where the cognitive distance between cooperating firms is fixed and given exogenously, in Savin and Egbetokun (2012) we address the dynamic approach and provide more extensive simulation results.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2012-056.
Date of creation: 15 Oct 2012
Date of revision:
inter-firm cooperation; absorptive capacity; cognitive distance; innovation; knowledge spillovers;
Find related papers by JEL classification:
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-27 (All new papers)
- NEP-BEC-2012-10-27 (Business Economics)
- NEP-CSE-2012-10-27 (Economics of Strategic Management)
- NEP-INO-2012-10-27 (Innovation)
- NEP-KNM-2012-10-27 (Knowledge Management & Knowledge Economy)
- NEP-NEU-2012-10-27 (Neuroeconomics)
- NEP-SBM-2012-10-27 (Small Business Management)
- NEP-TID-2012-10-27 (Technology & Industrial Dynamics)
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.:
- Oxley, Joanne E, 1997. "Appropriability Hazards and Governance in Strategic Alliances: A Transaction Cost Approach," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(2), pages 387-409, October.
- Ivan Savin & Abiodun Egbetokun, 2013.
"Emergence of Innovation Networks from R&D Cooperation with Endogenous Absorptive Capacity,"
Jena Economic Research Papers
2013-022, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Ivan Savin & Abiodun Egbetokun, 2013. "Emergence of Innovation Networks from R&D Cooperation with Endogenous Absorptive Capacity," Working Papers CEB 13-022, ULB -- Universite Libre de Bruxelles.
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