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The organization of research corporations and researcher ability

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  • Bruno Cassiman

Abstract

This paper analyzes the formation of Research Corporations as an alternative governance structure for performing R&D compared to pursuing in-house R&D projects. Research Corporations are private for-profit research centers that bring together several firms with similar research goals. In a Research Corporation formal authority over the choice of projects is jointly exercised by the top management of the member firms. A private for-profit organization cannot commit not to interfere with the project choice of the researchers. However, increasing the number of member firms of the Research Corporation reduces the incentive of member firms to meddle with the research projects of researchers because exercising formal authority over the choice of research projects is a public good. The Research Corporation thus offers researchers greater autonomy than a single firm pursuing an identical research program in its in-house R&D department. This attracts higher ability researchers to the Research Corporation compared to the internal R&D department. The paper uses the theoretical model to analyze the organization of the Microelectronics and Computer Technology Corporation (MCC). The facts of this case confirm the existence of a tension between control over the choice of research projects and the ability of researchers that the organization is able to attract or hold onto.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 327.

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Date of creation: Aug 1998
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Handle: RePEc:upf:upfgen:327

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Research and development; cooperation; research joint ventures; research corporations; monitoring; ability; organizational design;

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  1. Aghion, P. & Tirole, J., 1993. "On the Management of Innovation," Working papers 93-12, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
  3. Philippe Aghion & Jean Tirole, 1994. "Formal and Real Authority in Organizations," Working papers 95-8, Massachusetts Institute of Technology (MIT), Department of Economics.
  4. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 783-832.
  5. Peck, Merton J., 1986. "Joint R&D: The case of microelectronics and computer technology corporation," Research Policy, Elsevier, vol. 15(5), pages 219-231, October.
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  8. Sakakibara, Mariko, 1997. "Evaluating government-sponsored R&D consortia in Japan: who benefits and how?," Research Policy, Elsevier, vol. 26(4-5), pages 447-473, December.
  9. Aldrich, Howard E. & Sasaki, Toshihiro, 1995. "R&D consortia in the United States and Japan," Research Policy, Elsevier, vol. 24(2), pages 301-316, March.
  10. Gatignon, Hubert & Anderson, Erin, 1988. "The Multinational Corporation's Degree of Control over Foreign Subsidiaries: An Empirical Test of a Transaction Cost Explanation," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 305-36, Fall.
  11. Eisenberg, Theodore & Sundgren, Stefan & Wells, Martin T., 1998. "Larger board size and decreasing firm value in small firms," Journal of Financial Economics, Elsevier, vol. 48(1), pages 35-54, April.
  12. Vonortas, Nicholas S., 1997. "Research joint ventures in the US," Research Policy, Elsevier, vol. 26(4-5), pages 577-595, December.
  13. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-71, September.
  14. Bruce Kogut, 1991. "Joint Ventures and the Option to Expand and Acquire," Management Science, INFORMS, vol. 37(1), pages 19-33, January.
  15. Rotemberg, Julio J & Saloner, Garth, 1994. "Benefits of Narrow Business Strategies," American Economic Review, American Economic Association, vol. 84(5), pages 1330-49, December.
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