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Partner Proximity and Relationship-Specific Capital in Joint R&D Ventures

Author

Listed:
  • Conrad Ciccotello
  • Richard Fu

Abstract

Geographic proximity between parties increases personal interactions and enhances the exchange of tacit information vital to success in collaborative innovation. In a sample of 582 joint R&D ventures, we observe that the distance between partners varies widely. Controlling for the self-selection among partners, we find that more geographically proximate parties tend to establish longer contract duration ex ante to address contracting risks associated with the increased sharing of tacit information. We argue that partner proximity in joint R&D leads to the creation of relationship-specific capital. Thus, the operative governance mode when partners are geographically proximate is organizational in nature. JEL Classification : D23; L24

Suggested Citation

  • Conrad Ciccotello & Richard Fu, 2023. "Partner Proximity and Relationship-Specific Capital in Joint R&D Ventures," The American Economist, Sage Publications, vol. 68(2), pages 261-276, October.
    • Handle: RePEc:sae:amerec:v:68:y:2023:i:2:p:261-276
    DOI: 10.1177/05694345231172167
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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